Social media thrives in tough travel market

by Tom Johansmeyer on

Travel used to be recreational (well, recreational travel, at least), but now even vacationers are finding ways to turn it into work. The latest report from travel research firm PhoCusWright, Social Media in Travel: Traffic & Activity, finds that the average vacationer is becoming more like the average blogger on a press trip. Travel reviews are written, photos popped onto the likes of Flickr and Facebook and personal blogs are peppered with opinions and observations. And, immediate reactions wind up on Twitter with incredible speed. All this content, straight from the horse’s mouth, is having a profound effect on the online travel market.

According to Douglas Quinby, senior director of research at PhoCusWright, “There continues to be a big gap between the enormous promise of social media and the current reality of realizing and measuring those returns.” He continues, “With our partners, we analyzed nearly 1.9 million traveler reviews and visitor referral and conversion traffic from more than 50 social travel Web sites, as well as general social networking sites like Facebook and Twitter. The result is the most expansive research into where and how online travelers are creating, consuming and acting upon social content.”PhoCusWright is staying a bit tight-lipped with the reports details, holding them back for people with skin in the game (and thus willing to foot the $995 tab), but one observation was released that shows just how powerful an impact the social media environment can have on the travel industry: despite the hit the travel business took last year, monthly visitors to social travel sites surged from the first half of 2008 to the first half of 2009.

The fact that social media is having an impact on the travel community may be obvious, but the extent is staggering.

Online agencies bright spot in Spanish travel market

by Tom Johansmeyer on

The slump in the travel market has certainly affected Spain, which is among the top leisure destinations in Europe. Both foreign travel to Spain and domestic excursions within the country have suffered as a result of the global recession, with travel industry research firm PhoCusWright putting the decline at 12 percent for 2009. The traditional booking channels were hurt more than the online travel agencies, though, which only saw a 1 percent decline in the action. This is a bit of a shock, the research team reports, because the Spanish market has a lower rate of penetration for travel than other countries in Europe.

“While all travel segments contributed to the total market’s decline, each travel industry vertical has experienced varying levels of consumer pullback,” says Carroll Rheem, PhoCusWright director, research. “Car rental and hotel companies, particularly in Spanish cities like Madrid and Barcelona, have experienced some of the sharpest declines.”

The hotel industry in Spain had its worst drop in decades, losing 7 percent in 2008 and 9 percent more in 2009. International visitors, especially from the United Kingdom, plunged, and domestic tourism was squeezed, too. Excess capacity made the situation worse for the hotel business, as new properties hitting the market in 2008 upped the number of rooms to be filled by 3 percent.
Unlike many European markets, low-cost carriers did not post the market share gains against traditional carriers seen other markets. Both airline sectors suffered declines in demand due to both the travel slump and competition from high-speed domestic rail companies.

Online travel agencies, on the other hand, fared much better. They posted a revenue growth rate of 2.7 percent, with packaging becoming an increasingly lucrative service. PhoCusWright basically indicates that this is “a bright spot in the currently bleak Spanish travel landscape.”

When NOT to book travel online

by Kraig Becker on

Over the past 15 years or so, the Internet has managed to pervade every part of our lives. These days we use it to stay in touch with friends and family, pay bills, watch television, and a whole lot more. Of course, travelers were amongst the first to see benefits from the Internet, and now days it has become common practice to track, compare, and purchase airfares online. But the benefits to travelers have gone well beyond that, as it’s now simple to book hotels or even entire vacations, without ever speaking to an actual person.

But is this approach the best way to make your travel plans? According to CNN Travel, not always. In fact, they’ve come up with a list of 7 trips you should never book online, suggesting instead that, at least in these cases, you should consult with a travel agent rather than making the plans yourself. They argue that it is too easy to get duped on the web and hidden fees can end up costing you more in the long run anyway. A cautionary tale of a couple’s disastrous honeymoon, completely booked online, is used to illustrate these points.

And what are these seven trips you should avoid using the Internet to book? The list includes cruises, around-the-world trips, international travel, exotic journeys, like a safari or trekking expedition, or when you’re traveling for a special occasion, such as an anniversary or honeymoon. They also say that you should avoid using the Internet when you lack the time to do the proper planning yourself or if you are uncomfortable with using technology or navigating online in general.

So, what do you think? Are there times when it’s still not prudent to use the Internet to plan your travels? Ever had any horror stories from booking online? Personally, I’ve had very good luck with using the Internet as a tool to not only research destinations, but also make all my plans, connect with fellow travelers, and purchase airfares and hire guide services. At this point, I can’t imagine doing it any other way. That said, I can still see the benefit of using a travel agent under certain circumstances.%Gallery-67351%

A gloomy travel market for 2010 will follow an ugly 2009

by Tom Johansmeyer on

Everybody seems to want the travel market to recover next year, but it looks like more time will be spent in yards, instead. According to a new USA Today/Gallup poll, only 16 percent of us are going to hit the skies or crash in hotels more than we did in what will go down in history as a dismal 2009. Close to a third said they are going to spend less time in guestrooms and cramped plane seats. The main reason, of course, continues to be the state of the economy.

Slow improvements to the economy, according to some industry analysts, should push demand for tickets and hotel rooms higher – not to mention services related to the convention and meetings business. But, the baseline is set pretty low, with 2009 having been so weak. American Express, the largest travel agency in the world, doesn’t see a recovery coming anytime soon.

The bar has been reset, and it’s low. It will stay low for a while.

The big beast to be tamed in the travel market, doubtless, is business travel. Until the corporations start to send people on the road more liberally, the airlines, hotels and other businesses involved in travel will continue to feel the squeeze.

What’s going to happen by sector? See below.

Airlines: Industry analysts see hints that the market is turning, with demand for seats up year-over-year (by month) since May. United Airlines sees “a very encouraging trend line,” and US Airways notes a steady improvement. But, the latter continues that a decline of 30 percent to 35 percent in corporate spending has been a drag, and November was the first month in which it was up year-over-year. And, November 2008 wasn’t a tough month to beat.

Analysts believe that “even a modest rise in the USA’s gross domestic product,” says USA Today, will kick the airlines back into profitability. Gary Kelly, CEO of Southwest, isn’t that optimistic, telling the newspaper, “Business travel still lags, and I don’t know that I’m comfortable in reporting that we’ve seen any improvement in that market.” He doesn’t expect business travel to bounce back next year.

Hotels: What can I say that Melanie Nayer hasn’t? Not much, really. The past year has been miserable, with PricewaterhouseCoopers reporting occupancy plunging to 55.2 percent this year, from a 2006 peak of 63.3 percent. Next year, it’s expected to tick up only to 55.8 percent.

Room rates fell precipitously in 2009 relative to 2008, causing an average decline of 16.4 percent in the industry’s average revenue per available room-night. PwC expects 2010 to be worse than 2009, conflicting with the Business Travel Monitor report from American Express. But, there’s room for both views. Leisure travelers will have to spend a bit more, but hotels in business-heavy markets will still win some favorable pricing.

Conventions: Look for a slight increase next year – again, relative to a brutal 2009. For the good news about the conventions, you’ll have to wait until 2011 and 2012, says Roger Dow, president of the U.S. Travel Association. Through the end of 2010, approximately 40 percent of corporate and association meeting planners, reports USA Today, are likely to postpone or sink off-site meetings for the next year.

Five predictions for the European travel market

by Tom Johansmeyer on

The end of the year is the time for all kinds of predictions for the next one. Usually, I treat such conjecture as the bullshit that it is, but when PhoCusWright puts out a list of what’ll happen for the travel market, I tend to take it a little much more seriously.

The worldwide recession is still squeezing the European travel market, but the online sector is likely to be the star next year, as it was in 2009. Consumers are turning to the web more and more to book their travel in Europe, and this will have a profound effect on how travel products and services are sold.

1. Up a third: PhoCusWright forecasts that the online segment of the travel market will hit 34 percent of the entire industry in Europe in 2010. Customers will turn to the internet to find better bargains, accelerating the shift from offline to online. At the end of 2008, online accounted for only 28% of European travel sales.

2. Priceline’s the one to beat: Priceline has lagged the three largest online travel agencies – Expedia, Orbitz and Travelocity – for years, but Priceline has seized some serious market share through the travel recession, due in large part to its acquisition of European company Booking.com. Priceline could take the #2 spot next year and will be well-positioned for the future.3. Metasearch arrival: Finally, there will be a solution to the fragmented online travel market! PhoCusWright forecasts the growth of sites that search across sites, which makes sense given that financial concerns are driving travel buyers to the web instead of traditional venues. There’s demand already, and economic conditions will feed the trend.

4. Big in Germany: Germany’s been gaining ground in the European travel market. In 2008, the country was responsible for only 17 percent of the space. Look for it to hit 20 percent by 2011, PhoCusWright says.

5. Look south for sunshine: Online penetration has topped 40 percent in the United Kingdom, and France and Germany are making progress. The easy wins are in the past. So, the travel business is looking toward the emerging travel markets of Europe: in the south and east.

There’s plenty on the agenda for the European travel market next year. Even in what will continue to be a tight economic environment, there’s plenty of room for growth. No doubt, the most important factor will be the recession, which will shape travel company behavior by driving buyers to seek better deals. The perception that online is the place to save will accelerate the push to electrons.