A new report published by Skift.com details the travel habits and mimdset of affluent Americans. Among the findings: Affluent Americans make up just 20% of the U.S. population, but they account for 51% of total travel expenditures. The Skift report – which is available online for reporting subscribers – also looks at a sub-segment of the affluent travel market: the "Super Affluent” (those with a combined household income over $200,000) amd how their travel differs from the less affluent travelers.
With just a quick analysis, the most interesting report highlights to the luxury marketer may be Skift's summary of how Affluent Travelers are increasingly embracing alternative accommodation options as well as the reporting on how Affluent Travelers prioritize experiences while traveling.
As marketers, it's important to remember that our most important messages can become routine to customers. With repetition, they fade into insignificance. It's critical that we challenge our perceptions of what "must be" and innovate with what "can be". That is the art of #RestlessRenewal.
Kudos to Quantas Airlines for their beautiful, inspiring re-invention of the flight safety video. I've watched the entire clip time and time again to remind myself to challenge convention and re-imagine the ordinary.
AirBNB has been regarded as the great disrupter in the hospitality sector, but a new study shows that – for all the hype – AirBNB is not taking marketshare away from hotels.
The study, compiled by Smith Travel Research using AirBNB source data, offers critical insights into the true market penetration for the room-sharing service.
Among the key findings:
AirBNB has 2.3 million listings, far more than the world's largest hotel company, Marriott (1.1 million). However, much of AirBNB's inventory is available only in peak-season, not year-round.
Airbnb has higher peak-season occupancy because its users skew more heavily to leisure. Hotels have much higher year-round occupancy due to the diverse nature of their business (leisure, business, and group).
The markets with the highest hotel occupancy also have AirBNB's top occupancies. A deeper analysis shows that AirBNB is capturing excess demand, not shifting share.
Even on highest compression nights (hotel occupancy >95%) hotels are growing compression ADR faster than ever – at 35% in 2015 – with ADRs far exceeding those of AirBNB.
Jan Freitag, senior VP of lodging insights for STR, said that hoteliers are not at significant risk to lose share to AirBNB.
“I think the overall message is that the U.S. hotels industry continues to break demand records,” said Freitag. “We are selling more rooms than ever before on an annualized basis. In 2014, we had a demand record. We had another demand record in 2015. We expect in 2016 we will also top the number of rooms sold. Room demand has been higher than it has ever been.”
AirBNB has quietly launched a back-end page for hosts to turn over the management of their listing to superhosts. This new feature gives individual hosts the ability to outsource the management of their listing to a broker, of sorts, who handles guest transactions and pricing.
The Superhost market makes sense. I'm sure there are many AirBNB hosts (and potential hosts) who would prefer to have someone else handling the transactional minutiae of hosting. For AirBNB, superhosts could deliver a greater inventory and open access in large metro markets by lowering the barrier to entry for new hosts.
However, I can't help but think that superhosts may kill AirBNB's brand. After all, the "secret sauce" for AirBNB has been the direct relationship between guests and hosts. A superhosts isn't going to greet a guest and introduce them to an unknown taqueria, after all. If AirBNB removes that connectivity and endorses greater separation between host and guest, the next step is likely to be commoditization.
It will be interesting to watch this trend over the next few quarters for any hint of guest backlash, especially in gateway cities.
This week I spent time with the industry's top luxury travel agencies at VirtuosoTravelWeek in Las Vegas. Based on these interactions and the increased demand for travel agents, I've been giving some thought to what the travel agency of tomorrow may look like.
Years ago, the local travel agency was a brick-and-mortar office on Main Street with sunny and exotic destination posters adorning the walls.
As the age of online travel grew and travelers adopted a D-I-Y approach, travel agencies disappeared from Main Street in search of lower costs in high-rise buildings or work-from-home arrangements. What will the travel agency of tomorrow look like?
Instead of being simply a transactional office, retail travel agencies will return to Main Street as experiential spaces for luxury consumers.
Given the growing demand for curated travel experiences, I believe the travel agency of tomorrow will look much like the agency of yesteryear. Instead of being simply a transactional office, retail travel agencies will return to Main Street as experiential spaces for luxury consumers. Gone are the destination posters of yesteryear in favor of a refined, relaxed environment to enjoy coffee or wine with friends. Curated presentations – some travel related, some not – hosted at the agency become "nights out" for like-minded neighbors who view the agency as expert not just in travel, but in luxury experiences. The travel agency becomes a familiar hang-out for locals to learn, share stories, and laugh together. In short, the travel agency of tomorrow is an experiential hybrid: part wine bar, part concierge lounge, and part expert showcase.
For travel agency owners, the upside to this new agency format may include new revenue streams such as wine sales and event space rental… not to mention increased foot traffic and travel sales. Besides, what goes better with travel stories than a great glass of wine?
Google has just launched what may be the future of mobile travel search tools: Google Destinations. Brilliantly, Google has integrated the power of their hotel, airline, and destination search into a single, mobile-friendly travel planning platform.
The completely immersive experience is simple for travelers to navigate and – ironically for a search company – intended to eliminate the need for multiple searches. As the user navigates, the search results auto-update. One simply scrolls and Google Destinations handles all the heavy lifting.
It's difficult to imagine Google designing the "search" out of search, but one look at Google Destinations makes it easy to see how this could easily become the future of travel search. To test Google Destinations, enter a destination and add the word "vacation" (e.g. "Florida Vacation")… and Google Destinations does the rest.
For years, Expedia, Orbitz, and Travelocity have been entrenched OTA players in a static hospitality landscape. With back-end connectivity to the GDS, these OTA giants represented a simple, at-home entry point for many travelers. Over time, aggressive marketing and rate parity have established OTAs as a reliable retail outlet for hotels, airlines, and rental cars.
Armed with data on preferences, interests and even search histories, big-data providers like Facebook and Google have built platforms by which hoteliers can offer highly targeted packages and promotions to small groups of retail travelers. The result looks to net higher conversions at a lower cost of sale for hoteliers, all while delivering a more satisfying retail experience for guests.
This shifting landscape could bring the eventual downfall of the parity-based model for OTAs. Just this week, Expedia CEO Dara Khosrowshahi confirmed to CNBC's "Squawk Box" show that Expedia is looking for ways to shift its offering to hoteliers away from parity towards a guest-targeting model. (Note: Khosrowshahi's comments about Expedia's future model begin at 2:20 into the video.)
I believe that the pressure to build a more profitable, guest-targeted model may drive OTA consolidation. It's also quite possible that we will see the larger OTAs pursue big-data through acquisition of social media properties such as Pinterest or Gogobot.
Does this mean that Expedia, Travelocity, and Orbitz are about to fold up shop? Not at all. Although consolidation within OTAs is possible, the likely path for OTAs will be less emphasis on non-targeted results through the GDS and more focus on generating guest-targeted offerings at a higher margin.
This week, as many begin to focus on budget planning and creating strategic plans, I'm reading more about how the hospitality industry continues to evolve in the social media era. Here are five fresh hospitality reads:
How Luxury Hotels Mine Social Data in the name of Comfort
Great reminder that (a) there is so much information available online about each of us and (b) some hoteliers are using that public data about their guests. I think there's a lesson in this piece about the importance of balancing hospitality/privacy.
How TripAdvisor wants to own the Travel Cycle
TripAdvisor has evolved from a review site to an efficient booking engine. Now the TripAdvisor teams wants to be the provider of choice for local area information and concierge service. I will be interested to see if crowdsourced hospitality data can ever truly scale.
Another clear indicator of how important it is to know your audience and to continue to refine your message to each guest.