What can we learn from a topsy turvy week in travel?

04 August 2011


It’s been a real rollercoaster of a week for the travel industry as we see pictures of disappointed children at the airport deprived of their holiday due to the collapse of Holidays4u. Travel Weekly claims that this has affected more than 60,000 holidaymakers.
There is no doubt that 2011 has proved to be a tough year again on top of the downturn of 2009 and 2010 with the unrest in the Middle East and the ash cloud. We are far from out of the recession as our Chancellor downgrades his growth forecasts for the UK economy and the euro zone starts to look increasingly unstable. As you will see from the trends below, the UK outbound travel growth we saw in 2008 has not returned. The 2011 rise was due only to visiting friends and relatives; business and leisure outbound travel was pretty static.

To make matters worse shares in Thomas Cook dipped to an all time low of 59p from a high of £3.20 during the merger with Airtours, as one of the most famous brands in travel loses its CEO Manny Fontenla-Novoa as shareholder discontent increased this week.
Changing consumer behaviour
So what can we learn from all this turmoil in the travel industry? As I read the verdict in Tnooz about Thomas Cook I remember back to my time at Thomas Cook and the hard job I faced in convincing my colleagues back in 1995 that the internet would change everything. So many were convinced that the retail shops would always be the mainstay of the company and would never be replaced, however times and consumer behaviour have changed. Whilst there are still those that are happy to walk into a high street travel agent, more of us are becoming travel planners as we trawl the internet for the best travel deal and experience and seek the advice of our friends and family.
Flexibility is key
Dynamic packaging has become the norm as we want the flexibility to leave and return when we want and the traditional two week summer break has become the exception rather than the norm. Those travelling abroad no longer want to pay the premium for Saturday departures so the trade has slowly woken up to the realisation that they have to change their business to be more flexible. This has been hardest for the goliaths in the industry although there is no doubt that TUI has fared better than Thomas Cook.

Key learnings
We have to look for the unmet needs in a market and strive to be one step ahead of the curve and listen hard to the early adopters in the market. These are for example the people who are the first to buy the smart phone, the first to discover new destinations and the first to try new things. Yes it means that we need to get closer to our customers, especially the younger generations X and Y which recent IBM research showed have different usage of social channels. One size fits all has not worked for quite a while and heavy discounting is a treacherous path as we have seen so many travel companies fail this year.

Social opportunities
As we launch our social media channels, we have an excellent opportunity to use these channels to get closer to understanding where people want to travel next, what they are looking for and how they use their new mobile devices.
We have an ideal platform to test new ideas, product concepts and yet I see little evidence of companies harnessing the creative talents of their fans and followers. I talked in a previous blog about “crowdsourcing” and companies using the creativity of their fans to design new products like Tshirts but I have yet to see any travel companies using these channels to design new holidays.
Finding the unserved segments
We need to be looking at the unserved segments of the market where there is little competition and getting closer to these customers can deliver big returns when the business is scaled up to meet the needs of these customers on a global scale. Hence the interesting acquisition reported in TTG on 27th July 2011 of specialist niche players such as Holidaybreak by Cox and Kings for £312million which will expand these niche offerings into fast growing markets such as India.
If you look at the growth of volunteer tourism, gap year travel, solo traveller programmes, adventure and special interest tourism we see a raft of niche players who are not suffering the same fate as the providers of traditional package holidays struggling to differentiate themselves. Those players selling non differentiated holidays on price alone are competing fiercely with the bed banks to secure hotel bookings on price differences as slim as 50 pence per night.
New Facebook Marketplace opportunities

Some Facebook users have discovered the new Facebook Marketplace application which enables you to feature your house or apartment to rent. A handy application if you want to see if your friends around the world have somewhere interesting to stay. I’ve just loaded my spare August week in my Italian villa and I’ll keep you posted if I get a customer. You can load anything from a car to a holiday for sale as you will see from the listing categories.
Listen carefully
If the paint companies had not listened carefully to the small minority of customers who complained that they did not like the fact that paint dripped too much we would not have the raft of new non drip paint products that now make up so much of the paint market today. We have to listen to those consumers who now want a different type of holiday. My view is that we would not have seen the raft of new concierge type travel companies such as Mr and Mrs Smith and Quintessentially if the main travel players had been listening carefully. These new players are now providing very tailored travel services over the internet.  
Best practice outside our shores
I was responding today to a request for some advice on the Social Media Travel Group from a travel company in India and noted that they had implemented live chat on their site. As soon as I visited their website the screen gave me a friendly message asking if they could help with my booking. I had to congratulate the company on offering such help and yet as noted in a recent blog we see from the L2 think tank research that a mere 17% of top 100 travel companies are using this technology that has been on offer for several years, to get closer to their customers.

Using our social customer intelligence
The classic lessons of segmentation and customising your products and services to meet the needs of your different customer types are essential to stay alive in travel. We have the intelligence on our fans and followers to build the different offerings to meet their needs. As we capture the social IDs and interests of our customers and build these insights into our customer database we have the opportunity to start to cater to their interests.
If we know they love, for example, rock music and cycling then we can be listing the rock concerts and cycling trips that may be of interest to them. As we constantly seek feedback on the options offered and hone the selection we are better able to grow the lifetime value of our customer relationships. If we witness the successful SAGA strategy it focused on growing a range of services in response to the needs of a specific aged 50+ customer profile. There’s no doubt that predicting where your customers want to go next is extremely tough but tailoring offerings to their interests is possible with the raft of new social CRM platforms now available. The key issue is still organising ourselves to collaborate with our customers and partners to create the right new products, something that large companies have always struggled with.
Same old discount message
It seems that many companies choose instead to keep hammering out the same discount message on our social channels and fail to tailor any of their messaging to their fan profile. Facebook enables us to tailor messages by geography but how many companies are tailoring their messaging to ensure that the right gateways are featured in offers to their customer base? Anyone given it a try yet?
As promised the beach photo in last week’s blog was Playa Grande, near Puerto Columbia on the Caribbean coast of Venezuela. Happy holidays wherever you are!!
I look forward to hearing from you and please share your comments below or “tweet” this. I always enjoy reading your feedback.
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