It’s May, which means that Spring is well and truly here, which means the summer travel season is just around the corner!
According to a survey by “Ask Your Target Market”, July is the most popular month for traveling; 46% of respondents planning to take a summer vacation were planning it for July. As the average traveler takes about two months to plan a vacation, now is when travelers are going to be researching destinations and travel options.
Few industries have been disrupted as quickly and as completely by digital technology as the travel industry. Ten years ago, the first travel apps were just being launched and the iPad was still a year away from its first release. But given that so far, 2019 has seen slowing economic growth and an uncertain economic outlook, how is the travel industry faring in this turbulent economic climate?
Overall Industry Trends
While it’s true that the travel and hospitality industry does have its difficulties, such as rising cost of fuel and labor, largely it seems to be faring much better than the embattled retail industry:
- Research by Deloitte shows the US travel industry has shown steady growth from 2009 to 2017 across all segments.
- Tourism already accounts for roughly 1 in 10 jobs in the global economy. (Deloitte)
- However, the travel industry has been growing faster than its ability to source labor and talent; US Bureau of Labor Statistics estimates for job openings in leisure and hospitality grew from 353,000 in 2009 to 1,139,000 in 2018 – a growth of 223%. (Deloitte)
- A 2017 report by the World Travel and Tourism Council predicted an average growth of 3.9% in the hotel industry for the next ten years.
- However, travel is a cyclical industry that is due for a downturn after nearly 10 years of growth. The outlook is solid for the near term, but travel brands need to be prepared to weather the storm when it happens.
While these numbers speak well toward the current strength of the travel and hospitality industry, that strength is not reflected in airline customer satisfaction scores, which remain dismally low.
In 2018, the University of Michigan’s American Customer Service Index – a customer satisfaction ranking of U.S. companies operating in 45 different industry sectors – showed that airlines were in the bottom 20% of US companies, where they have been since the report was first issued in 1994. This is corroborated by Forrester’s 2017 Customer Experience Index, in which not a single airline got an “excellent” or “good” rating for its customer experience. So, it’s clear that while Americans love travel, they definitely are not happy with their airline customer experience.
But if travelers see air travel as a necessary evil, that hasn’t kept airlines from realizing continued growth. So how are travelers making travel decisions?
- Travelers are increasingly using travel apps: 25% of travelers surveyed have a mobile travel app installed on their phone
- Social media is a key source of travel research: More than half of people planning a trip look for tips and advice on social media
- The complexity of travel sites means the majority of bookings still happen on desktop: The portion of flights booked on mobile has increased from 6% in 2013 to 27% in 2016.
- Travelers are increasingly unwilling to disconnect when they travel: 83% of flyers prefer flights that offer in-flight Wi-Fi, and 23% of those are willing to pay extra to access in-flight Wi-Fi.
Thankfully for the hospitality industry, today’s travelers are much more satisfied with the hotel guest experience than with the airline customer experience. J.D. Power’s 2018 North America Hotel Guest Satisfaction Index (NAGSI) showed that overall guest satisfaction increased an average of 8 points to 825 (on a 1,000-point scale). And for luxury hotel brands, these results were often higher.
Says Jennifer Corwin, Associate Practice Lead for the Global Travel and Hospitality Practice at J.D. Power, “Years of capital investment in offerings such as higher-end televisions and in-room tablets have left their mark. Now, as hotels look to push customer satisfaction levels higher, their focus should turn to service areas, particularly when it comes to direct booking.”
But do these high levels of customer satisfaction translate into increased loyalty? The answer is… sometimes:
- 59% of consumers are willing to pay between $10 to $50 more to stay at their preferred hotel brand.
- But while the difference is small, Millennials belong to fewer travel loyalty programs than older travelers
As for travel loyalty programs, how are travelers using them, and what rewards do they value most?
- For both business travelers (84%) and leisure travelers (79%), hotel nights are still by far the preferred reward (PwC)
- The second choice for leisure travelers overall was airline miles, at 19%. However, 36% of Millennials chose room upgrades as their second preferred reward. (PwC)
Travel Industry Trends, Summarized
Do you have questions about how you could improve your digital guest experience? Contact us to speak to one of our digital engagement experts or book a demo to see our digital customer service platform in action.