Here’s what marketers with travel and hospitality brands can do to overcome consumers’ “inflation anxiety” and beat their competition.
Travel hospitality brands have shown incredible resilience in the last couple of years as people around the world have significantly cut down on vacations and work trips. For airlines and global hotels, the number of US consumers traveling abroad plummeted in 2020 and is still only at about half of what it was before the pandemic started. While traditional hotels hoped to see opportunities for a big rebound in the last year, much of that revenue has gone to increasingly popular alternative lodging brands such as Vrbo and Airbnb.
Yet, hope is on the horizon for all players in the sector. Travel and tourism is forecasted to generate $8.6 trillion globally this year, which is only 6.4% below pre-pandemic levels.
At the same time, Americans are reportedly on the fence about how much money — if any — they want to spend on their summer vacations due to inflation. With this critical travel and hospitality season fast approaching, let’s look at what brands need to know to maximize their business outcomes.
Ad spend is shifting to digital
Travel and hospitality brands should not skimp on ad budgets because the competition will probably do the opposite and, subsequently, own more of the summertime market. In 2021, travel marketers spent 38% more than they did the year before, and they are expected to spend 36% more this year than last year.
Marketers in this space seem to have gotten the message that they need to invest to win. Recently, we saw Vrbo, Expedia and Booking.com purchase expensive broadcast ads reaching roughly 100 million consumers during the 2022 Super Bowl. Airbnb also recently ran a large ad campaign, which had a strong focus on TV.
But while TV gets a brand’s message out to a broad audience of potential customers, marketers have little control of targeting and knowledge of whether sales were a result of ads. This is why advertising dollars are shifting more and more toward digital.
With targeting and measurement far superior to broadcast, digital advertising offers audience segmentation that broadcast and out-of-home ads can not, allowing travel and hospitality brands to find the right consumers who are closer to point of purchase. Through data and analytics, travel and hospitality marketers can pinpoint which consumers are planning to go on a trip, which are likely to shop with traditional or nontraditional lodging and then pinpoint ads to the most likely buyers.
More importantly, they’re able to see exactly how successful the campaign was on a granular level with the help of incremental measurement. It’s why next year, travel and hospitality brands are projected to spend 70% of their budgets on digital advertising, a 63% increase from 2020.
Digital ads also allow marketers to tweak campaigns mid-flight, as they see what’s working via real-time performance data. They can change the creative, the cashback or discount offer and the audience segmentation depending on what’s happening in the market and ad performance, optimizing the campaign’s results in real-time. You do not have this level of insight or timely results with broadcast media.
So this year, expect more travel and hospitality brands to shift what it means to “go big,” investing more in online inventory and less on mass media. Brands that adapt to this shift can capture more of the pent-up demand for travel we will see this summer and beyond.
“Inflation anxiety” is real but presents an opportunity
At the moment, inflation is likely making consumers hesitate from booking the trips they would otherwise purchase. Travel costs are up nearly 16% compared to 2019, and average price changes for transportation (up 30%), lodging (up 10%), recreation (up 5%), food and beverages (up 14%) also are troublesome for consumers’ wallets.
These costs actually give travel and hospitality brands an opportunity to build loyalty with consumers who may have “inflation anxiety” by helping them out with cash back, rewards and discounts. Such offers will encourage consumers to not only take a trip but also think highly of the brand that made it financially feasible.
Recently, DoubleTree New York, Waldorf Astoria Las Vegas and the Arizona Biltmore have been leaning into loyalty, offering $70 to $90 cash back for one-night stays on digital advertising platforms. In a less-than-perfect economic environment, these hotels want to build loyalty and are wise to do so.
Brands with strong loyalty marketing programs grow revenues 2.5 times faster than their competitors and generate up to 400% higher returns to shareholders. And 79% of consumers say loyalty programs make them more likely to continue doing business with brands.
In closing, travel and hospitality brands are not in a perfect economic environment due to inflation, but the turbulence isn’t as bad as two years ago. The pent-up demand will still be there as family and friends are ready to meet up at destinations to take full advantage of their vacation time. The marketers who use digital advertising to its fullest strength and relieve consumers of their anxieties by giving them cash back will get the most out of their revenues this summer.
Copyright 2022 SmartBrief, is a division of Future US LLC. All rights reserved. From https://str.com and https://smarbrief.com. By Sasha Trifunac.