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Monday, September 9, 2013
3 Ways to Grow Your Online Travel Business
Global online travel sales exceeded $160 billion in 2012, growing 12% year over year. This impressive growth can be further accelerated provided the right steps are taken to overcome these key challenges.
1. Loss of business to travel agents - Even with about 150 million online travel bookings last year, travel agents saw a growth in their offline business. This growth is a combination of two things – 1) the plethora of flights, hotels and vacation options available to customers, and 2) a lack of personalized service to cater to the needs of every customer. Travel agents are able to fill this void by having a good understanding of the market and personalizing their offerings depending on the customer. At times, they are even able to generate more business by offering deep discounts or coupons to customers based on their relationships with an airline or a hotel property.
Online travel sites can reclaim this business by enabling real-time personalization on their site. The personalization has to be fast and dynamic for displaying relevant content, offers and recommendations. This is only possible if the site has the right infrastructure to analyze all customer interactions (web, social or mobile) along with thecustomer profile and purchase history, in real-time. Another key aspect is to improve the overall customer service to own the customer travel experience from door-to-door. This means offering the customers not just flights & hotels but other services like restaurant recommendations at the airport during the layover, connecting them with fellow travelers based on customer preferences, making it straightforward to modify an existing reservation, etc.
2. Tough competition from search engines – Online travel sites are losing business to travel portals created by searchengines, like Google and Bing, that are leveraging their deep search expertise to make it easier for customers to find the right flights and hotels. Unfortunately, the travel sites are also indirectly funding the search engines to build this new functionality by spending millions of dollars with them for search engine marketing.
The best way to overcome this challenge is to enhance the stickiness of your travel site. One way to do this is by offering value-added services e.g. each customer can be assigned a travel concierge at the time of booking and the concierge can help in case of any problems or questions related to the trip. Another way is to have richer content on the site. Expedia realized the importance of content when it decided to separate TripAdvisor. Richer content attracts more customers and keeps them engaged resulting in increased stickiness and greater revenue.
3. Customer loyalty is a tricky business – Most customers sign up for multiple loyalty programs but still end up buying from a site that has the lowest price. Just relying on price to drive revenue is a risky strategy, as the online travel businesses do not own the airlines and hotels inventory that is sold on their sites. In several cases, airlines and hotels offer special perks that cannot be matched by most travel sites resulting in customers directly booking with the airline or hotel site regardless of the amazing loyalty program offered by the online travel site.
It has become table stakes to have a great loyalty program that can drive more business, is easy to use and the points are redeemable in multiple ways. In the current environment, a loyalty program needs to have that ‘little extra’ to retain the customer business. This ‘little extra’ could be complementary travel insurance when a customer books a trip above a certain dollar value or it could be something tied to the customer preferences like a bottle of their favorite wine at their destination.