Design & Technology May 08, 2018
Digital trends in Travel & Leisure
Companies in the travel and leisure industry specialize in relaxation, but the industry itself cannot afford to rest on its laurels. Big traditional travel agents have to reposition themselves in the ever-changing digital landscape. New players have to find ways to establish their brand. Meanwhile, technology keeps evolving, and disruptors are challenging old business models. How can (travel) companies hold their own in the midst of all this commotion? Better still, how do they stay at the front line of innovation?
1. User experience is key
This first trend is not confined to travel and leisure. It applies to almost all industries that want to accelerate their digital transformation and deliver innovative products and services: user experience is the key to success. This is clearly demonstrated by players such as Airbnb, Uber, and Lyft; which is why they are often quoted as examples. Yet the implications are not always spelled out. When compared with retail, for example, the interface standards in the travel industry are rarely cutting edge.
If you visit the average travel website on your phone, it’s unlikely that you’ll be inspired. User interface design is better than it was a few years ago, but the experience doesn’t compare with the one you get if you visit #travel or #wanderlust on Instagram. Travel website interfaces are still very functional. Visitors are expected to enter travel dates, a destination, and other details and are then presented with a list of travel offers. Yet, while it makes sense for a bank to have a functional interface – you just want to check your balance, when you visit a travel website, it’s a major hurdle – especially if you haven’t yet decided where you want to go. As a traveler, you’re looking for inspiration and you want to be surprised. As the old adage goes, much of the pleasure is in the anticipation as you decide on the destination and book your holiday. Unfortunately, (digital) user experience tends to fall short in this respect.
This is partly because many travel companies find it difficult to position themselves. And yes there are differences: some specialize in budget travel (in which case a functional interface is appropriate), while others are experts in tailored long-haul travel and offer individual attention and advice. But is the average visitor actually aware of why they choose TUI, Sunweb or D-reizen? Many travel brands have yet to really capitalize on what it is that makes them stand out from the rest and this is also reflected in their interface.
Traditional travel companies versus new players
There is also the fact that traditional travel companies and the new players in the market have diametrically opposed business models. Traditional travel agents have a history of supplying package holidays: a hotel, a flight, a hire car and excursions that can be booked with representatives at the destination. However, the successful new companies in the travel and leisure industry are all single-issue companies. OpenTable specializes in restaurant bookings, Uber and Lyft specialize in taxi transport, and Booking.com, Airbnb and HotelTonight specialize in (hotel) accommodation. Having become market leader in their chosen field, these companies are branching out. Uber now delivers food from local restaurants on the basis that having food delivered is a form of leisure and therefore, a logical extension of its activities. Booking.com and Airbnb made their names as online hotel and holiday rental booking services and are now turning their attention to the experience once there. They provide city guides and try to get you to book activities and ‘experiences’ at your holiday destination.
However, the difference is that Booking.com and Airbnb do not have local representatives. From the moment you book an experience through Airbnb, to the moment you engage in it on holiday, everything is handled through the app, including questions, payments and any complaints. The entire ‘travel experience’ is encompassed in a single app. That’s why new players are gaining ground at the expense of traditional travel companies that still send emails with vouchers and a customer service number to call if there’s a problem. Not only that, the digital experience offered by traditional travel companies ends once you arrive on holiday. The guide at the destination may know a lot about the area, but they cannot always be reached through an app.
Traditional travel companies tend to focus on user experience while booking, but the customer journey extends far beyond that. It starts the moment you book and ends the moment you arrive back home with your luggage. The digital customer journey needs to include the whole travel experience.
2. Focus on brand
Companies that have achieved success in the travel and leisure industry in recent years are almost all driven by e-commerce. But with vastly increased competition, price is not the only consideration: brand is now an increasingly important factor when it comes to choosing a travel company.
Netherlands-based CitizenM is a good example of a new type of hotel chain where everything is in balance. User experience is good not only when booking online and checking into the hotel, but also in the room. And the chain works with partners in the local ecosystem to ensure that the experience at the destination is good too. The price is also well thought out: you get a good room at a reasonable price and the food, city guide and in-room entertainment are all top-notch. In other words, everything about the CitizenM brand works.
Experience and service
Many travel platforms struggle to integrate all of these elements. The technology needed to achieve this is complex and requires considerable investment in terms of time and money.
And it is not always possible to stay in control of the whole process, especially when dealing with partners such as airlines, hotel chains and car hire companies. The risks and costs tend to put the brake on innovation for major brands. Price comparison sites mean they all want to be the cheapest. Service comes second. But this is short-term thinking. Price alone is not enough to retain customers. Yet it’s hard to build a brand in the travel industry. Traditional travel companies that have made a name for themselves are losing ground to new market entrants, and they, in turn, are finding it difficult to build their brand at the e-commerce level at which they operate.
But the race to the bottom is never-ending and only one can be the cheapest. So it’s time to shift the focus to customer experience and service, because that’s what people go on holiday for. The future lies in building a strong travel brand because people are prepared to pay more for a better experience.
3. Battle for the travel ecosystem
When you want to book a holiday, first you visit Zoover to choose a destination, or maybe TripAdvisor to check reviews of the hotels. Then you go to Skyscanner for the cheapest flight and another website for car hire. Then you go back to TripAdvisor to see the reviews of a particular hotel or restaurant and do a quick double-check on Booking.com where it might cheaper. Then, once you land, you use Uber to get to the hotel. Why has nobody been able to link all these providers? And, while we’re on the subject, when you hire a car, why do you have to fill out a whole bunch of forms at the counter when you’ve already done it online? Why can’t you just scan everything on your phone? Not only when you collect the key to your hire car, but also when you check into the hotel and open the door to your room.
The problem is that the interests of the different companies in the travel ecosystem are not aligned with the interests of the customer. They’re all too busy optimizing their own ‘yield management’, which involves extracting maximum value from their inventory. Companies such as Uber, KLM and Hertz still think largely in terms of silos. No one is seeking to link-up and optimize the whole chain. Large travel companies such as TUI, Sunweb and D-reizen still control much of the travel ecosystem they have built up in the last 50 years. They themselves have everything from hotels to aircraft and cruise liners. If we look at the new travel ecosystem, we see that players such as OpenTable, Airbnb and Uber control a small part of it and these parties also combine to form an ecosystem.
In the world of e-commerce these ecosystems are becoming increasingly important. In fact, the next big battle in the travel industry will be for these ecosystems. Many players are still deciding on their strategy. Do you team up with a partner – as OpenTable has done with Uber for example? Do you branch out, as Airbnb and Booking.com are trying to do? Or do you opt for a combination of the two? And what role will be played by ecosystem partners such as Google?
We are also seeing new initiatives such as srprs.me, which allows you to specify certain preferences and takes you to a mystery destination. Or Hopper, which notifies travelers when prices for their flights are at their predicted lowest points so they get the best deals. These developments are comparable to those in the fintech sector. This is ‘traveltech’, with service providers working out what they can add to enhance the experience.
Connecting the journey
The challenge is to link up all the individual elements of the travel ecosystem. Players like Google, Booking.com and TUI may have sufficient scale and leverage to play a leading role, but at this point, user experience is still fragmented.
For travel ecosystems to operate effectively, these parties need to have access to each other’s data, but at the moment, everyone is reluctant to share their data. There are a few blockchain initiatives that address the issue. Sharing data will improve ROI throughout the chain because everyone is prepared to pay for a better travel experience that starts with the user interface and doesn’t end until you arrive back home.