It feels like everyone is constantly on vacation – and filling up our Snapchat, Instagram and Facebook feeds with the minute details of their flight paths, what they are eating, and the amazing adventures they are enjoying. Taking ‘bragcations’ have become so ubiquitous that you are probably starting to wonder how people in your network have both the time and the money to do so – and when your next vacation is!
This should be only good news for Online Travel Agencies (OTAs), as 90% of travelers have online touchpoints for research or booking, up from 58% in 2006, according to a study conducted with high-end Chinese travelers by GfK. Furthermore, this trend is moving into mobile – by the end of 2016, the majority of online travel bookers from the US will use their mobile device to book their travel according to emarketer’s estimates of digital and travel research and booking.
From a business perspective, the name of the game is consolidation as Expedia and Priceline together own 95% of the market share following their acquisitions in recent years. This is spurred by the need for volume to make up for the small amount they make on every transaction. Their shared scale gives them enhanced negotiating power with their travel partners. The individual OTAs appear untouched by the holding companies to keep brand loyalists on board and keep their business models differentiated. For instance, when Expedia acquired Travelocity in January 2015 for $280 million in cash, it was a stated strategy that they would leave the Travelocity brand intact – with Expedia’s brand spokesperson quoted as saying “the Travelocity team will be part of the Brand Expedia group within the Expedia, Inc. family allowing it to tap into Brand Expedia’s scale and expertise while still maintaining a strong independent brand.”
However, from a consumer point of view, it can feel like there are too many places to start looking – KAYAK, Trivago, Booking.com – the list goes on. The number of startup options is overwhelming too – with Hipmunk, Skiplagged, Hotel Tonight and others all trying to reinvent how we book and experience travel. The plethora of choices available to help you make your choices can stop you in your tracks before you even start exploring your next trip. Consumers often resort to being price-driven (rather than brand-driven) since they can’t make sense of all the places to look.
Given this competitive climate, how can OTAs make meaningful, differentiated stakes in the ground about why to go with them?
Future traveler trends lend themselves to provocations of how OTAs to ride the wave to win with the traveler of the future:
- Travelers are looking for more ways to discover and explore their next travel experience before they book to make sure they are making the right choice for them – while also feeling like they are getting a unique experience that hasn’t been done a million times before.
- How can OTAs extend the enjoyment of the travel experience to booking by making discovery and exploration a thrilling part of process – rather than a price-driven item on the ‘to do’ list?
- How can OTAs share a bit of the experience to come while keeping some of mystery of what is to be discovered (akin to what a movie trailer is to a full-length feature)?
- What is the potential for interactive video content and virtual reality technology that can immerse travelers in a travel experience before any money is put on the line?
- There is also a shift towards seeking more authentic and localized experiences while traveling (this is in stark contrast to the cookie cutter, consistent experiences that ruled the early stages of travel).
- How can OTAs tie meaningful local experiences into their suggestions and offerings?
- Could offering homestays, connections with local “peers,” and experiences that can’t be found in guidebooks give OTAs a unique edge in the market?
- What is the potential for AI-enabled digital assistants to develop highly personalized travel plans without the time commitment on the part of the traveler?
- Travelers are looking for vacations that help them escape from their daily lives – and the mental escape is just as important – if not more important – than the physical escape.
- How can OTAs offer peace of mind regarding the traveler’s home life while they are on the road (for instance providing services to assure travels that their home is secure)?
- What are options for helping travelers mentally escape from their work obligations in this age of always-on connectivity?
While the travel booking market is saturated in terms of number of players, OTAs can cut through the competition by innovating from a consumer benefit point of view. Meaningful differentiation can arise by understanding the core needs travelers have today and tomorrow, then ideating on how your business can solve for these needs to fit into their lives. The outer bounds of consumer wanderlust are yet to be seen — and the potential for growth within the travel industry is immense.
At antedote, we love to hunt down new opportunities for our clients and have a range of approaches and award-winning tools and techniques to do this. Get in touch with us at firstname.lastname@example.org to learn more.