2 2 trends and prospects
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Peter Varlow
TEAM Tourism Consulting
E-marketing for Tourism Destinations
ETC and UNWTO, Budapest, 16-17 June 2008
Trends and prospectsTrends and prospects
1. Global trends
2. Travel sales
3. Packaging4. Social networking and UGC
5. Mobile6. Implications for DMOs
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but not everywherebut not everywhere
Source: eMarketer, February 2008 .
0200400600800
1,0001,2001,4001,6001,800
2007 2008 2009 2010 2011 2012
China and India now the growth areasChina and India now the growth areas
Source: eMarketer (February 2008 for US and February 2007 for other markets).
111
20
85
134
26
87
188
156
33
89
194
181
42
91
200207
51
93
206227
61
94
212
246
72
95
217
0
50
100
150
200
250
2005 2006 2007 2008 2009 2010 2011 2012
USChinaIndiaJapan
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Internet users by world region 2008Internet users by world region 2008
Source: eMarketer, February 2008.
543.8
347.5
216.5
113.7
46.4
0 100 200 300 400 500
Asia-Pacific
Europe
North America
Latin America
Rest of the World
! "#$$%
Internet users, top 15 countries, 2007Internet users, top 15 countries, 2007
211
162
86
5042 39 38
34 33 31 28 23 22 20 20
0
50
100
150
200
250
U S C h
i n a J a
p a n
G e r m
a n y
I n d i a
B r a z i
l U K
S . K o
r e a F r a
n c e
I t a l y
R u s s i a
M e x i c
o
C a n a
d a
I n d o n
e s i a
S p a i n
Source: Internet World Stats, updated 30 June 2007.
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Top 15 marketsTop 15 markets per head of populationper head of population
88% 88%85%
78% 77% 76% 76%73% 72% 72% 71% 71% 70% 69% 69%
0%
20%
40%
60%
80%
N o r w
a y
N e t h e
r l a n d
s
I c e l a n
d
N e w
Z e a l a
n
S w e d
e n
A n t i g
u a & B a
r b u
A u s t r
a l i a
P o r t u
g a l
U S
F a r o e
I s l a n
d
S . K o
r e a
L u x e
m b o u
r g
H o n g
K o n g
F a l k l
a n d I
s l a n d
S w i t z
e r l a n
d
Source: Internet World Stats st atistics updated 31 December 2007
& #$$'
Broadband growthBroadband growth
194.2
252.2299.5
351.7 400.1447.0
497.4
0
100
200
300
400
500
2005 2006 2007 2008 2009 2012 2011
(#$$) #$**
Source: eMarketer, June 2007.
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0
500
1000
1500
2001 2004 2007
Worldwide
WirelessWireless internet use growing fastinternet use growing fast
Non-Wireless Internet UsersWireless Internet Users((eTForecastseTForecasts ))
MobileMobile broadband growing fastbroadband growing fast
Source: eMarketer, February 2008.
0%1%
0%1%2%
4%2% 7%
3%7%2%
8%4% 10%
4% 10%
7% 11%
14% 21%7% 16%
32% 53%
0% 10% 20% 30% 40% 50% 60%
PolandCanada
US
Netherlands
Germany
SpainIreland
France
UK
Italy
Sweden
Japan
+,& #$$- .
20062005
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2. Travel sales2. Travel sales
Online travel revenues growing fastOnline travel revenues growing fast
Source: PhoCusWright, November 2006.
Online Offline2005 25% 75%2008 40% 60%
44%56%2008
Online Offline2007 51% 49%
2009 60% 40%
North America/Western Europe/Asia markets
US market
Source: PhoCusWright (reported by Travelmole in January 2008).
In the USA, 40% of revenues were already online in 2005.
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80
49.3
20.4
0
20
40
60
80
100
!/ 0
Online travel sales in US, EuropeOnline travel sales in US, Europeand Asiaand Asia --Pacific in 2006Pacific in 2006
!/1
Source: PhoCusWright Inc. (2007).
Patchy growth in EuropePatchy growth in EuropeOnline share of all leisure and unmanaged business
travel gross bookings 2006
Others6%
Italy5% Spain
7%Scandinavia
11%
France16%Germany
20%
UK35%
Source: PhoCusWright (September 2007).
Europe average will approach 25% in 2007, the level in the US in 2004.
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Four travel distribution companiescontrol over half of the market.
USA
Source: Phocuswright, November 2005.
Europe
USA agency sales controlled by only four agenciesUSA agency sales controlled by only four agencies
Expedia, Sabre,Cendant and Priceline
97%
Other
Other Expedia, Sabre,Cendant and
Priceline
Four travel distribution companiescontrol 97% of the market.
European Online Agency Market
Source: Phocuswright
European agencies consolidating rapidlyEuropean agencies consolidating rapidly
Lastminute
Ebookers
Expedia
Opodo
Travelocity
Others
Travelocity andLastminute - partof Sabre
Expedia, Ebookers,Octopus - part ofTravelport
(former Cendant)
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61%
32%
7%
Hotel sales by channel2004
13%
46%
41%
Source: Phocuswright
Hotel sales by channel2007
Hotel sales in Europe: shift from agencies to hotelHotel sales in Europe: shift from agencies to hotelsites and tour operatorssites and tour operators
Onl ine t ravel agenc ies Hotel branded webs ites Tour Operators
Internet booking vital for hotelsInternet booking vital for hotels
29%33%
40%45%
0%
10%
20%
30%
40%
50%
2006 2007 2008 2010
% of all hotel bookings generated from theinternet in the US 2006-2010
Source: Merrill Lynch (reported by Tourism Exchange in February 2008).
In 2008, at least another third of all hotel bookings will beinfluenced by the internet but done offline
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3. Trends in packaging3. Trends in packaging
PackagingPackaging
Products with multiple components arepurchased less frequently online
Simple components (eg flights) are purchasedmore frequently
Source: PhoCusWright (reported by Travelmole in January 2008).
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DynamicDynamic customised packagingcustomised packaging
Enables customer to create their own package
selecting components of their own choice
paid for in one transaction
Key development for major tour operators andonline travel agents
Growing rapidly .
Dynamic packagingDynamic packaging the next battlefieldthe next battlefield
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Dynamic packagingDynamic packaging the next battlefieldthe next battlefield
45% of US package buyers booked apackage online, of which:
76% bought through an online agency 9% bought only at a supplier site
Source: Dynamic Packaging The Next Battlefield: Are you dynamic yet? 2008 Status Report, March 2008.
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4. Social networking and UGC4. Social networking and UGC
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UGC use by online travellersUGC use by online travellers
US online travelresearchers use of
UGC:
32% used it early intheir research process
56% used it to verifytheir hotel choicesprior to booking
Blogs Half of people who
read blogs read travelblogs.
Travellers who visit themost sites are likely toread traveller reviews,research destinationsand buy tickets toevents or attractions.
Source: JupiterResearchs Travel Consumer Survey, 2007, reported by EyeForTravel, March 2008.
Source: PhoCusWright Travel 2.0 Consumer Technology Survey, reported by Travelmole, Dec. 2007.
Sources used to find out where to goSources used to find out where to go
30% 69% 23% 11%6% 12%
33% 61% 35% 22% 22% 8%
36% 64% 19% 7% 5% 8%
39% 65% 22% 24% 14% 5%
42% 47% 20% 26% 23% 4%43% 60% 14% 23% 11% 7%
44% 62% 26% 9% 7% 10%
47% 31% 26% 25% 8% 6%49% 50% 25% 19% 17% 11%
49% 57% 25% 33% 26% 1%
50% 63% 29% 39% 21% 13%
50% 36% 13% 29% 13% 7%51% 65% 50% 44% 35% 11%52% 53% 33% 26% 12% 7%
54% 58% 12% 22% 16% 16%54% 55% 8% 20% 21% 15%
59% 51% 27% 32% 31% 1%59% 37% 24% 32% 13% 7%
0% 50% 100% 150% 200% 250% 300%
Korea
Italy
France
UK
PoIandNetherlands
Spain
Mexico
Canada
Germany
Australia
Brazil
China
Japan
USA
Denmark
India
Russia
Personal recommendation Web search Visit travel agent's office See TV program Read a newspaper Other
Source: Global Market Insite (GMI) Survey of 18,000 consumers globally, June 2005.
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Most trusted online sourceMost trusted online source -- UKUK
12%
5%
0%
10%
11%
12%
15%
15%
21%
0% 5% 10% 15% 20% 25%
Sites with reviews by other travellersOnline tourist guides
Local tourist guides
Travel agent sites
Search results
Airline sites
Advertising eg banner ads
Other
Don't know
Most trusted online source for reliable travel information according to UK Internet users,
September 2006 (% of respondents)
Source: Nielsen//NetRatings commissioned by Adviva and Harvest Digital, January 2007 quoted by eMarketer in June 2007
5. Mobile trends5. Mobile trends
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ConvergenceConvergence 3G speed and
capacity Phone Email GPS satnav Camera Music and TV player Web browser QWERTY screen or keys MobileMe sync with PC
3.3 billionphones,and rising(GSMA, June 2008)
Apple iPhone 3G, June 2008
Global trendsGlobal trends -- summarysummary1. Continued rapid growth
a) Asia-Pacific, especially India and Chinab) Russiac) South America
2. E-commercea) Germany soonb) Southern and Eastern Europe later
3. Shift to mobile
4. Convergence of devices and of services5. C2C and UGC becoming dominant?6. E-commerce and m-commerce will be standard7. Content more and more important - emphasis on video
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6. Implications for DMOs6. Implications for DMOs
Why do it?Why do it?
1. Massive information delivery
2. Good brand-building3. Two-way interaction
a) Destination to customer (B2C)b) Customer to customer (C2C)
4. 1 to 1, or 1 to many
5. Seamless progression from promotion to sale6. Integrates with offline marketing7. To build partnerships
a) Market intelligenceb) Contentc) Product developmentd) Brandinge) Promotion
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Ten keys to future successTen keys to future successProvide your industry with additional market reach
1. Build the brand(s)2. Segment your markets, use CRM to maintain the
relationship, upsell and cross-sell
3. A compelling website and refined email marketing4. Partnerships to achieve distribution especially satnav5. High quality content6. Encourage and use customer-generated contentCreate sales7. Deliver sales, directly or indirectly8. Engage tourism businesses to connect their inventory
9. Offer customised or dynamic packagingProve your worth
10. Measure and report your performance dynamically
and11. Business systems that enable partnerships
Leading DestinationsLeading Destinations
Are effectively e-businesses throughoutHave sophisticated CRMHave inspirational, comprehensive, timely
contentHave radically improved their websites and
email marketing over the past 5 yearsAlready use 3 rd -party and UGC content
wellHave mobile servicesHave achieved ground-breaking 3 rd -party
distribution
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InnovationsInnovations
Services E-commerce
- directly run- aggregated
Targeted e-newsletters RSS Travel planners on website
and to mobile Mobile service
- podcasts- website- SMS services
Content Mashed TripAdvisor-type
reviews Visitor videos Flights engines Taxi booking Corporate blogs Participate in wikis and
leading blogsDistribution To satnav vendors To mapping services
petervarlow@team-tourism.com
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SpainSpain -- Multimedia (1)Multimedia (1)
SpainSpain Multimedia (2)Multimedia (2)
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SwitzerlandSwitzerland video sharingvideo sharing
VisitVictoriaVisitVictoria blog/forumblog/forum
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Pennsylvania, USA:Pennsylvania, USA: VisitPA.comVisitPA.com
www.visitpa.comwww.visitpa.com
VisitPA.comVisitPA.com :: PlaylistCentralPlaylistCentral
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VisitPA.comVisitPA.com : Local: Local PlaylistPlaylist Wine & WildernessWine & Wilderness
VisitPA.comVisitPA.com :: RoadtripsRoadtrips Rugged RoadwaysRugged Roadways
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Starwood Holding CompanyStarwood Holding Company -- SheratonSheraton
Aphrodite Hills Holiday RentalsAphrodite Hills Holiday Rentals
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English Country CottagesEnglish Country Cottages
Louvre Museum, FranceLouvre Museum, France
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Soprintendenza archeologica Di PompeiSoprintendenza archeologica Di Pompei
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