The Travel Agency of Tomorrow

This week I spent time with the industry's top luxury travel agencies at Virtuoso TravelWeek 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?

Top Travel Trends for 2016

This week, TripAdvisor released their annual list of top travel trends for 2016 (PDF). Hidden in the results are a few very interesting details that not only apply to 2016, but hint at travel trends that may have a longer tail for both hotels, airlines, and OTAs.
2016 Travel Trends

Top Travel Trends for 2016

Trend #1 – Seeking new experiences

Globally, 69% of travelers plan to try something new in 2016, including cruises (20%) and adventure travel (15%). A key travel trend in the data is that 17% will try solo travel for the first time in 2016. It will be key for hoteliers to anticipate the unique needs of solo travelers and catering to this emerging trend.

Trend #2 – Spending more because it’s “worth it”

One in three travelers plan to spend more in 2016 than they did in 2015, with nearly half (49%) of respondents doing so “because I or my family deserve it.” To capture these increased revenues, hotels must differentiate themselves with travel packages that focus on unique experiences, such as the "romantic kidnapping" and picnic at Namale Resort.

Trend #3 – Choosing destinations based on culture, special offers

Travel trends continue to point to the importance of targeted online marketing to focus buyers on your destination, with 21% choosing a destination because a hotel had a special offer or package. One in five global travelers have picked a destination because they saw it featured on television. In 2016, turn your marketing and social media team loose to create visibility for those key items that make your market a "must see."

Trend #4 – Staying cool and connected

While free wi-fi continues to be a critical buy factor for most travelers (46%), many travelers relate that they require "super-fast" wireless internet access (26%); 11% are willing to pay a premium to get the speed they need to stream movies and connect in high-definition.

Trend #5 – Rising room rates (and optimism)

Industry analysts and hoteliers are confident that 2016 will bring higher rates, with 47% of global hoteliers initiating rate increases. This travel trend should lead to capital improvements and enhancements for many in the industry. Despite these reinvestments, 65% of hoteliers expect profits to increase next year, as 2016 should give the industry a new baseline for both ADR and profitability.

Trend #6 – Managing reputations online

Given that TripAdvisor initiated the survey, it's not surprising to see reviews carrying a focus in 2016. I was surprised, however, to see only 59% of hoteliers planning to invest more in online reputation management in 2016. I anticipated this number to be much higher and see this as a travel trend that will go higher in future years. There is simply too much at stake for service providers to not actively manage these channels.

TripAdvisor insights on Hotel Guest Engagement

TripAdvisor has compiled a study of guest engagement and found several key factors that drive hotel guest engagement on the review site.

Among the key findings, management responses to TripAdvisor reviews can drive bookings on the site by more than 20% Click to Tweet. Specifically, hotels that responded to guest reviews were 21% more likely to receive a booking via TripAdvisor than hotels that did not respond to reviews. And properties that respond to over 50 percent of their reviews further increase their likelihood of receiving a booking inquiry by 24 percent over those that did not respond.

In addition to creating guest engagement, management responses to reviews seems to have a "halo" effect of higher review ratings. Hotels that regularly responded to reviews from guests have consistently higher reviews as well. From the study:

0% response rate = 3.81 average review rating
5%-40% response rate = 4.04 average review rating
40% – 65% = 4.05 average review rating
65%+ response rate = 4.15 average review rating.

Additionally, hotels with photo displayed on the TripAdvisor site saw a 138 percent increase in guest engagement vs. properties without photos. And for those hotels with more than 1000 photos, the guest engagement factor is a 203 percent increase over those with no photos.

As past studies have shown, the impact of guest reviews on both hotel ADR and RevPAR are significant, so any increase in reviews represents a very meaningful impact for hoteliers and management companies.

In a release, TripAdvisor for Business President Marc Charron tied guest engagement directly to management/owner engagement on the website. "Looking at the results of this study, a clear theme emerges: the more engaged the business owner, the more interested the traveler," said Marc Charron, President, TripAdvisor for Business. "It’s no secret that traveler want to see pictures and read reviews of a property before making their booking decision. What’s really key is the upward trend in average review ratings, traveler engagement levels and booking inquiries on the site, the more frequently a hotel owner responds to reviews. Taking part in the conversation and demonstrating that the owner cares about feedback has a very real and measurable effect on converting a traveler from a casual browser into a potential guest."

Five Fresh Hospitality Reads for the Week

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:

The Future of Travel: Eight Things You Need to Know | Marketing Magazine
Great piece on the critical importance of innovation in the hospitality industry.

STUDY: 44% of Luxury Guests Choose Hotels through Word of Mouth
You know it. I know it. And yet… it continues to be overlooked. For all that you are doing through sales, marketing and PR, the most critical component of hospitality remains guest service.

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.

Airlines testing new ways to Board Planes
All aboard (faster!) Also… 100 times YES!

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.

For more hospitality trendspotting, follow me on Twitter.

The Answer: How TripAdvisor Rankings Are Calculated

Given the popularity of TripAdvisor and the impact of hotel reviews on ADR and RevPar, hoteliers and guests want to know the answer to one pressing question: How are TripAdvisor Rankings calculated?

TripAdvisor RankingsTake New York City, for example. A recent ranking of hotels by TripAdvisor found the Best Western Herald Square to be among the top hotels in Manhattan.

No disrespect to the Best Western, but many travelers may be asking just how this limited service property is ranked higher in New York City than the Trump International, Four Seasons New York, and – of course – The Ritz-Carlton, New York Central Park. (There's also a pretty good chance that hotel owners and managers are asking the same thing!)

The answer, according to TripAdvisor, is that hotel rankings are determined by the following:

TripAdvisory Hotel Ranking Criteria

  • Number of Reviews per Hotel
  • Recency of TripAdvisor Reviews
  • Rating given to Hotel by Reviewers

TripAdvisor takes these three core elements – quantity, quality, and recency – and runs them through their proprietary algorithm to determine the rankings for hotels in each city.

The more highly rated reviews a hotel receives in a short-period, the higher their ranking will be on TripAdvisor.

It's worth noting that TripAdvisor rankings are updated for each city are updated approximately once per week, to incorporate new reviews and ratings.

So, there you have it… the "secret" to how TripAdvisor calculates rankings for every city.

Source: TripAdvsor Help Center

New Study Shows Hotel Reviews Drive Rate & RevPar

A new study from the Cornell School of Hotel Administration details that hotel reviews posted on social travel websites, such as TripAdvisor and Travelocity, positively impact a guest's willingness to book reservations at a premium rate for a reviewed hotel.

"The Impact of Social Media on Lodging Performance," by Chris K. Anderson found that the number of reviews as well as the willingness of consumers to assign credibility to hotel reviews has increased over time. Anderson also found that a 1-point increase on Travelocity's review scale – such as increasing a hotel's review from 3.3 stars to 4.3 stars – drives an 11.2 percent premium in a hotel's rate, while still maintaining occupancy and market share.

Given these results, it's increasingly clear that hoteliers must dedicate resources to monitoring their social reputation, actively review online hotel reviews and invest further in guest experiences on-property to create engaged guests. (Read more on who writes hotel reviews)

Beyond Travelocity, Anderson determined through regression analysis that a 1-percent gain in a hotel's social media reputation is worth 0.89% in average rate lift and a 1.42 percent increase in RevPar. Click to Tweet

The full social media impact study is available online from the Cornell School of Hotel Administration.

Who writes hotel reviews?

Travelers today are innundated with resources to assist in planning trips. Among the tools are first-hand "unbiased" published on the major booking sites, including TripAdvisor, Booking.com, Expedia and others. 

But, have you ever wondered, "Who writes these reviews, anyway?"

Olery, a reputation management company, has taken a stab at answering that question and the answers are pretty interesting. 

Generally speaking, Olery found that hotels receive about 300+ reviews per year on average and that 46% of travelers post hotel reviews. Reviewer demographics skew slightly towards female guests, with a plurality of reviews being written by 35-49 year-old guests.

Interestingly, guests on vacation and leisure travel – those who are spending their own money – write the majority of hotel reviews. 

 

Why you NEED a Travel Agent

You already know how to use Expedia, Travelocity, and TripAdvisor. You're not an online travel novice. Perhaps you're using more advanced tools like Kayak, Hipmunk, and TripIt to plan your vacations. But are you neglecting to use the #1 travel resource in the world? If you're not using a professional travel agent, then you're putting your time, money, and experience at risk. Travel agents are travel EXPERTS. They've been there, done that, and donated the t-shirt. 

But don't just take my word for it. Here's a Forbes.com post on why you need a travel agent:

There are many, many good reasons, which I will explain. But the bottom line is that they know more than you do, they are better connected than you, they have access to benefits you can’t get otherwise, they can often beat any other prices available (even online, yes), and after you have planned everything, they provide a safety net during your trip that you simply won’t get by booking yourself or buying insurance. Having a top travel agent can also make you an instant VIP – free room upgrades, hard to get restaurant reservations, cutting lines, access to otherwise closed stores and exhibits, private guides, and cheaper – often much cheaper – premium airfares. Here’s the best part: even though most top agents charge fees, in almost every firsthand experience I or my friends, family, and acquaintances have had, travel agents have saved money, often a lot of money, thousands of dollars, and in every case, more than paid for themselves.

Why you need a travel agent – Forbes.com 

How reliable are TripAdvisor reviews?

Since its launch in February 2000, travelers and hoteliers have attempted to better understand just how accurate the reviews at TripAdvisor truly are. 

Jonathan Barksy and Robert Honeycutt of Market Metrix, who's specialty happens to be hospitality feedback, compared 12-months of TripAdvisor reviews against their firm's proprietary index to find that – generally speaking – aggregate TripAdvisor review scores tend to be accurate

The hotels used in this comparison were selected on the basis of their location, brand and type to achieve a diverse mix. Each hotel also must have received a sufficient number of responses. Statistical analysis was conducted to compare the similarity of scores for each hotel, the distribution of the data, and the change in scores.

The most significant conclusion of this study is that the mean scores of hotels track very consistently and closely between TripAdvisor (CSI) and MMHI. This indicates that, when taken as a whole, the reviews for a particular hotel are a reliable measure of average customer satisfaction of that hotel, given adequate sample size. However, the variability of scores was found to be slightly greater among TripAdvisor hotels. TripAdvisor reviews were more spread out with more high scores and more low scores. While some persons may appreciate reading a wider range of reviews about a hotel, extreme observations may be distracting or even distort consumer perception.

(emphasis added above)

In other words, there are some reviews on TripAdvisor that – regardless of the hotel – simply aren't accurate. Individual reviews can skew negative or positive as a byproduct of an emotional experience. For example, receiving an amenity from the hotel to mark a special visit may elicit a more positive reaction on TripAdvisor than having a hotel misplace a guest's laundry.

On the whole, however, the median score for an individual hotel tends to be accurate and in line with established industry metrics for guest satisfaction.