The Online Travel Industry: Investing EssentialsBy Asit Sharma | More Articles August 25, 2014 | Comments 0Barajas Airport, Madrid. Source: Jean-Pierre Dalbera under Creative Commons license.The speed at which the Internet evolves can make milestones from 10 or 15 years ago seem worthy of encasement in a glass museum display. Take this quote from Priceline Group’s first annual report after its 1999 IPO:
Earlier this year, we celebrated Facebook’s 10th anniversary, LinkedIn boasted more than 300 million active users while TripAdvisor now has more than 175 million reviews. We have come to expect seeing travel & hospitality stakeholders managing accounts on Instagram, Pinterest, Twitter or even Google+. In other words, social media marketing has moved beyond bells and whistles and is now the mainstay of a sound digital strategy, along with having a transactional, mobile-optimized website and a clean database for frequent, automated emails and/or newsletters. But while social media is now recognized as important, in particular within the travel vertical, managing it remains a constant challenge.
During its most recent annual summit in Vegas, DMAI Destination Marketing Association International shared the results from a recent study conducted by Development Counsellors International, surveying more than 100 individuals responsible for social media marketing at destination marketing organizations across North America. Some findings were real eye-openers, confirming what many observers suspected: while social media are considered important for a majority, budget allocation remains marginal, at best.
This chart shows that 71% of destinations surveyed must deal with a social media marketing budget of less than 25,000$. Perhaps even more surprisingly, 99% of organizations have a digital marketing budget, yet only 60% have a dedicated envelope for social media activities.
This second chart demonstrates beyond any doubt how social media are under-represented in the big picture of digital marketing budgets. Roughly 76% of destinations allocate less than 10% of their total marketing budgets to social media, regardless of the size of the digital marketing budget to being with!
So how are social media budgets spent? Some very interesting findings here, shedding light on some best practices by destinations in their social media efforts. According to the survey, most popular budget allocations are:
- 39% in paid promotion: promoted tweets, Facebook ads and promoted posts, etc.
- 29% in content development: graphics, writing, photos and videos, apps.
- 28% invest in Human Resources for engagement.
- 18% spend on contest initiatives.
- 13% spend their budget on monitoring tools such as Radian6, VocusSocial, Sysomos, etc.
One eye-opening finding is that destination brands with intermediate social media marketing budgets seem to be the ones outsourcing this function the most. In particular organizations with budgets within the 25,000-50,000$ bracket, 83% of which outsource their social media activities, handing it over to agencies and/or freelance experts. We are not so surprised to see that destinations with the smallest budgets tend to keep activities in-house, since budgets are scarce to being with. Nevertheless, it is somewhat surprising to find out that virtually one out of every three DMO outsources its social media activities.
Finally, when surveying what are today’s top social media challenges face by DMOs, again I was somewhat surprised not to see some concerns rank higher, i.e. maintaining engagement, or budget constraints. In fact, the biggest challenge seems to be one shared by many industries alike, and not just in marketing: time, or a lack therof. Over 30% of destination marketing managers identified time as a key challenge, specially with new social networks and mobile apps creeping up all the time and despite of softwares that help managing it all.
It’s no wonder the second biggest challenge is to stay abreast of new trends and technologies that can help making sense of it all. In fact, attending industry events, conferences and participating in various training and webinars is a key component of staying on top of evolving trends and finding out the tools and tech to help managers in their everyday chores handling social media activities.
One last word. Return on investment (ROI) is almost always a key performance indicator in most organizations, yet it remains elusive in particular in destination marketing, where direct sales are not core to their business model (compared, say, to a hotel, restaurant or transportation). Nevertheless, it’s surprising to see only 8.1% of respondents identifying this challenge as key. Does it make it less important to measure? Of course not, but it does reflect how difficult it remains to “prove” social media campaigns, and that destination marketing organizations have integrated different ways to address this concern in some shape or form.
Travel Marketing the Social Media Way
By Ilya Albert, Published June 27, 2014
You would have looked for their advices on going to places they suggest and booking the accommodation there that they would tell you to be the best for you. The advent of the social media seems to have changed this concept completely.
Making Travel Plans from Social Media
As many as 40% of the travelers use social media for travel inspiration and 42% use it for planning their trip, says Trip Advisor. But what seems to be an important information provided by this travel website is that an overwhelming 76% seems to use social media platforms for sharing their travel experiences, Almost 91% of the travelers who take social media into account post photos there. Besides, many others also use social media platforms to post videos or write ups to share their online friends. Therefore, these experiences are surely going to impress others and influence their decisions in future while going for a trip.
Finding the Best Accommodation on Social Media
Worried how to find the perfect place to stay during your trip? Social media can help you in this process as well. Hundreds of hotels and timeshare companies are advertising on Facebook and other social media platforms. This provides you with the option of finding the best options for staying, which can make your trip an enchanting one. While you can go for luxury hotels, there are also budget options, such as timeshares and bed & breakfast inns, which can help you complete the trip within a short time. Check out different social media platforms for advice from the people who have already treaded the route you are planning to travel.
Social Media as a Travel Best Practice
According to LinkedIn, the integration of social media in the travel industry for marketing has been one of the best practices. More and more travel and tourism companies are engaging these days in the process of social media marketing. In fact, different governments are also engaging in advertising the places in their territories as the perfect travel destinations. Besides, these governments and also a few travel companies are providing different types of offers to the travelers. This is driving more and more people with every passing day to use these social media platforms for making their travel plans.Social Media becoming Important Travel Marketing PlatformTravel companies have already started taking the social media platforms seriously. They are planning special marketing programs on these websites. Many of them are creating pages of their own on social media sites, such as Facebook. They are using these pages to provide information about their offerings. Besides, they are also providing images and videos of these places to make the tourists more interested in them. Hence, many of these companies are finding that a large number of their customers are being mobilized from the social media platforms.
Marketing in the Social Media Groups on Travel
Have you already joined a social media website for making travel plans? Are you worried how to start with the process? You will find quite a few groups, which are engaged in discussions about travel. Join them. You can even ask questions to clarify your doubts or finding the best destinations. This is why many travel marketing companies also join these travel groups on social media. They find these a perfect place to market their plans. When you ask a question, they can answer it and, at the same time, publicize their offerings as well. This is likely to help them increase their business revenues significantly.Like any other process, travel marketing was also growing and transforming over the years. As social media became an integral part of the life, it entered almost all the industries. The travel industry was no exception as well. Social media has been utilized significantly. Hence, it has helped to take the process of travel a significant step forward.
Major product extension for Booking.com as it launches its first standalone brand in the guise of Villas.com.
The Priceline-owned accommodation giant officially unveiled the site this week in a bid to capture more of the vacation rental market beyond its existing coverage on the main Booking.com brand.
The Villas.com site has almost 150,000 properties listed, covering villas, apartments and rental homes.
The company says it built the site because it understands the “big difference between booking a room in a hotel and planning a do-it-yourself vacation”.
Although Villas.com has significantly fewer properties than HomeAway (the US-based rental pioneer currently has around 952,000), customers will be able to book all properties from within the site (with instant confirmation, according to the website) rather than often having to secure reservations through the owner or a third party offline.
In some respects the new Villas.com is a simple re-skinning of the Booking.com site with only relevant properties – it has the same functionality, filtering tools and image galleries, although there are some minor differences to the design and user experience.
It is the strategy to provide a dedicated site for the product itself which is likely to capture the attention, not least with HomeAway, TripAdvisor and Airbnb gaining traction (and making acquisitions) in recent years.
Such a move will also not come as the biggest surprise to those watching the sector and seeing the rise of other players.
Booking.com has been gradually adding more vacation rental properties to the main site for the best part of 18 months, adding to the small numbers of bungalow and cottage rentals it had featured for many years.
In January 2013 it struck a deal with InterHome to start plugging in properties from around the world (an initial 2,500 was announced at the time).
It is unclear as yet if Booking.com is contracting all 146,000 properties itself or has simply extended the existing vacation rental agreements it has to bolster the portfolio number.
Villas.com claims to have around properties featured from some 25,000 destinations in 176 countries around the world. Many of the properties listed have guest reviews imported from the existing Booking.com website.
By Smita Nair • Apr 29, 2014 9:00 am EDT
Priceline and its peers such as Expedia (EXPE) and Orbitz Worldwide (OWW) have been investing in marketing and promotion, technology, and personnel in an attempt to improve long-term operating results, but these expenses have pressured operating margins. Priceline’s management said on the earnings call that “operating margins were impacted by 146 bps of deleverage and offline advertising mainly related to our Booking.com TV campaigns in the U.S. and Australia and the inclusion of KAYAK offline advertising.” Although Priceline has managed to efficiently improve its margins, its peers have struggled.
In 2013, Priceline’s total online advertising expense was approximately $1.8 billion, up 41.2% year-over-year. A substantial portion of this was spent internationally through Internet search engines, meta-search and travel research services, and affiliate marketing. The company has worked on building brand awareness for Booking.com, Priceline.com, Agoda.com, KAYAK, and Rentalcars.com via aggressive marketing and promotion campaigns. It said it uses online search engines (primarily Google), meta-search and travel research services, and affiliate marketing as primary means of generating traffic to its websites. It also invested approximately $127.5 million in offline advertising via television, print and radio.
Priceline said its online advertising ROIs were down year-over-year for 2013. Its online advertising as a percentage of gross profit has increased due to lower returns on investment (ROIs) from online advertising, brand mix within the group, and channel mix within certain of its brands. Plus, its international brands are generally growing faster than U.S. brands, and usually spend a higher percentage of gross profit on online advertising.
Priceline CEO Darren Huston said in a Bloomberg interview that the company spends more on search ads on Google, and that results from Facebook (FB) and Twitter (TWTR) haven’t worked out for the company. Huston said in the article that the ad spending would be modified to include TripAdvisor Inc. (TRIP), the KAYAK travel search engine, and Expedia’s (EXPE) search site Trivago. When asked about the emergence of Google as a potential competitor, Hudson said he was not worried, adding “Google of course respects us as an advertiser.”
Expedia mentioned in its annual filing that its marketing channels include social media sites such as Facebook (FB) and Twitter (TWTR). The marketing initiatives also include promotional offers and traveler loyalty programs such as Welcome Rewards and Expedia Rewards that are recorded under its expenses. Orbitz (OWW) said in its annual filing that its marketing expense increased 16% or $39.5 million to $292 million, due largely to the growth of its private label distribution channel, which increased affiliate commissions by $23.5 million, and search engine and other online marketing of $32.7 million.
Priceline Group CEO Darren Huston’s lament that Facebook and Twitter can’t do what Google advertising can when it comes to driving travel transactions is not news to TripAdvisor, which complained of the same shortcomings five months ago.
At the time, TripAdvisor CEO Steve Kaufer said using Facebook to promote its Cities I’ve Visited Ap leads to better monetization, but Facebook falls short in driving transactions in the way that Google Adwords does.
“We weren’t able to get the same traveler in shopping mode to come over to TripAdvisor in any scale that matched Google,” Kaufer said, referring to advertising on Facebook, when speaking at an investor conference in November 2013.
Unlike Huston, Kaufer didn’t address the effectiveness — or lack thereof — of advertising on Twitter at the time.
The independent statements of Kaufer and Huston are a blow to Facebook advertising as a travel-transaction-booster. Both TripAdvisor and the Priceline Group were previously rooting hard for Facebook advertising to succeed as both companies look for other ways to advertise in addition to Google’s platform.
TripAdvisor, in particular, has engaged in lots of disputes with Google when it felt Google was pilfering TripAdvisor reviews and artificially limiting traffic to TripAdvisor in favor of Google promoting its own travel products.
In addition, TripAdvisor was once considered Facebook’s best friend in travel because of TripAdvisor’s Cities I’ve Visited Facebook app, with Facebook even citing TripAdvisor’s promotions on Facebook in its IPO registration papers.
Read MoreBrand USA’s 47-to-1 Return on Investment Claim Attracts Doubts Even Among Supporters
Travel companies do have an alternative to Google, though, in one growing channel — travel metasearch through companies such as Kayak, Trivago, Skyscanner, and TripAdvisor, among others.
You only have to look at the Priceline Group’s acquisition of Kayak for $1.8 billion, and Expedia’s acquisition of Germany’s Trivago for $564 million in cash and 875,200 shares to see how Priceline and Expedia were looking for an advertising hedge against Google’s dominance.
Many travel industry companies hoped that alternative would be Facebook, but so far Facebook hasn’t delivered in the view of some major players, at least.
Facebook declined to comment on the issue.
2014-04-09 BY PHILLIP BUTLER
Will mobile technology negate travel service providers’ direct revenue streams? An insightful post by Skift’s Dennis Schaal points to the big OTAs and the coming leverage game of travel bookings via mobile.
Expedia, Booking.com, TripAdvisor, a plethora of booking channels now clutter the hospitality booking lobby, and these carry varying degrees of effectiveness and economy.
While Schaal’s report does allude to hoteliers suffering ever increasing pains at the hands of OTAs, there is another side to the story. Schaal quotes Macquarie Equities Research’s Tom White on the operational disruption TripAdvisor, Expedia, and Priceline can cause. Furthermore, it’s no big secrete TripAdvisor would like to rule the entire hospitality revenue roost. Schaal elaborates using the equity research expert’s intuition, accentuates by TripAdvisor CEO Steve Kaufer’s proclamation over owning the “entire cycle.”
Certainly there’s ample concern on the hotelier end of things here. Clients of our own Pamil Visions travel PR, associates across the spectrum of travel marketing, and even some players in the app building arena have expressed virulently the pluses and minuses of this new “mobile travel ” game. What Shaal and the others mentioned have not shed light on is the flip side of such revenue disruptive technologies.
How the Hotel Will Always Be Right
Somehow the hospitality cart managed to get far out ahead of the hotelier horses, first via the WWW, and now (ostensibly) via the power of an ever growing mobile constituency. Let’s face it, prophesying huge corporate online travel agencies monopolizing guest bookings, that’s a bit like watching a man with a chainsaw standing in front of a redwood, and predicting he’s intent on chopping it down. Excuse the metaphors, but Expedia and the like have made a living providing far reaching reach, with a minimum of effort I might add, to tap into the coffers of every hotelier on the planet. However effective these businesses may be however, unless they plan on hiring bell hops and desk clerks, hotels are still their customers. And the customer is always right, right?
This article on BigHospitality speaks for the hotelier fed up with battling their own service providers (OTAs) over who owns the business of serving guests. In this piece the balance of equity is the needed shift in favor of the real guest services providers. Nial Kelly Vice President Acquisitions and Development at Starwood Hotels talks suggests leveraging OTAs by only working with those that are for balance. In essence, big and small hotel groups can put the proverbial “squeeze” on Expedia and others. This is what is about to happen if our information here is accurate. All the independent or major chain hotels need is the right catalyst, the right app developer, or an existent player willing to think outside the box.
The “Who” of Direct Mobile Bookings
A couple of months ago I was speaking with Stefan Weitz, head of Microsoft’s Bing about forward movement on Bing’s Travel App. Like other major corporations in the game, Microsoft and Bing came up with an imminently useful app for travelers here. Not unlike
our friend’s at Stay.com, Bing put a lot of quality in, features users get the most out of, and ultimately the ability find and reserve the best hotels in the world. Also like Stay.com, “depth” and a lack of appropriate marketing left conversions in a shortfall situation. You see there’s no lack of expertise in creating such tools (even for individual hotels), the cost of such development has been driven down dramatically. The real rub for hotels or corporations like Microsoft is “commitment” – to put it bluntly some companies have more money and resources than drive, when it comes to breaking out into mobile. It’s as if those that should most believe have become too conventional in their thinking.
Therein resides the biggest hurdle for Dennis Schaal’s omnipotent OTA rulers too. TripAdvisor and the rest are super slow on the uptake historically. In fact, in my view, TA and the rest have been lucky somebody like Microsoft has not already snapped up their market share. While Google was the heir apparent to digital travel mastery, today the original OTAs retain their places among marketing channels for hospitality. I am fairly amazed at this, to be honest. Looking at Bing’s app, like everything else at Microsoft it’s Microsoft-centric. These companies act as if they’re the only game in town, like gigantic ostriches. (Sorry Stefan, you know it’s true)
Finally, to give you a few “for instances” on how hotels can rescue themselves from lobby takeovers, here’s a list of apps that could be used to snatch a bigger share of the mobile pie. This says nothing for us working to create regional apps to help hoteliers ourselves :)
by Daniel Stone — April 9, 2014
New York – On Tuesday, Bloomberg released a report that Google (NASDAQ:GOOG) has reached an agreement with Room 77 to license that company’s hotel booking software. Room 77 is a start-up that has been funded by Expedia (Nasdaq:EXPE). The licensing deal marks Google’s intention to re-enter the online travel market after a stop-start attempts in the past, including the introduction of Hotel Price Ads (HPA) in 2010, the acquisition of ITA Software in 2011, and the launch of Hotel Finder the same year.
Along with Expedia, the online travel market is currently dominated by Priceline (NASDAQ:PCLN), Orbitz Worldwide (NYSE:WWW), and TripAdvisor (NASDAQ:TRIP). According to the ITB World Travel Trends report published last December, online travel booking now accounts for almost 70 percent of all booking and mobile bookings is one to the fastest growing segments overall. In the United States alone, the industry is worth more than $ 300 billion and given the recent performance of many of the companies in the sector there is still room for growth.
According to analysts the licensing deal by Google is most likely an attempt to upgrade their HPA, which essentially operates as the equivalent of ITA, a proprietary airline booking software. Whilst HPA is aimed at hotel marketers, the software would essentially allow Google to complete the loop, by facilitating the customer booking. If this is the case, Google would be positioning itself to cut the middlemen, such as Priceline and Expedia, while providing hotels with a better return on investment when compared to typical paid search campaigns.
Furthermore, industry analysts believe the move was driven by the Department of Justice’s ruling that allowed Google to acquire ITA Software on several conditions, including Google must allow licensed competitors to continue using the software, Google must take measures to prevent snooping, and the company must continue to maintain the software for licensees.
Through the licensing deal, it could be expected that Google might make more forays into the industry as their ‘competitors’ have little if any choice but to continue advertising through Google. While there is little direct evidence to suggest that such a move would hurt Priceline, Expedia, and TripAdvisor, almost 90 percent of what they spend on marketing goes to Google. As such, the increased emphasis on travel could dramatically alter the online travel market in the long-run. Shares in Google were up $ 4.10 in pre-market trading on Wednesday morning.
Understanding the travel habits of ‘Asian millennials’ is essential to understanding the business, family, or senior traveller of tomorrow. That was the message from the PATA seminar, ‘The Rise of the Young Asian Traveller’ which was held March 5 at ITB Berlin. In a panel moderated by Peter Jordan, PATA In-house consultant, the audience heard from Pyung-sup Shin, Executive Director for Overseas Marketing of the Korea National Tourism Organization on the successful 2012 ‘Touch Korea Tour’ campaign and how it drew interest from thousands of potential young visitors from around the world. High-value Asian students studying in Europe were the focus of comments by Thibault Ruffat, Head of European Tourism for ChicOutlet Shopping. He emphasized that it was not just young Chinese visitors who were shopping in Europe, but Indonesian and Korean tourists too. Charlie Ballard, Director of Research for TripAdvisor, described how according to the company’s research, travellers from the Asia Pacific region were highly attracted to specific cultural attractions and the possibility of having fun. He also described how domestic travel was still high on the agenda for many travellers in Asia.
Ivy Chee, PATA Regional Director – East Asia, told the audience that PATA will continue to build its ‘Next Gen’ initiatives. Currently, 11 PATA Student Chapters have been established in Asia. The PATA Face of the Future award recognizes rising stars of the travel industry. In addition, the Association has launched the PATA Internship Associate Programme.
PATA is currently collecting data on the travel habits of young Asian consumers through an online survey, available online until March 21, 2014. The survey is available to complete in English, Chinese (Mandarin), Japanese, Korean and Thai. Participants can enter a draw to win great prizes, sponsored by Tourism Malaysia and Aloft Hotel – Sukhumvit 11 Bangkok.
The report on young Asians’ travel habits will be released this April.
Firstly, we would like to congratulate Dubai and its premier sponsors and bid supporters from around the world for their successful bid to host the EXPO 2020. This edition draws attention to three insightful studies: Facebook have released some new findings on their impact on travel plansEuromonitor have released a report on the trends of \”The 21st Century Traveller\”Boston Consulting Group and Trip Advisor have released a report on the explosion of Chinese Tourism and how to capitalise on it In addition, Amadeus announce a new travel start up venture fund, Twitter announce their first entry into advertising and we provide a summary from CMOs InTravel, our blog site.
- News story: Foreign Secretary congratulates Dubai on being named Expo 2020 host (gov.uk)
- Sheikh Mohammed hails Dubai’s Expo 2020 win (medingroup.wordpress.com)
- BCG – Press Release – Capturing the Full Opportunity Behind China’s Explosion in Travel and Tourism (cmosintravel.com)