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Industry Overview
The travel and hospitality industry is formed by three types of companies with considerable overlap: retail travel agencies, business travel management companies and tour operators. Demand of the industry is driven by business and leisure travel, which is subsequently dependent on the shape of the economy. Major services include reservations, tickets for airline flights and lodging, as well as leisure cruises and packaged tours. Other more minor services include entertainment and event tickets, time-share services, convention and sightseeing services and car rental reservations. In recent years, there have been two major factors affecting the industry: sophisticated pricing schemes created by the airlines to maximize profitability, and the progression of the Internet as a widely available information and booking tool.
Business Challenges
- Intense Competition from Internet Agencies: Travelers can easily bypass traditional travel agents and third party travel websites by simply booking directly with airlines and hotels. To maintain a competitive edge, many large online travel agents (like Expedia or Travelocity) have eliminated booking fees. Additionally, some companies even waive cancellation and change fees. This shift away from fee revenue, forces travel agencies to backend commissions and advertising revenue to shore up the difference.
- Economy and Terrorism Fears: Travel is strongly connected to the strength of the economy, partially because of business travel and partially because personal travel is dependent on income. Further, terrorism or natural disaster fears easily prompts tourist cancellations.
- Competition from Communication Technology: Advancements in communication technology significantly decreases the need for business travel. Video conferencing is a method that is becoming a strong alternative to travel. Adoption of video conferencing technology has significantly cut travel expenses for companies. Online management and collaboration tools decrease the need for business travel.
Industry Opportunities
- Internet Distribution: The Internet has the ability to help traditional travel agencies expand their reach to new customers. While most travel agencies already operate Internet websites, many of these are purely promotional. Agencies that invest in computer technology are more able to increase sales by enabling customers to vie and purchase travel packages directly from the website.
- Specialization: As airlines tickets become commodities, travel agencies are adapting and changing their focus to providing packaged tours. By focusing on a niche and developing expertise in specific areas of this large industry (like African safaris or European art tours for example), travel agencies can provide a higher value-added service to travelers.
- Technology Initiatives: Travel agencies are investing in new technology initiatives in order to help them attract more customers, improve efficiencies, cut costs and win market share from competitors. For instance, travel companies are leveraging customer databases by combining information from other subsidiaries. This tactic enables agencies to create more-targeted marketing campaigns as well as offer incentives to encourage future travel.
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Digital Marketing Trends
- Top Online Merchandising Tools
- Why Travelers Visit Hospitality/Tourism Sites
- Mobile Boarding Passes
- Select Online Tools for Hotel, Airline and Cruise Sites
- Mobile Sites and Apps
- Desired Hotel Industry Related Apps
Digital Marketing Opportunities
- Immediate Areas of Focus for Social and Mobile
- Popular Pay-Per-Click Keywords
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