What travel and hospitality brands need to know ahead of a critical holiday season
Here’s what travel and hospitality brand marketers can do to overcome consumer “inflationary anxiety” and beat their competition.
Posted: June 14, 2022
Travel hospitality brands have shown incredible resilience over the past two years as people around the world have drastically reduced their vacation and work trips. For global airlines and hotels, the number of American consumers traveling abroad plummeted in 2020 and is still only about half of what it was before the pandemic began. While traditional hotels hoped to see significant rebound opportunities last year, much of that revenue went to increasingly popular alternative accommodation brands such as Vrbo and Airbnb.
However, hope is on the horizon for all players in the sector. Travel and tourism is expected to generate $8.6 trillion globally this year, just 6.4% below pre-pandemic levels.
At the same time, Americans are said to be on the fence about how much money – if any – they want to spend on their summer vacations due to inflation. As this critical travel and hospitality season approaches, let’s take a look at what brands need to know to maximize their business results.
Ad spend is going digital
Travel and hospitality brands should not skimp on advertising budgets as the competition will likely do the opposite and subsequently take over the summer market further. In 2021, travel marketers spent 38% more than the previous year, and they are expected to spend 36% more this year than last.
Marketers in this space seem to have gotten the message that they need to invest to win. Recently, we’ve seen Vrbo, Expedia, and Booking.com buy expensive broadcast ads reaching around 100 million consumers during Super Bowl 2022. Airbnb also recently launched a major ad campaign, which had a heavy focus on TV.
But while television delivers a brand’s message to a wide audience of potential customers, marketers have little control over targeting and whether sales are the result of advertisements. This is why advertising budgets are increasingly turning to digital.
With targeting and measurement far superior to broadcast, digital advertising offers audience segmentation that broadcast and out-of-home ads cannot, enabling travel and hospitality brands to find the right consumers who are more close to the point of sale. Using data and analytics, travel and hospitality marketers can identify consumers who are considering travel, those who are likely to shop with traditional or non-traditional accommodations, and then identify ads at most likely buyers.
More importantly, they are able to see exactly campaign success at a granular level using incremental metrics. That’s why next year, travel and hospitality brands are expected to spend 70% of their budgets on digital advertising, a 63% increase from 2020.
Digital ads also allow marketers to tweak campaigns along the way, as they see what’s working through real-time performance data. They can modify creative, cashback or discount offer, and audience segmentation based on market changes and ad performance, optimizing campaign results in real time. You don’t have that level of insight or timely results with broadcast media.
So this year, expect more travel and hospitality brands to change what it means to “go big,” investing more in online inventory and less in mass media. Brands that adapt to this shift can capture more of the pent-up travel demand we’ll see this summer and beyond.
‘Inflation anxiety’ is real but presents an opportunity
Right now, inflation is likely making consumers hesitant to book the trips they would otherwise buy. Travel costs are up almost 16% compared to 2019, and average price changes for transport (up 30%), accommodation (up 10%), leisure (up 5%), food and beverages (up 14%) are also inconvenient for consumers. ‘ wallets.
These costs actually give travel and hospitality brands an opportunity to retain consumers who may have “inflation anxiety” by helping them with cashback, rewards and discounts. Such offers will encourage consumers not only to take a trip, but also to think highly of the brand that made it financially feasible.
Recently, DoubleTree New York, Waldorf Astoria Las Vegas and Arizona Biltmore have taken a look at loyalty, offering $70-$90 cash back for overnight stays on digital advertising platforms. In a less than perfect economic environment, these hotels want to build loyalty and are right to do so.
Brands with strong loyalty marketing programs grow revenue 2.5x faster than competitors and generate up to 400% more returns for shareholders. And 79% of consumers say loyalty programs make them more likely to continue doing business with brands.
In conclusion, travel and hospitality brands are not in a perfect economic environment due to inflation, but the turbulence is not as severe as it was two years ago. The pent-up demand will still be there as family and friends are ready to meet up at their destination to take full advantage of their vacation time. Marketers who make the most of digital advertising and relieve consumers of their anxieties with cashback will make the most of their earnings this summer.
Sasha Trifunac is Vice President, Travel & Entertainment Partnerships at Cardlytics.
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