Throughout 2018, PhocusWire brought you in-depth coverage of
some of the critical topics impacting travel, organized by a different theme
As we prepare for 2018 to end and a new year to begin, we
are revisiting each of these themes.
We’ll look back on key developments of the past 12 months
and look ahead, with additional perspective from the topical experts we
interviewed throughout the year.
In June, we examined digital marketing for the travel
industry, with analysis of SEO, social media, email and paid search strategies.
As we look ahead to 2019, we asked MMGY Global CEO Clayton
Reid to share thoughts on the future of travel and what lies ahead for marketing
and advertising strategies, the growing influence of Google and Amazon and the
impact of mobile, personalization and voice technology.
Digital marketing - Clayton Reid, MMGY Global
No global industry has experienced a rate of change in
digital more than that of travel, from how corporate and leisure travel is
managed and booked to how suppliers use technology to streamline operations.
Travel is now leading innovation in business.
The MMGY Global team sees five major changes ahead for 2019.
demand and higher commercial rates will change digital influence
Until late 2017, we enjoyed 20 straight quarters of
significant travel demand growth, but the acceleration that peaked in 2017 has
since moderated and reversed in 2018. Slowing RevPAR growth in 2019 (from 3.2% to
2.6%) and projected airline domestic enplanements plateauing at just above 75
million per month are worrisome.
So, for 2019, we believe a slackening demand curve will be a
true test of whether online travel agencies and other intermediaries continue to hold a dominant
place in the market. Of course, all down markets present opportunities for
disruptors, but we believe it is the suppliers who are in a better position
today and can now own more of the low- and mid-funnel travel decisions.
for airline, hotel, rental car and attraction brands to use data-led special
retail offers that connect with leisure travelers directly while they also work
more closely with corporate travel platforms such as Concur, Deem and
TripActions to yield more direct revenue.
Other important trends:
- Further supplier consolidation should improve digital
marketing efficiency and lower distribution cost at the expense of online travel agencies and
other third parties.
- Ultra-low-cost carriers (ULCCs), such as Allegiant, Frontier,
Spirit and Norwegian Air, will go heavily rate retail through digital channels
such as Google Flights search, metasearch and a renewed focus on travel agents.
- A clear demarcation will emerge between economy and luxury
travel that forces suppliers to offer either a commodity at the lowest price or
a completely customized experience that carries premium pricing.
- We expect a plateau in demand for shared accommodations
and shared rides as inventory and regulation become more of a headwind.
Amazon enters the
travel channel in a big way
Not unlike Alibaba - which has built a dominant travel
platform in China with Fliggy plus programmatic marketing and its own payment
and packaging engine - Amazon is in position to immediately take a big share of
the travel pie.
Just as he has done in other industries, Jeff Bezos can
lever data, loyal Prime customers and a lower-cost distribution channel to move
the market overnight. Maybe Amazon will even build its own “future hotel,” as
has Alibaba with its Flyzoo Hotel in Hangzhou, China, which relies on robots, artificial
intelligence and facial-recognition tools to operate.
Consider that today Amazon already accounts for more than 4%
of all digital ad spending (and is growing rapidly), and we see their ad rate
conversion is twice as effective as Google’s ad network. Maybe this is why
Google Hotel Ads continue to be more aggressive, which tells you Google sees a
path forward to connect this to a booking proposition that includes value-add tools
around trip management and experience.
How else could Amazon affect the digital travel landscape?
- The possible acquisition of an OTA such as Expedia
- Forcing Google to move more aggressively into booking
- A forced shift in how paid search and meta models function
as well as the potential death knell for OTAs as we know them
- The continued push up funnel by third parties (away from
retail conversion) to create early customer engagement and thus justify more
“brand marketing investments”
- A new era of AI-driven, curated travel placed on virtual
shelves for travelers to buy easily, based on a more personalized set of needs
Data, GDPR and the
continued path to personalization
If 2018 was the year of data privacy and the elevation of
questions around Facebook and other online data collection, then 2019 will be
more about how these platforms prove that consumers receive real value for
sharing this data. As marketers place a premium on collecting first-party data
that is permission-based, tied to location purchase behavior and connected to
real-time decision-making, the travel industry stands at the doorstep of real
Important trends we are watching:
- There is no evidence at all that people, as a condition of
use, are rebuffing apps and web content when sharing their data. And by the
way, 80% of app downloads carry a default agreement for data-sharing
- A reform of ad tech will force more data visibility and
define which programmatic networks provide real value. Expect a culling of ad
platform middlemen in favor of data-direct connections to served impressions.
- Longer-term advancement in AI tech will only exacerbate ad
- Disintermediation of the ad click path means costs should
lower while ROI increases through more intelligent targeting.
- Expect the continued dominance of Facebook and LinkedIn in
effective ad targeting in the travel space, both at the top and bottom of the
- Brands will begin to accept personal data as a payment
alternative, for example free onboard Wi-Fi in exchange for detailed profile
information and personally identifiable information.
A return to
traditional advertising channels
We are seeing clients actually move ad budgets from digital
into areas such as out-of-home, broadcast, PR and events and, yes, even print
and direct mail. Continued compression being created by the massive investments
in search and digital units has driven costs up, ROIs down and ad inventory
down (especially in mobile).
Just as he has done in other industries, Jeff Bezos can lever data, loyal Prime customers and a lower-cost distribution channel to move the market overnight.
Clayton Reid - MMGY Global
Even Booking Holdings and Expedia have moved more
money into traditional media as their margins have eroded. For MMGY’s European
clients, digital is growing but still represents just over half of marketing
investments being made in both trade and consumer channels.
- Both national radio
(up 6.5%) and national TV (up 2%) will grow in 2019, and all TV and radio
revenues, including over-the-top (OTT), should increase 10%.
- While digital continues to grow across all consumer
categories, MMGY research shows print, TV and out-of-home continue to score
highly with travelers on “influence to book.”
- 64% of travelers say brand perception is a major factor in
travel decision-making, suggesting brand vehicles are vital in the marketing
- But, more cord-cutting and OTT niche content will hurt
traditional networks and content hubs in favor of narrowly targeted channels.
The next horizon in mobile, voice and AI is coming
Consumers check mobile devices over 200 times per day and
spend 20 hours per week inside mobile browsing, so we are well past wholesale
adoption in the marketplace.
A more important recent trend has been in the
rapid adoption of web-enabled, interconnected devices that now exist in 12% of
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By 2020, it’s predicted that 50% of all search activity will be
voice searching, which means that will represent another major shift in how we
use our devices.
Although only 1% of voice activity represents a
purchase today, 76 million households will have a smart speaker by 2020, which
will surely connect voice more closely to the Internet of Things.
represents a major growth for voice-prompted shopping and transactions.
Companies such as Carnival, Marriott and Lufthansa are now investing heavily in
AI-based customer service programs that enable more sophisticated interaction across
a variety of customer needs.
- KLM’s smart assistant, BB, has now handled hundreds of
millions of interactions from planning to booking.
- As part of this natural evolution in bot-controlled online
interactions, we expect organic social, including the influencer universe, to
face a culling out. Transparency about the value of the influence (through
better viewability and conversion metrics) as well as the authenticity of
content will speed ahead in 2019.
- Facial recognition for airport access, security and
boarding is just around the corner and should begin broad testing in 2019,
easing airport delays.
While augmented and virtual reality are still at
relatively low adoption rates in travel, Statista projects the entire industry
will be worth $207 billion inside four years. And, according to this Business
Insider article, 51% of marketers currently use AI to glean, amongst other
things, consumer preference around automation and workflow.
In what might be
more of a longer-term and dramatic shift, the same article suggests that AI
will leapfrog traditional data collection to instead rely on human senses such
as sight and hearing to dictate customer interaction. Related thoughts include:
- Retailers such as Samsung are now aggressively marketing
low-cost headsets, which creates new awareness of VR technologies.
- Suppliers such as Best Western, Berlin Tourism and Alaska
Airlines have embraced new consumer-facing technologies.
- Harvard Business Review suggested in a June article that
reliance on brands will shift over time to reliance on trusted bot assistants.
- Chinese virtual assistant Xiaoice already has 40 million
Travel is now an
innovation leader, not a follower of others
As digital travel ecosystems continue evolving to merge
better data with online UX, connected to curated transactions and an improved
travel experience, our industry is now a petri dish for broader global
commerce. Companies such as Uber, Airbnb, Ctrip and many others are seen as
global innovators, not followers, and our entire industry has lifted itself in
meaningful and exciting ways that serve as an example for other areas of the
There is still a lot to play out with intermediaries, data privacy and
best practices throughout the next decade, but as with each of the last several
years, we expect 2019 to bring more surprises, great ideas and lightning-fast
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