Understanding the core principles of Behavioural Economics will give players in the travel industry a major competitive advantage when restrictions lift and travellers begin to book again. And there are a few insights in here for the rest of the marketing community, too.
While COVID-19 restrictions continue to have a significant impact on our ability to travel, it doesn’t take away the intrinsic human behaviours that make us want to do so in the first place.
Behavioural economics - a field of study that explores ‘the why’ behind our decision making - has demonstrated the underlying motives, emotions and biases that drive us today have evolved over thousands of years. This makes them deeply entrenched, almost universal, highly predictable and unlikely to be disrupted by the temporary closure of man-made borders, or extended periods spent Zooming in activewear from the waist down.
For many in the industry, it’s tough to imagine things ever going back to ‘old normal’ when travel was a natural expectation of modern-day life. A Behavioural Economics principle known as Projection Bias can help us see why.
Projection Bias is what causes us to assume our future selves will have the exact same set of tastes, preferences and priorities that our current selves do. As it turns out, the difficulty we have feeling empathy towards others also extends to our future selves - a shortcoming that Carnegie Mellon University psychologist, George Loewenstein, labelled the ‘intrapersonal empathy gap’.
With job cuts, a slew of travel industry shutdowns, international travel bans, indefinite state border closures and months-long lockdowns, we can all be forgiven for believing the world - and our desire to travel - has fundamentally and irreversibly changed. But our desire to travel didn’t fundamentally and irreversibly change after 9/11. Or after Sars, swine flu, tsunamis, earthquakes or the Bali bombings.
Projection Bias dictates we are often prone to underestimating our ability to adapt to life-changing events, and our attitude to travelling post a worldwide pandemic is no different.
Beyond Projection Bias, there are other lessons from Behavioural Economics that should give us cause for optimism, including the Licensing Effect. Licensing refers to our innate desire to balance our virtuous acts with indulgent ones to retain a sense of equilibrium. On a small scale, it’s why we’re more susceptible to being tempted by a burger for lunch when we’ve worked out in the morning, or why we’ll feel good ‘treating ourselves’ to a couple of glasses of red on a Friday if we’ve worked hard all week.
For Australians, the notion of treating ourselves to a holiday after months of slogging it out at school or work might as well be written into our constitution. Per capita, we do more domestic flying than any other nation.
The last five months have placed the entire population into ‘licensing deficit’. Since March, we’ve been well behaved, civically compliant, frugal and conservative. We’ve done everything our political leaders have asked of us, all while working hard from our makeshift offices and homeschooling our ‘usually much better behaved than this’ kids. With limited travel, sport, pubs, clubs or parties to enjoy, our ability to square the ledger with a treat here and there has proved challenging.
As restrictions ease, consumers will be looking for treats big and small. And we all know that holidays and travel are one of the great rewards of modern life in Australia. The demand is palpable. Earlier this month, even in the depths of stage four lockdown, all it took was for the Victorian Treasurer to mention the potential easing of restrictions, for flight and holiday-related Google searches to instantly double.
A survey by the Pedestrian Group in July of 8000 people between the ages of 18 and 34 found people are already well into the dreaming and planning phases of their next trips. Yet 80 per cent stated they were cashed up enough to book a holiday but were trigger shy on booking until restrictions were lifted.
But they will be lifted. And then the race will be on.
Hundreds of thousands of Australians will be looking to treat themselves at the same time - without the ability to travel overseas - creating a once in a generation opportunity for our domestic travel sector. As planning and research continue to ramp up, now is the time for travel brands to sew the seeds for a spring that’s just around the corner.
Yes, there are other biases the industry may need to lean in to in order to get bookings over the line. Like the Zero Risk Bias, which demonstrates that any reduction in risk is good, but the complete elimination of risk is even better (and something people will pay a premium for). Change and cancellation policies that shift the risk from traveller to operator may be uncomfortable in the short term, but will undoubtedly accelerate the large scale return of travellers to our skies.
Whether consumers decide to book an airline, resort, holiday, tour, city or weekend away will be dependent on how brands are reaching out to them, right now. Don’t get left behind.
Copyright 2020 IDG Communications. All rights reserved. From https://www.cmo.com.au. By Dan Monheit.