the future of travel search

Researched and Written byCarroll Rheem

Sponsored by

®

EMPOWERING INSPIRATION: THE FUTURE OF TRAVEL SEARCH

PhoCusWright Inc.1 Route 37 East, Suite 200Sherman, CT 06784-1430 USA

+1 860 350-4084+1 860 354-3112 fax

www.phocuswright.com

Philip C. Wolf Chairman

Carol Hutzelman Senior Vice President

Bruce Rosard Vice President, Sales and Marketing

Lorraine Sileo Vice President, Research

Empowering Inspiration:The Future of Travel Search

Researched and Written by Carroll Rheem

Sponsored by

PhoCusWright's Empowering Inspiration: The Future of Travel Search is published by PhoCusWright Inc. The information contained herein is derived from a variety of sources. While every effort has been made to verify the information, the publisher assumes neither responsibility for inconsistencies or inaccuracies in the data nor liability for any damages of any type arising from errors or omissions.

©2012 PhoCusWright Inc. All Rights Reserved.

February 2012PhocusWright's Empowering Inspiration: The Future of Travel Search

©2012 PhoCusWright Inc. All Rights Reserved. Page iii

February 2012PhocusWright's Empowering Inspiration: The Future of Travel Search

About PhoCusWrightPhoCusWright is the travel industry research authority on how travelers, suppliers and intermediaries connect. Independent, rigorous and unbiased, PhoCusWright fosters smart strategic planning, tactical decision-making and organizational effectiveness.

PhoCusWright delivers qualitative and quantitative research on the evolving dynamics that influence travel, tourism and hospitality distribution. Our marketplace intelligence is the industry standard for segmentation, sizing, forecasting, trends, analysis and consumer travel planning behavior. Every day around the world, senior executives, marketers, strategists and research professionals from all segments of the industry value chain use PhoCusWright research for competitive advantage.

PhoCusWright enables clients to bolster productivity through superior staff training and education. Scalable products, customized programs and cost-effective delivery improve the performance of thousands of travel, tourism and hospitality employees worldwide.

To complement its primary research in North and Latin America, Europe and Asia, PhoCusWright produces several high-profile conferences in the United States and Germany, and partners with conferences in Canada, China and Singapore. Industry leaders and company analysts bring this intelligence to life by debating issues, sharing ideas and defining the ever-evolving reality of travel commerce.

The company is headquartered in the United States with Asia Pacific operations based in India and local analysts on five continents.

PhoCusWright is a wholly owned subsidiary of Northstar Travel Media LLC..

PhoCusWright Inc.1 Route 37 East, Suite 200 • Sherman, CT 06784-1430 USA

+1 860 350-4084 • +1 860 354-3112 faxwww.phocuswright.com

This article is published by PhoCusWright. The information herein is derived from a variety of sources. While every effort has been made to verify the information, the publisher assumes neither responsibility for inconsistencies or inaccuracies in the data nor liability for any damages of any type arising from errors or omissions.

All PhoCusWright Inc. publications are protected by copyright. It is illegal under U.S. federal law (17USC101 et seq.) to copy, fax or electronically distribute copyrighted material beyond the parameters of the License or outside of your organiza-tion without explicit permission.

©2012 PhoCusWright Inc. All Rights Reserved. Page v

Empowering Inspiration: The Future of Travel Search February 2012

Foreword

How will travelers search for travel online in the future?

How will technology evolve in the future to provide a smarter user experience?

How will the future of travel search impact travel professionals’ businesses?

Millions of travelers start planning their holidays by exploring different destinations via their computers, tablets and mobile apps or even engaging with their social networks – all facing various degrees of satisfaction during the travel planning process. In today’s economy, consumers are cautious about where and how much they spend and wish for a seamless shopping experience. When every cent counts, it is crucial for travel professionals to understand travelers’ behavior to influence those with the greatest poten-tial – and ensure they develop the best strategies for engaging consumers.

Amadeus commissioned this study to understand how consumers will search for travel in the future. Over ten years have passed since the

first online travel website was launched. Today, we believe we are at the forefront of a technological evolu-tion in travel which we refer to as Online Travel 3.0. This concept recognizes the power shift from sup-pliers to retailers and to end-consumers, who have increasingly become expert travelers. It is therefore key for Amadeus to understand how travel shoppers are currently searching for travel now and in the future.

‘The discretionary traveler'- a sample of trend setting experts from six different markets (US, UK, Germany, India, Russia and Brazil) was selected in order to understand how travelers behave in the search, shop and book processes. This is the first PhoCusWright consumer travel study to include both Russia and Brazil.

For Amadeus, it is essential to understand travelers’ needs and future trends, and drive technology evolutions that help our travel agency and tour operators customers to best engage with their own customers. Although tech-nology, especially in the booking arena, has come a long way, it is only the beginning: travel is definitely a great booster for technology evolution and we foresee more revolutionary developments to come that will affect the future of travel search – and the success of travel professionals’ businesses. Perhaps even sooner than we may think.

The aim of the study is to stimulate discussion within the industry and there is no doubt that it will also open the door to new opportunities:

• Opportunities to inspire and convert customers when addressing different levels of frustration;• Opportunities to provide a smarter user experience online; • Opportunities to optimize content customization tools to increase conversions and grow revenues

We hope you will enjoy reading the study and look forward to engaging with you in building together a world of opportunities!

Stéphane Durand

Director, Leisure and Online

©2012 PhoCusWright Inc. All Rights Reserved. Page vi


ContentsOverview, Methodology and Key Findings 1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Key Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The Discretionary Traveler 5

Key Discretionary Traveler Characteristics by Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

The Journey Before the Trip 11

Section Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

The Decision Timeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

The Destination Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Booking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Patches of Turbulence 19


Destination Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Booking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

The Appetite for a New Recipe 24


Flexibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

New Ways of Searching . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

The Progress of New Media 30


Mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Social Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

2020 Foresight: The Future of Travel Planning 34

Hardware Agnosticism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

The Truly Private “Private Sale” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Cumulative “Intelligence” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Smart Systems and the Virtual Personal Assistant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Biometrics and the “Creepy Line” Creep . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Empowering Inspiration: the Future of Travel Search

©2012 PhoCusWright Inc. All Rights Reserved. Page vii


List of FiguresFigure 1 Discretionary Traveler Incidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Figure 2 Key Discretionary Traveler Characteristics by Market . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Additional Market Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Figure 3 Decision Timelines (Average Number of Days). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Figure 4 Information Sources of Decision to Visit the Destination . . . . . . . . . . . . . . . . . . . . . . . 12

Figure 5 Websites Used for Destination Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Figure 6 Information Sources for Travel Product Shopping. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Figure 7 Websites Used for Travel Product Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Figure 8 Travel Products Booking Methods: Air Travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Figure 9 Travel Products Booking Methods: Lodging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Figure 10 Booking Methods: Air . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Figure 11 Booking Methods: Lodging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Figure 12 Frustrations When Selecting Destination Online . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Figure 13 Frustrations When Shopping for Travel Products Online . . . . . . . . . . . . . . . . . . . . . . . . 21

Figure 14 Frustrations When Booking Travel Products Online . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Figure 15 Destination Flexibility (Last Discretionary Trip) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Figure 16 Annual Household Travel Expenditure (US$) by Destination Flexibility (Last Discretionary Trip) . 25

Figure 17 Flexibility in Travel Aspects: Somewhat Flexible + Very Flexible . . . . . . . . . . . . . . . . . . . 26

Figure 18 Usefulness of Search Capabilities (“Very Useful”) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Figure 19 Interest in Online Activities via Mobile Phone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Figure 20 Interest in Activities Through Social Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32


PhocusWright's Empowering Inspiration: The Future of Travel Search February 2012

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OVERVIEW

Every day, millions of individuals around the globe journey far from the comforts of home to explore new places and cultures. And every day, more of these travelers are coming from nations with a freshly-minted middle class. While some traveler needs are universal, local dynamics add distinct characteristics to each marketplace and can make or break enterprising retailers. But a snap-shot of current traveler behavior is just part of the big picture. As a dynamic industry consistently at the forefront of innovation, the busi-ness of selling travel requires players to keep a sharp eye on the future.

With this in mind, Amadeus com-missioned PhoCusWright to con-duct a study of consumers around the world to understand how they make leisure travel decisions online today, and how they would like to make those decisions in the years to come. Six key markets were targeted to provide a diverse geographic range of perspectives: the U.S., the U.K., Germany, India, Russia and Brazil. To yield specific insights into how travelers would like to navigate their options online in the future, this study was designed around a particu-lar kind of traveler: the discretionary traveler. Discretionary travelers are those who take “true” holidays that are not constrained by social obliga-tions (such as attending a wedding) or other outside influences. Why not just study the general traveling public?

One of the perennial challenges in leveraging consumer research to isolate future trends, particularly when examining behaviors, is that the survey results are most reliable when anchored in the past – cap-turing behavior over some previous increment of time (i.e., the pre-vious 12 months). Consumers are inherently better able to accurately describe what they have recently done (particularly when answering complex or detailed questions) than what they will do in the future – especially when that behavior may involve some sort of change.

Therefore, rather than examining how the grand mass of all travelers plan their trips and pressing respon-dents to extrapolate how they might like to do things years from now, this study focuses squarely on trend-setters – high opportunity travelers who are the best indicators of future trends. These are the travelers who latch onto new technologies early (and tell their friends about them). They are valuable consumers who choose their own destinations, spend enough to really think about their holidays and care about the process that gets them there. They are expe-rienced holiday planners who go through the process often enough to understand their options and what is missing from the travel planning tools available to them. When plan-ning strategy in the ever-evolving travel arena, companies must think ahead to where traveler behavior and preferences will be years from now

(not just where they were during the past year), or risk being left behind.

As the goal of this study is to provide insight into trendsetting consum-ers, it is important to recognize that the results presented will not reflect today’s entire traveling population – especially with metrics concern-ing technology adoption and social media. Particularly in emerging mar-kets, discretionary travelers do not represent the mainstream, as a small-er portion of travelers in these mar-kets are able to afford purely leisure discretionary holidays. Instead, they represent the early adopters whose current behaviors and preferences are leading indicators for the future.

METHODOLOGY

PhoCusWright fielded an online consumer survey in April 2011 through Global Market Insite, Inc. to adults (18 years or older) in the U.S., U.K., Germany, India, Russia and Brazil. To qualify for participa-tion in the study, respondents had to indicate they had taken at least three overnight trips in the past 12 months that included paid lodging, air travel and/or long-distance rail. At least one of these trips had to be a discretionary trip. The term “dis-cretionary trip” refers to a trip taken to a destination that was chosen independently by the respondent, as opposed to trips that have a pre-determined destination like visits with friends/family. Respondents were also required to have played

Overview, Methodology and Key Findings



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an active role in planning their lei-sure trips. Consumers who quali-fied for the study are referred to as “discretionary travelers.” The term “developed markets” refers to the U.S., U.K. and Germany; “emerg-ing markets” refers to India, Russia and Brazil; “lodging” refers to the broad range of paid accommoda-tions – hotels and other nightly priced lodging products, as well as timeshares and vacation rentals.

PhoCusWright surveyed a total of 43,537 consumers to obtain the final respondent pool of 4,638 qualified responses (see Section Two for coun-try details).The weighted respondent pool can be projected with confidence to the adult populations with Internet access within the corresponding countries. The error interval for anal-ysis is +/–3.46% at a 95% confidence level for each country. Significant differences noted in this report were identified at a 95% confidence level.

In addition to consumer insights, PhoCusWright conducted 18 executive interviews with thought leaders around the world to gain industry perspective on where travel search is headed.

KEY FINDINGS

Patches of Turbulence

The frustrations and pain points travelers face when planning and booking travel.

• It’s not really too much infor-mation, but it feels like it. The

biggest issue in travel planning for most markets is perceived to be information overload. But more specifically it is the organization and navigability of content that typically discourages people, along with a healthy dose of irrelevant information. Summarizing infor-mation at a high level, then allow-ing consumers to drill for more detail can help cut the clutter.

•Frugalityfuelsfrustration.Many consumers feel like they are making a hasty, potentially regrettable pur-chase if they do not shop around. In addition, the pricing volatility resulting from the practice of yield management has created substan-tial anxiety about when to book. It can feel like a game of chick-en to the traveler who wonders if he should wait or book. Tools that support price benchmarking for shoppers can help address this booking anxiety.

•Destination decisions need sup-port. Roughly half of discretion-ary travelers in developed markets and nearly two thirds in emerging markets do not have a specific des-tination in mind when they start their trip planning process. Yet, it is not easy to browse destina-tions on most travel websites today. Especially for inexperienced travel-ers coming from emerging markets, there is a need for better roll-ups and condensed snapshots of infor-mation such as seasonal tempera-ture/precipitation and price ranges. Freshness and accuracy of destina-tion information is also an issue, particularly for emerging markets.

The Appetite for a New Recipe

New ways in which travelers would like to search for travel options.

• It’stimetothinkoutsidethe(citypair/travel date) box. Catering to the substantial group of travel-ers who do not have a destination in mind is advantageous for travel websites, as these consumers often spend more money on travel than others. Attracting shoppers earli-er in the travel planning process allows websites to go higher up the purchase funnel – potential-ly broadening their audience and reducing their reliance on search and referral traffic. A substantial portion of travelers is eager for new ways to determine where to go and what to buy. Now that Google has thrown its hat into the flight search ring, it is more essential than ever for online travel agencies (OTAs) and metasearch players to continue innovating and keep pace with new ways of searching.

•New combinations can unlocknewpossibilities.Enabling search across multiple destinations would be helpful for many shoppers, but can easily yield an unwieldy vol-ume of results. Multi-destination search parameters must therefore be paired with others (traditional or otherwise) to keep results relevant. For example, melding budget and interest-based parameters would enable consumers to search for beach vacations anywhere that cost 1,000 dollars or less. Companies that build flexible, layered search



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parameters can then begin to align more closely to the way travelers instinctively think about their trips.

The Progress of New Media

How travelers want to use mobile devices and social networks when plan-ning and sharing travel experiences.

•Convenience before complexity:Across the range of travel-related mobile activities, travelers show the most interest in functionality that makes relevant bits of scattered information convenient and easy to retrieve. Tasks that facilitate travel-ing convenience via mobile device (boarding pass, check-in) also command strong interest. These well-received features that address the immediate needs of travelers on the road have a substantially broader appeal in comparison to more complex tasks like making new reservations.

•Powertothepeers:Whatever the medium – online, offline, from friends or strangers – consumers hunger for fellow traveler perspec-tive. In emerging markets, advice most often comes directly from friends and family. But all over the world, anonymous traveler reviews and advice received through social networks are becoming ever more popular flavors of peer opinion.

•Posting today, booking tomor-row? Consumers in developed markets tend to use social networks for very specific things, and stay

within the original premise of these sites – to keep up with people they know. However, travelers in emerg-ing markets are less likely to have grown accustomed to planning and booking travel online over the years. Therefore, social networks may become an instinctive source of information for both user and company-generated content (such as pricing and room descriptions) in emerging markets. In developed markets, travelers are not as likely to seek company-generated content on their social networks because they habitually use other web-sites like OTAs, supplier sites, etc. The differentiation between what people do on company websites versus social networks may there-fore become increasingly unclear in emerging markets.

2020 Foresight: The Future of Travel Planning

An exploration of how new technolo-gies may change travel planning in the future.

•Hardware Agnosticism: Over time, the distinctiveness of mobile platforms will not be so important. The limitations of clumsy fingers on small screens may be here to stay, but voice and image/visual recognition will make input easier. Stored information will become more sophisticated, enabling trav-elers to move beyond the con-fines of individual activities on individual devices. Ultimately, the “Splinternet” created by platform proliferation (PC, phone, tablet,

gaming system, TV, etc.) will once again converge.

•TheTrulyPrivate“PrivateSale”:Marketplaces around the world have been flooded with promo-tions, deals and now flash sale brands that tout deep discounts with no context of whether an individual would be interested in the product or not. There is a dif-ferent kind of flash sale, however, that technology will eventually make possible. With consumer seg-mentation and behavioral targeting becoming ever more sophisticated, demand management will be able to go step further, allowing sellers to microtarget promotions to spe-cific consumers and offer a truly private sale that drives relevance for both the buyer and seller.

•Cumulative “Intelligence”: With hundreds of options for even a des-tination/date-constrained search, shoppers are often overloaded. Eventually though, regardless of the form of input, programs will be able to “learn” from an individual’s behavior over time. When someone executes a search for the fifth time, the results should be more relevant than the first time. Perhaps it will never be truly 1:1, but microse-gmentation will at the very least help companies analyze behavior and deliver increasingly intelligent results.

•Smart Systems and the VirtualPersonal Assistant: While we would all love a robot house ser-vant to do our chores, the notion



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that devices themselves will be “smart” and interconnected is more likely (at least for 2020). Computer chips might be in everything from coffee machines to light fixtures. In these household examples, timers can already regulate certain activi-ties. The difference will be that in the future, the manual nature of programming them will likely be replaced by intercommunica-tion between devices. In the future, we will still use different websites for different things. However, a program that collects and stores

this information may act as a vir-tual personal assistant – recogniz-ing and processing inputs from the sites we visit and what we do on them – and interact with sites on our behalf.

•Biometricsandthe“CreepyLine”Creep: Biometric input (such as facial expression and heartbeat) could someday be read as mun-danely as location is today, and companies could potentially utilize the information to ascertain our moods and reactions and adapt

their offerings accordingly. As with the virtual personal assistant, the prohibitive issue is privacy and the “creepy line.” The notion of privacy and the mental line that defines what is acceptable is con-stantly weighed against the benefits of sharing information. As we con-sider the possibilities, we should also bear in mind that elements that seem to cross the creepy line today, might be readily accepted in a decade’s time.


PhoCusWright's Empowering Inspiration: The Future of Travel Search February 2012

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tives of their trendsetters. With such a strong rate of growth and overall change in emerging mar-kets, the behavior of the general traveler population in the past 12 months (in the absence of histori-cal trending) is not an ideal indica-tor of what the next few years have in store. Trendsetters like discre-tionary travelers, however, reflect unique marketplace characteristics while providing direction for the future.

As the overarching purpose of this study was to understand consumer needs for future development, the target respondent base was designed to represent trendsetting discretion-ary travelers – the segment that has the most sophisticated shopping needs. The consumers examined in this study are not the mainstream – they take holidays as they please, plan online and travel frequently enough to know what they like and dis-like. The methodology was designed this way for several key reasons:

•Trendsetters point to where themarketisheaded.Years ago, U.S. online companies that assumed Europe would follow similar trends learned that such assump-tions left them ill-equipped to win – they had to learn to adapt to each new market (or acquire local players). Rather than examining trends in developed markets and assuming other markets will fol-low in the future, this study seeks to find contrast between a broad range of markets and the perspec-

The Discretionary Traveler

Figure 1Discretionary Traveler Incidence

*Source: ITU World Telecommunication / ICT Indicators DatabaseQuestion: Which of the following, if any, have you done while traveling for leisure in the past 12 months? In the past 12 months, how many overnight trips of each type did you take that required the purchase of travel products (such as airline tickets, lodging and long-distance rail)? Of the leisure trips you took in the past 12 months, how many trips, were to the following? Which of the following, if any, have you done online (via computer or mobile device) for your lei-sure travel in the past 12 months? Please indicate who played an active role in planning your leisure trips taken over the past 12 months? Note: Brazil has 2% under 18 years of age, India and Russia each has less than 0.5% 18 years of age.Base: Internet users who travel for leisure (Unweighted n – U.S. 7,374; U.K. 5,411; Germany 6,844; India 9,450; Russia 5,471; Brazil 8,987) Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.

U.S.

2010InternetReach*

U.K.

Germany

India

Russia

Brazil

Took fewer than three trips

Did not play an active role in planning trips

THE DISCRETIONARY TRAVELER

Did not plan trip online

Did not select destination independently

58% 18% 19% 79%

85%

82%

8%

43%

41%

2%2%

54% 20% 23%1%2%

61% 17% 18%1%2%

48% 37% 10%2%3%

55% 20% 20%2%3%

41% 39% 13%2%4%



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•Only discretionary travelerschoose their destination. To be able to provide insight into the full travel planning process, includ-ing destination selection, target respondents must participate fully in the process. Destination selec-tion represents one of the most complex decisions a traveler makes in the process of planning a trip. Travelers who do not take discre-tionary trips would not be able to provide a description of their actual behavior/experienced perspective with regard to this key phase of travel planning.

•Developed vs. emerging mar-ket comparisons can be domi-natedby trends thatmaskotherinsights.The broad range of mar-kets explored in this study are characterized by huge disparities in basic metrics like Internet access, which is roughly 10 times more common in the U.S. compared to India. Socio-economic differ-ences would overwhelm overall trends if looking at the general traveling population, and underly-ing market characteristics would become indiscernible. By leveling the “playing field,” we are able to compare similar consumer targets across markets, and results are not dominated by basic infrastructural and demographic elements such as Internet access and income.

•Familiarity is a foundation forconstructive feedback.As emerg-ing markets are brimming with new travelers, an element of level-ing the playing field requires that

travelers are experienced enough in the process of planning to have informed opinions. As the study explores complex perspectives such as frustration points and website functionality, respondents were required to have taken at least three trips in the past year to establish that they have experience with the tools available today.

The percentage of Internet users who qualify as discretionary trav-elers is strongest in the U.K. and Russia, at 23% and 20%, respec-tively (see Figure 1). Though the percentages are similar for the two markets, Internet usage is roughly half as common in Russia as in the U.K. Therefore, relative to the entire population, the U.K. (as well as Germany and the U.S.) come in well ahead of Russia. Over time, as mid-dle class lifestyles (and consequently, leisure travel) become more wide-spread in Russia, the percentage of discretionary travelers is likely to fall, as new travelers are more likely to start with other types of trips, such as visiting friends/family. The U.S. and Germany show discretionary traveler incidence at 19% and 18%, respec-tively. German travel patterns con-sistently reveal a longer trip duration and a lower frequency of travel com-pared to other developed markets. Accordingly, 61% of German trav-elers were excluded from the study because of their low frequency of trips, compared to 58% in the U.S.

India and Brazil have the lowest percentage of discretionary travelers. Unlike the other markets, a sub-

stantial portion of Indian (37%) and Brazilian (39%) travelers were excluded because they did not engage in the destination selection – their trips were constrained by other influences. In India, spiritual and religious activities often dic-tate leisure travel. In Brazil, visiting friends and relatives and social events are common influencing factors.

KEY DISCRETIONARY TR AVELER CHAR ACTER-ISTICS BY MARKET

U.S.

Although the incidence of discretion-ary travelers is not particularly high in the U.S., those consumers who do fall into this high-opportunity group are big spenders, contributing $5,189 per household to leisure trav-el annually – more than any of the other markets covered in this study. Despite this high level of spend, U.S. discretionary travelers are the least likely to leave their borders (43% travel internationally). Additionally, their trips tend to be relatively short, not only compared to European mar-kets, but emerging markets as well. The U.S. ties with India for the smallest portion of leisure trips that last seven nights or longer (29%).

Though the vast majority of discre-tionary travelers in the U.S. book online (84% for air, 71% for hotel), these results fall slightly behind the U.K., which leads in online book-ing percentages. Nevertheless, U.S. discretionary travelers are more likely to consider them-

2 PhoCusWright’s European Consumer Travel Report Second Edition



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Figure 2Key Discretionary Traveler Characteristics by Market

U S U K Germany India Russia BrazilAverage age 44 47 44 36 37 36

Average annual householdleisure travel expenditure (USD) $5,189 $4,642 $4,027 $2,527 $2,912 $5,049

International travelers 43% 82% 87% 44% 66% 54%Business travelers 42% 31% 49% 78% 83% 78%

Early users of new technologies (self-described) 55% 41% 51% 76% 88% 64%

Number of websites typically used when shopping for travel products

3.7 4.0 4.1 3.6 5.2 4.2

Online air bookers 84% 88% 75% 70% 63% 73%Supplier website air bookers 36% 46% 34% 17% 41% 47%OTA air bookers 38% 24% 29% 51% 12% 19%Online lodging booker 71% 74% 66% 66% 56% 62%Upscale lodging (four or five-star) consumers

50% 46% 57% 35% 44% 50%

Percentage of all leisure trips that are discretionary

60% 62% 61% 35% 58% 48%

Percentage of all leisure trips that are at least 7 nights

29% 37% 41% 29% 50% 31%

Smartphone owners 57% 60% 65% 76% 86% 73%Facebook users 72% 67% 53% 88% 47% 78%

Additional Market InformationU S U K Germany India Russia Brazil

2010 Internet reach* 79% 85% 82% 8% 43% 41%Discretionary traveler incidence** 19% 23% 18% 10% 20% 13%Discretionary traveler sample size (unweighted) 823 822 782 710 761 740

*Source: ITU World Telecommunication / ICT Indicators Database **Incidence among Internet users who have taken at least one leisure trip in the past 12 monthsSource: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.



Page 8

selves early adopters of technology than their European counterparts.

U.K.

Though the U.K. ranks behind the U.S. and Brazil in terms of expendi-ture, this result is at least partly driv-en by broader incidence of the discre-tionary traveler lifestyle (the highest of all markets at 23%); the audience extends far beyond the wealthiest tier of travelers. Despite having the high-est level of online bookings, U.K. dis-cretionary travelers are the least likely to consider themselves early tech-nology adopters (41%), coming in substantially below Germany (51%). Though the age difference is not dra-matic, U.K. discretionary travelers are the oldest of the group, and age plays a very significant role in met-rics concerning technology adoption.

Germany

Discretionary travelers in Germany spend the least of the developed markets, but similar to the U.K., this trend is driven by the lifestyle being accessible to a broader demographic range rather than a pervasively lower level of expenditure among all travel-ers. However, the lower propensity to book online in comparison to the U.K. and the U.S. is pervasive, and reflects a characteristic that applies to the German marketplace as a whole. Another characteristic of the broader German market is the narrower audi-ence for social networks. At 53%, discretionary travelers in Germany are substantially less likely to be Facebook users than in the U.S. (72%) or the U.K. (67%). German discre-

tionary travelers are the most likely to stay in upscale or luxury properties.

India

In some ways, India is the emerg-ing market with the biggest con-trast to the developed markets. With Internet penetration still extremely low at 8%, the audience for online travel is very narrow in relation to the population as a whole. Indian discretionary travelers spend the least on travel across all the markets, most often taking domestic trips influ-enced by social or religious motiva-tions. But despite huge disparities in general lifestyles, Indian patterns display several similarities to the U.S. – a relatively low incidence of inter-national travel, a tendency to take shorter trips, and the use of fewer websites in the process of shopping for travel. While the first two of these three trends are somewhat linked (as international trips tend to be longer) the low number of websites used in both India and the U.S. is the result of completely different dynam-ics in the two markets. Marketplace maturity has consolidated traffic in the U.S., while marketplace imma-turity drives the trend in India.

Russia

Despite average travel expenditure at a level only slightly higher than in India, Russian discretionary travelers are the most likely among the emerg-ing markets to leave their borders (66%). Russia’s cold climate is a like-ly contributor to this dynamic. Of all the markets covered in the study, Russia has the lowest level of online

booking (63% for air, 56% for hotel). However, Russia has the highest per-centage of early technology adopt-ers (88%); the willingness to adapt to online booking is clearly there. Russian discretionary travelers tend to take long trips rather than short ones, which is consistent with their propensity for international travel. The vast majority (83%) of them travel for business at least once a year.

Smartphone ownership reflects the Russian early adopter orientation, as 86% carry Internet-capable phones. The three emerging markets all have high levels of smartphone ownership in comparison to the developed mar-kets, but age is an important factor – discretionary travelers in emerging markets are roughly 10 years younger than their counterparts in developed markets. Though Facebook has the lowest reach among discretionary travelers in Russia, this finding is symptomatic of Facebook’s lower market share in Russia compared to Vkontakte, rather than ambiv-alence to social networks overall.

Brazil

The high travel expenditure among Brazilian discretionary travelers is remarkable at $5,049. However, the low level of incidence reflects how exclusive the group currently is; over time, the average spend will fall as leisure travel becomes accessible to a broader audience. Social motiva-tions are the most common rea-son Brazilian travelers do not go through destination selection as often as their counterparts, but they are also slightly more likely than travel-



Page 9

ers in the other markets to have (or share) vacation homes. Fortunately for some Brazilians, they often do not have to travel far to feel like they are on holiday. Nevertheless,

over half (54%) of Brazilian discre-tionary travelers take international holidays. While Facebook usage is very strong at 78%, it is not the only social network in town – a majority

of Brazilian discretionary travelers also use Orkut, which has a sub-stantial following in India as well.



Page 11

By the time travelers click the “Book Now” button, they have already gone on a journey. They have pored over pictures, dissected reviews, sought advice from friends and relatives and fretted over which flight to book (and when to book it) – all to make sure the holiday is the best that it can be. This section explores the phases of the trip planning journey from destination selection to booking.

SECTION HIGHLIGHTS

• Developed markets have a substan-tially longer travel decision time-

line than emerging markets – the U.K. has the longest timeline (116 days) and India has the shortest (50 days)

• General search engines are the most commonly used website cate-gory in travel planning (both desti-nation selection and travel compo-nent shopping), except in the U.S., where OTAs are more common for both phases

• For airline tickets, the most com-mon booking channel is supplier websites, except in the U.S. and

India, where booking with OTAs is more common. In contrast, general hotel booking channel trends show OTAs in a stronger position com-pared to hotel websites.

THE DECISION TIMELINE

Travelers spend weeks contemplat-ing their holiday options and typi-cally book months in advance of their trips. This has certainly been the trend in developed markets (see Figure 3). For example, in the U.S., the average discretionary traveler spends 21 days selecting a destina-

The Journey Before the Trip

Figure 3Decision Timelines (Average Number of Days)

Question: Please select one answer for each of the following questions: How much time did you spend researching/selecting your destination for this trip? How far in advance of your departure date did you decide to go to that destination? How much time did you spend researching/selecting travel components, such as airline tickets or hotel rooms, before you made the first booking for this trip? How far in advance of your departure date did you book the travel prod-ucts for this trip? Base: Discretionary travelers (Weighted n – U.S. 857; U.K. 801 ; Germany 900; India 791; Russia 763; Brazil 829)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.

U.S.

Total Days

U.K.

Germany

India

Russia

Brazil

Destination Selection

Shopping


Shopping


Shopping


Shopping

Destination SelectionShopping


Shopping

Spent shopping for travel componentsSpent selecting destinationBetween destination selection and departure

Between �rst booking and departure

87216417

10016

8415

94146816

3812

3110

6518

3712

7530

5525

108

81

116

99

108

84

50

41

83

49

105

80

90 days 60 days 30 days



Page 12

tion, and this selection is made 87 days before departure. This U.S. dis-cretionary traveler will then spend 17 days choosing travel components like airline tickets and hotel rooms, and make his first booking 64 days before departure. In emerging mar-kets, however, the planning cycle is much shorter and varies substantially by country. Brazil looks most similar to the developed markets overall, but Brazilians spend more time weighing both their destination (30 days) and product purchases (25 days) before committing. Indian travelers have the shortest destination lead time (starting 50 days out), partly because they most often travel to domestic

destinations. Russians display a size-able gap of nearly a month between destination selection and shopping, and have a relatively short booking window (37 days). Merchandisers in India or Russia might find suc-cess promoting July travel in June, but for U.K. retailers it would be far too late, as most travelers would have made their decisions by May.

THE DESTINATION DECISION

Deciding where to go on a vacation is an extremely complex decision. Not only are consumers considering one particular trip, but the range of trips

taken before and planned for after a particular trip can have strong impact as well. Many travelers do not want to visit the same area or type of des-tination back-to-back. In addition, the destination consideration set is frequently illogical because it is often based on chance – a friend happened to go there and loved it, or an episode of a favorite show was set there and it looked amazing. All this complexity makes decision-making difficult and building effective tools to support decision-making even more difficult.

The most common source of desti-nation information is the Internet via computer, but particularly in

Figure 4Information Sources of Decision to Visit the Destination

Question: What sources of information influenced your decision to visit the destination for this trip?Base: Discretionary travelers (Weighted n – U.S. 872; U.K 830.; Germany 913; India 797; Russia 768; Brazil 831)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.

U.S. U.K. Germany India Russia Brazil

Websites via computer

Personal recommendations from friends/family

Online advertising/email

Printed publications, articles or brochures

Information in printed travel guidebooks

Personal advice from travel professionals/travel agents

Websites or applications via mobile device

47%48%

52%59%

65%54%

53%

23%

16%

18%18%

37%30% 35%

58%57%

12%8%

18%29%

26%

11%14%

14%21%

15%

21%

10%15%

19%25%

21%

19%

6%7%

13%23%

24%

8%8%

7%24%



Page 13

emerging markets, word of mouth is very close behind (see Figure 4). Travelers in emerging markets tend to use more sources of information generally, while travelers in the devel-oped markets are not doing as much legwork. Discretionary travelers in emerging markets are also younger on average than their counterparts in the developed markets; they do not have as much personal experience to guide them. Mobile device usage is more than twice as common in emerging markets, most notably in India, where nearly a quarter (24%) of discretionary travelers research destinations online on their phones.

General search engines are the most common website category for des-tination selection in all markets except the U.S., where OTAs are slightly ahead of them (see Figure 5). Nevertheless, referencing OTAs is most common in India, where two out of three travelers use them for destination information. Traveler review websites are most popular in Russia, while usage is lowest in the U.S. Because OTAs are so popu-lar in the U.S., travelers often read user reviews on OTAs rather than on user review sites. Overall, travel-ers in emerging markets again show a propensity to use more informa-tion sources than those in devel-

oped markets, with the exception of Brazil, which displays patterns similar to the developed markets.

SHOPPING

Retailers often refer to the concept of the “moment of truth” – when the consumer is in the store looking at a shelf of competitive products from which to make a choice. For the travel industry, the moment of truth has never worked that way. Holidays cannot be picked up and examined from a shelf or rack; you cannot smell them or try them on. Instead, the decision-making has always happened far away from the product itself, and

Figure 5Websites Used for Destination Selection

Question: What type(s) of websites did you use?Base: Discretionary travelers who use the Internet when selecting a destination (Weighted n – U.S. 432; U.K. 429; Germany 495; India 526; Russia 534; Brazil 497)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.


General search engines

Online travel agency websites

Traveler review websites

Travel provider websites

Destination websites

Travel guide websites

50%57%57%

72%77%

53%

47%

47%

36%38%

51%40%

45%66%

44%

29%53%

43%62%

34%

36%26%

53%33%

34%

25%23%

33%48%

37%

29%

15%26%

15%38%

44%



Page 14

relied on nothing but descriptive information. This is why travel is so well-suited for the online medi-um, which has vastly improved the quantity and quality of travel infor-mation. Through clarity, real-time accuracy and breadth, online travel inherently empowers consumers.

In developed markets, the domi-nance of online channels is therefore overwhelming; nearly three quarters (73%) of travelers in the U.S. and U.K. use their computers to compare and choose travel products online (see Figure 6). The other markets are not far behind, with Germany and Brazil trailing at 66%. The key difference

between emerging markets and the more mature ones is consumers’ reli-ance on sources of information other than websites. Travelers in developed markets often do all their planning online, whereas those in emerging markets tend to use a broader range of channels. Mobile options attract a notable audience in emerging mar-kets, but the results should not be interpreted as definitive evidence of the “leapfrog effect.” Most of the travelers who selected mobile also selected websites via computer.

In the destination selection phase, U.S. discretionary travelers are an exception in that they favor OTAs

over general search engines. In the shopping phase, however, the OTA lead is much stronger at 49% ver-sus 38% for search. Indian travel-ers again show the most widespread use of OTAs overall at 67%, which places OTAs in a tie with search for the top spot. Russia leads in search usage at 71%, as well as in the use of traveler review websites (52%). Generalist review site otzyv.ru has achieved widespread popu-larity in Russia and is likely a sub-stantial contributor to this trend. Supplier websites show a strong peak in India at 52%, driven primar-ily by the railway website irctc.co.in.

Figure 6Information Sources for Travel Product Shopping

Question: What sources of information did you use when comparing and choosing leisure travel products, such as airline tickets or hotel rooms for this trip? Base: Discretionary travelers (Weighted n – U.S. 872; U.K 830.; Germany 913; India 797; Russia 768; Brazil 831)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.


Websites via computer

Personal recommendations from friends/family

Online advertising/email promotions

Calls/visits to travel professionals/travel agents for advice

Calls/visits to travel providers, such as airlines and hotel companies

Websites or applications via mobile device

73%73%

66%70%

69%66%

34%

23%

16%

23%17%

25%49%

45%

13%11%

17%35%

28%

9%8%

6%28%

18%

21%

10%15%

19%25%

21%

19%

6%7%

13%23%

24%



Page 15

lodging are very different, booking channels were captured and ana-lyzed on an individual product level.

In most markets, airline websites attract more bookers than OTA web-sites, but the U.S. and India are exceptions (see Figure 7). While the OTA lead in the U.S. is small (38% OTA vs. 36% airline website), the lead in India is substantial (51% OTA vs. 17% airline website). The trend is completely the opposite in Russia and Brazil, where air-line websites have a wide lead over OTAs. Offline channels are most popular in emerging markets, where the shift to online channels is still in the early stages. Offline travel

Destination websites have a substan-tial audience in emerging markets during the shopping phase. This is unusual given the inconsistency of product information on destination websites. There are several likely drivers of this trend. When trav-eling internationally, these travelers are often visiting gateway cities that typically have sophisticated websites with shopping capabilities. When traveling locally, hotel inventory may not be available on OTAs and other online aggregators, whereas destina-tion sites are likely to at least have a listing of hotels in the area. In addition, these consumers are like-ly considering websites that have destination-centric addresses (often

affiliates of OTAs) to be destination websites, though they are not associ-ated with the official tourism boards.

B OOKING

The last stop of the planning jour-ney typically happens after weeks of searching and comparing. While travelers have decided what they want to book at this point, there is still yet another decision to make – where to book. Many make this decision without realizing it, simply following the shopping path to the end. Others make a conscious switch, most often from OTA to supplier website, par-ticularly when it comes to airline tickets. Since the trends for air and

Figure 7Websites Used for Travel Product Shopping

Question: What sources of information did you use when comparing and choosing leisure travel products, such as airline tickets or hotel rooms for this trip? Base: Discretionary travelers who use the Internet when comparing and choosing leisure travel products (Weighted n – U.S. 669; U.K 640.; Germany 629; India 619; Russia 582; Brazil 603)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.


General search engines

Online travel agency websites

Traveler review websites

Travel provider websites

Travel search engines

Destination websites

38%44%

49%67%

71%53%

50%

36%

36%34%

49%42%

43%67%

36%

21%42%

38%52%

25%

33%28%

52%30%

11%

26%19%

34%19%

30%

41%

17%13%

25%36%

35%



Page 16

agents have roughly twice the level of influence in emerging markets (10-11%) compared to the U.S. and U.K. (4%), while Germany retains a higher level of usage at 9%.

Lodging, on the other hand, has a vastly different distribution frame-work. Hotel websites attract far fewer bookers than their airline counter-parts. Nevertheless, in the U.S., where a large percentage of inventory is chain-affiliated, the audience for hotel websites is substantial. Though they are very active online, American travelers (20%) are twice as likely to call a hotel to book as their British counterparts (10%). But at 24%, German travelers are the most likely of all to book direct via phone. OTAs are the most common booking chan-nel across all the markets except Russia, and barely in Germany.

However, it is likely that consum-ers in Germany and Russia are not able to distinguish clearly between OTAs and travel search engines, since neither market is likely using travel search engines (metasearch) to book to the extent the responses indi-cate – 18% in Germany, 19% in Russia. Again, offline travel agents are a substantial booking chan-nel in the emerging markets, par-ticularly Russia (20%) and Brazil (18%), whereas their usage among discretionary travelers is minimal in the U.S. and U.K., both at 3%.

OTAS – RETENTION VER SUS DEFECTION

In the frictionless environment of the Internet, there is little to keep consumers from jumping from one site to another. OTAs suffer high

rates of defection among their shop-pers, who often use their sites as shopping engines, but not book-ing engines. To examine how well OTAs retain their shoppers, compare the average booking channel results against those who shopped on OTAs.

Figure 9 displays air booking meth-ods for the whole discretionary trav-eler group as well as for OTA shop-pers. Though OTA shoppers show a higher propensity to book air on OTAs, they are not consistently less likely to book air on supplier web-sites. The positive impact that OTA visitation has in Brazil is negligible for air travel – in fact, OTA shoppers are more likely to book on an air-line website (50%) than the average discretionary traveler (47%). This is not an indication that OTAs drive their shoppers to airline websites –

Figure 8Travel Products Booking Methods: Air Travel

Question: How did you book the travel products for this trip? Base: Discretionary travelers who booked airline tickets (Weighted n – U.S. 377; U.K 322.; Germany 301; India 456; Russia 310; Brazil 516)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.


Called travel providers Called/visited a retail travel agentUsed a travel provider websiteUsed a retail travel agency website

Used an online travel agency websiteUsed a travel search engine websiteAt the airport/property location

12%

38%36%

7%

2% 0%4%

9%

24%

46%

12%

5%0%

4%

16%

29%34%

9%

2% 0%

9%

15%

51%

17%

1%

2%4%

11%

23%

12%

41%

5%4%

4%

10%15%

19%

47%

3%4%

2%

10%



Page 17

Figure 9Travel Products Booking Methods: Lodging

Question: How did you book the travel products for this trip? Base: Discretionary travelers who booked hotel rooms (Weighted n – U.S. 645; U.K 522.; Germany 527; India 563; Russia 394; Brazil 556)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.

Figure 10Booking Methods: Air

Question: How did you book the travel products for this trip? What sources of information did you use when comparing and choosing leisure travel products, such as airline tickets or hotel rooms for this trip? Base: Discretionary air travelers and OTA shoppers who booked air travel (Weighted n – U.S. 377; U.K 322.; Germany 301; India 456; Russia 310; Brazil 516)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.


Called travel providers Called/visited a retail travel agentUsed a travel provider websiteUsed a retail travel agency website

Used an online travel agency websiteUsed a travel search engine websiteAt the airport/property location

20%

31% 31%

7%

2%

7%3%

10%

20%

38%

10%

5%

14%

3%

24% 25%19%

18%

3% 3%

7%

12%

39%

18%

6%3%

12%11%

17%13%

16%19%

7%7%

20%

9% 9%

30%

13%10%

12%

18%

Supplier Website

Average OTA Shoppers

OTA Supplier Website OTA


36%

46%

34%

17%

41%47%

38%

24%29%

51%

12%19%

31%

43%

28%

18%

30%

50% 50%

30%34%

60%

23%20%



Page 18

age, but not substantially less likely to book on supplier websites (see Figure 11). However, hotel website share is considerably lower than airline share in most markets. The sharpest dichotomy between products is seen in the U.K. and Brazil. While suppli-ers reign in air travel in these markets, OTAs have the upper hand in hotel.

Though the mission of planning and booking travel is essentially the same everywhere, the channels travelers

use are materially different market to market. Industry players have the ability to truly shape what people buy and where they buy it. There is no universal online/offline or suppli-er/intermediary equilibrium. Every travel company must craft its own strategy in a game that is constantly redefined by the players. The stron-gest contenders get to write the rules.

people who do not shop on OTAs are more likely to book offline rather than on supplier websites. In the U.K., Russia and Brazil, even OTA shoppers are more likely to book air tickets on an airline website than an OTA. Low-cost carrier direct distri-bution policies are a likely contribu-tor to this trend in some markets.

Hotel booking trends reveal a similar result – OTA shoppers are more likely to book hotels on OTAs than the aver-

Figure 11Booking Methods: Lodging

Question: How did you book the travel products for this trip? What sources of information did you use when comparing and choosing leisure travel products, such as airline tickets or hotel rooms for this trip? Base: Lodging consumers and OTA shoppers who booked lodging (Weighted n – U.S. 645; U.K 522.; Germany 527; India 563; Russia 394; Brazil 556)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.

Supplier Website

Average OTA Shoppers

OTA Supplier Website OTA


31%

20%19%

18%16%

9%

31%

38%

25%

39%

13%

30%27%

16%19%

15%18%

7%

45%

52%

35%

45%

19%

37%



Page 19

In the extremely competitive online travel arena, sometimes it is the little things that can help a company break away from the pack. In developed markets, travel retailers – especially OTAs – typically have comparable stock on their virtual shelves; differ-entiation cannot be built on inven-tory alone. While today’s travel web-sites have achieved widespread use, there are still points of frustration during each phase of travel plan-ning that can erode an otherwise good experience. This section will review these lingering issues that represent an opportunity for enter-

prising retailers to improve their offerings and perhaps gain a bit of advantage over the competition.

SECTION HIGHLIGHTS

• For destination selection, travelers in most markets are frustrated by having to sift through too much information, but in India and Brazil, information accuracy is a more common complaint

• In the shopping process, sifting through too much information is also a common issue, but the top

complaint in most markets is that travelers feel compelled to search around a lot to ensure they are get-ting a good deal

• Booking has fewer complaints than other phases, but a substantial por-tion are anxious about price vola-tility and feel rushed into booking out of fear that the price will go up

DESTINATION SELECTION

Years of tweaking have helped travel websites in developed markets create products that cater to their traveler

Patches of Turbulence

Figure 12Frustrations When Selecting Destination Online

Question: What, if anything, has frustrated you while selecting destinations online for your leisure trips in the past 12 months?Base: Discretionary travelers (Weighted n – U.S. 872; U.K 831.; Germany 913; India 797; Russia 768; Brazil 831)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.


Percentage frustrated by at least one factor (aggregate)

I had to sift through too much information

I was not sure that the information I found was up to date

There was no easy way to search multiple destinations at once

There was no way to search based on my preferences (such as secluded locations)

42%46%

49%72%

78%70%

36%35%

21%22%

29%33%

30%51%

13%15%

20%

13%

36%

6%

16%14%

29%20%

21%

7%12%

17%22%

20%



Page 20

Each of the top three complaints are somewhat related. They are not challenges created because the infor-mation they seek is unavailable or inaccurate (though sometimes this is also an issue, as demonstrated by the fourth most common com-plaint). Instead, the biggest frustra-tions have to do with the aggregation and organization of information. Providing consumers with a hotel price benchmark that lists things like a three-month average price and the average price of comparable hotels might help bring peace of mind and minimize the cross-checking and sifting that people feel compelled to do. Tools on finance websites may therefore provide an unconventional source of inspiration for building a better travel shopping experience.

B OOKING

Once consumers have played the field to their heart’s content and are ready to commit, their needs shift sub-stantially. Nevertheless, frustration levels are only slightly lower than in previous phases. The most common two issues are closely connected, as they both relate to price fluctuations. The pricing volatility introduced by the practice of yield management has created substantial anxiety about when to book. It is a common (and uniquely travel-related circumstance) for the price of an individual prod-uct to change significantly within a short period of time. It can feel like a game of chance to the traveler, who wonders if he should wait or book. Consumers often book as early as they can (at least for airline tickets), in part because they fear the price will rise. Tools that support price

better roll-ups and condensed snap-shots of information such as seasonal temperature/precipitation and price ranges. Freshness and accuracy of des-tination information is also an issue, particularly for emerging markets.

SHOPPING

Though travel websites tend to focus more energy on the shopping phase, consumers show similar levels of frus-tration overall in comparison to des-tination selection (see Figure 13). Travelers in emerging markets once more show a higher likelihood of being frustrated with some element of their online shopping experience. Most markets share the top issue – travelers’ need to search around to feel confident about their choices. It would seem that metasearch prod-ucts feed right into this need, but the issue is more complex than com-paring suppliers and a handful of OTAs. The trend is only exacerbated by the barrage of flash sale prod-ucts touting exclusive deals. Many consumers feel like they are making a hasty, potentially regrettable pur-chase if they do not shop around.

Holidays represent an investment of both precious time off and a con-siderable bundle of cash. As with any substantial investment, consum-ers seek not only information on a product they are interested in, but also the context of what else is out there. They also need to feel con-fident that they could not get that product for a lower price, which feeds into the third most common complaint – there was no way to compare the price to an average.

needs rather well. Or, perhaps trav-elers have learned how to navigate them over time. Whatever the driv-ers may be, consumers in developed markets are far less likely to be frus-trated when selecting a destination online, compared to consumers in the emerging markets (see Figure 12). Just over four in 10 (42%) U.S. trav-elers experience frustration online when deciding where to go, com-pared to over three quarters (78%) of Russian travelers. The biggest issue in most markets is perceived to be information overload. But more specifically it is the organization and navigability of content that typically frustrates people, along with a healthy dose of irrelevant information.

Summarizing information at a high level, then allowing consumers to drill for more detail can help cut the clutter. For example, climate and pricing are common criteria for des-tination selection. It is easy to find information on either criteria, but the data most often exists in a very granular format. On most travel web-sites (though some might not have climate information at all), consum-ers would have to enter dates to get that information, and have to do it for each destination they want to evaluate. At this early stage of travel planning, consumers just want to sample the flavor, not read the list of ingredients. They want to know if the hotels in Paris are less expensive than Rome, not how much the Le Meridien is compared to the Sofitel – at least not yet. It is not easy to browse destinations on most travel websites today; especially for the inex-perienced new travelers coming from emerging markets, there is a need for



Page 21

important to all retail websites; but in developed markets it is becom-ing ever more critical, as growing visitor volumes becomes increas-ingly difficult. Investing in tools to alleviate consumer frustration offers the potential to improve sat-isfaction as well as conversion in general. But solving problems for discretionary travelers in particu-lar can be especially lucrative, given their high-value travel expenditure.

consumers have been conditioned to expect that the lowest fares will be prepaid and non-refundable. In emerging markets, however, the rules are not as clear to travelers – three in 10 Russian travelers find cancel-lation/refund policies to be unclear.

While many of the lingering frus-trations travelers have are rooted in things that cannot be “fixed” (i.e., pricing volatility), they represent excellent opportunities to improve the user experience. Conversion is

benchmarking for shoppers can also help address this booking anxiety.

Caching issues can contribute to the third most common frustration dur-ing booking – pricing changes in the midst of the purchasing pro-cess. While this issue is never com-pletely preventable, building better and more efficient caching/updating systems can help lessen its frequency. Confusion about cancellation/refund policies is marginal in developed markets, in part because so many

Figure 13Frustrations When Shopping for Travel Products Online

Question: What, if anything, has frustrated you comparing and choosing travel products (such as airline tickets or hotel rooms) online for your leisure trips in the past 12 months?Base: Discretionary travelers (Weighted n – U.S. 872; U.K 831.; Germany 913; India 797; Russia 768; Brazil 831)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.



I had to search around a lot to feel con�dent that I was getting a good deal

I had to sift through too much information

There was no way to see if the current price was high or low compared to its average

I was not sure that the information I found was up to date

47%48%

47%71%

79%68%

43%27%

24%26%

20%30%

29%38%

17%17%

21%

16%

24%

8%

16%16%

27%27%

19%

9%14%

27%30%

26%



Page 22

Figure 14Frustrations When Booking Travel Products Online

Question: What, if anything, has frustrated you while booking travel products (such as airline tickets or hotel rooms) online for your leisure trips in the past 12 months?Base: Discretionary travelers (Weighted n – U.S. 872; U.K 831.; Germany 913; India 797; Russia 768; Brazil 831) Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.



There was no way to see if prices were likely to go up or down

I felt rushed into booking because I was afraid the price would go up

The price sometimes changed while I was trying to book

The cancellation/refund policies were not clear

40%44%

39%70%

72%61%

24%26%

20%20%

14%30%

22%28%

16%16%

7%

12%

24%

6%

14%13%

29%21%

14%

7%10%

25%30%

19%



Page 24

The tools available on today’s travel websites have clearly served most consumer needs sufficiently, as online channels are the predominant medi-um through which consumers (who have Internet access) choose to book. Sufficiency, however, leaves plenty of room for improvement. The previous section highlighted areas where needs are not being met, identifying sources of dissatisfaction. This section moves beyond the realm of needs into consumer wants – identifying ele-ments that would boost satisfaction during the travel planning process.

SECTION HIGHLIGHTS

• Roughly half of discretionary trav-elers in the developed markets, and well over half in emerging markets, do not have a set destination in mind when planning trips

• Distance, traveling time and bud-get are the most flexible trip ele-ments

• Travelers show the most interest in searching by budget, price includ-ing fees and interest/activities

FLEXIBILIT Y

To isolate areas for potential improve-ment in travel search, respondents were asked a series of questions regarding their flexibility while plan-ning their last discretionary trip. In the developed markets, nearly half of travelers had a particular place in mind (see Figure 15). In the emerg-ing markets, the group with pre-determined destinations was small-er, at roughly a third of travelers. Correspondingly, the audience for destination selection tools is slightly

The Appetite for a New Recipe

Figure 15Destination Flexibility (Last Discretionary Trip)

Question: Which of the following statements best describes the circumstances of this trip? Base: Discretionary travelers (Weighted n – U.S. 872; U.K 831.; Germany 913; India 797; Russia 768; Brazil 831)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.

U.S.

U.K.

Germany

India

Russia

Brazil

I had the speci�c place in mind and did not research destination options

I hadn't been thinking about taking this trip, but saw a good deal

Other

I had no idea where I wanted to go until I started researching options

I had a few places in mind when I started researching destination options

50% 43% 2%2%3%

46% 41% 3%6% 4%

47% 43% 1%6% 4%

31% 59% 1%4%4%

36% 56% 1%4%2%

31% 58% 0%6% 5%



Page 25

travel dates have the lowest prices have consistent, widespread appeal.

In stark contrast to most other met-rics, the various aspects of flexibil-ity do not show material differences between the developed and emerging markets. Instead, geographical and infrastructural characteristics exert a stronger influence. For example, U.S. and U.K. travelers are some-what limited in alternative modes of transportation, whereas alternatives like rail and bus transportation are more common in other markets.

NEW WAYS OF SEARCHING

Veering away from the standard city pair – departure/return date travel search box is an exciting proposi-

audience and reducing reliance on referral traffic. Additionally, consum-ers who go through the process of shopping for a destination spend more on average than those who do not – though travelers in Germany and India are exceptions (see Figure 16).

In the early stages of thinking about their trips, the majority of discre-tionary travelers are flexible about how far they will travel, how much time they will spend in transit and how much they will spend. Russian travelers are an exception in that they are less flexible about travel distance and transportation time. More than four in 10 travelers across the markets are flexible about their travel dates. Therefore, tools that help travelers determine which

less than half of travelers in devel-oped markets, and roughly six out of 10 in emerging markets. A smaller percentage of travelers in emerging markets have a pre-determined des-tination, which means that destina-tion selection tools are more impor-tant. Therefore, requiring travelers to specify a destination when searching for travel is not ideal for a very sub-stantial portion (in some cases the majority) of discretionary travelers.

Though travel retailers are often primarily focused on the shopping and booking phases, catering to des-tination selectors is advantageous. Attracting consumers earlier in the travel planning process allows web-sites to go higher up the purchase funnel, potentially broadening their

Figure 16Annual Household Travel Expenditure (US$) by Destination Flexibility (Last Discretionary Trip)

Question: What was the discretionary amount your household spent on travel components (including airline tickets, paid lodging, car rental, cruise tickets, railway tickets for travel over 120 km) for your N leisure trips in the past 12 months. Which of the following statements best describes the circumstances of this trip? Base: Discretionary travelers (Weighted n – U.S. 872; U.K 831.; Germany 913; India 797; Russia 768; Brazil 831)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.


Did not research destination Researched Destinations

$4,735

$5,818

$4,206

$5,160

$4,038 $4,016

$2,559 $2,509 $2,530$3,153

$4,256

$5,536



Page 26

tion, but conducting a search still requires some parameters. While some search criteria can build off the existing framework, others require a fundamentally different approach.

Budget is the search criteria with the broadest appeal in most mar-kets, and price including all fees

is a close second (see Figure 18). This finding may seem contradictory to the results showing widespread flexibility of budget. However, cost is consistently top of mind during travel planning and an instinctive standard to use when comparing alternatives. While consumers may not be firm in their desire to spend

an exact amount, interest in seeing what is available at or below a cer-tain price point holds broad appeal.

While many travel websites have filters and sorting options based on price, they are within the framework of a given destination or city pair and time frame. Enabling search based on

Figure 17Flexibility in Travel Aspects: Somewhat Flexible + Very Flexible

Questions: In the earliest stage of thinking about this trip, how flexible were you in the following aspects of travel? Base: Discretionary travelers (Weighted n – U.S. 872; U.K 831.; Germany 913; India 797; Russia 768; Brazil 831)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.


Distance

Traveling time

Budget

Mode of transportation

Activities

Climate

Travel dates

60%62%

75%60%

32%58%

40%

61%

44%

62%66%

66%57%

59%

55%51%

56%57%

52%

43%

41%45%

43%

46%

46%

47%

35%35%

41%45%

40%

44%

49%40%

47%42%

44%36%

33%37%

43%47%



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budget across multiple destinations would be helpful for many shoppers, but can easily yield an overwhelming volume of results. Multi-destination search parameters must therefore be paired with others (traditional or otherwise) to keep results relevant.

By releasing travelers from destina-tion constraints, travel websites can deliver entirely new consideration sets through alternative combina-tions of search criteria. For example, melding budget and interest-based parameters would enable consumers to search for beach vacations any-

where that cost 1,000 dollars or less. Websites often use frameworks like these in their merchandising, but incorporate just a handful of offers. Consumers have demonstrated that there is a significant demand base for this type of multi-destination search (see Figure 14). Incidentally,

Figure 18Usefulness of Search Capabilities (“Very Useful”)

Question: How useful would you find the following search capabilities when planning leisure travel online? Base: Discretionary travelers (Weighted n – U.S. 872; U.K 831.; Germany 913; India 797; Russia 768; Brazil 831)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.

Budget Price including fees Traveler rating/reviews

Included amenitiesInterests/Activities


49%45%

44%52%

66%

56%

43%47%

42%44%

47%52%

43%

27%

41%43%

55%51%

39%34%

46%44%

52%

39%43%

33%36%

41%

51%48%

Average weather conditions

Transportation time Physical distance Environmental/ carbon impact

Local events


31%35%

37%48%

47%46%

32%27%

27%

49%44%

44%

37%

26%22%

41%

34%

42%

33%

21%25%

42%

33%38%

12%11%

16%

32%27%

20%



Page 28

this type of alternative-parameter search is exactly what Google hints that it ultimately aims to deliver.2

Beyond the context of SEO/SEM, a much larger underlying issue with Google’s travel focus looms. With the launch of Flight Search in the U.S., it is clear that Google intends to act as a robust flight shopping engine, one that does not include booking links to OTAs. Google claims this exclu-sion was forced on them by airlines that insist on controlling how their fares are displayed. Regardless of the root cause, OTAs are being placed in a difficult position.

As the search giant sits higher up in the funnel, it could (at least in theory)

preempt OTA visitation and move the shopping and price comparison pro-cess away from them. Being relegated to a booking versus a decision engine could commoditize OTA shopping products and weaken their position in the distribution chain. But this is not necessarily a situation for airlines to celebrate either. While suppliers might dislike the margins/commis-sions they concede to OTAs, the cost of search marketing could easily rise, displacing distribution-related sav-ings and shifting even more power to an already powerful media player.

Google has maintained that it is building opportunities for OTAs and metasearch partners to have a pres-ence in the product, and the first

version of this is evident in the form of links at the bottom of the page. The current iteration is hardly com-pelling, although Google continues to emphasize, it is just the first look.

Ultimately, as much as they might not like it, OTAs must fish where the fish are. And Google is extremely good at luring fish. It is critically important – especially in emerg-ing markets where consumers use search extensively – that websites keep up with product search func-tionality to minimize the risk of being disrupted by whatever Google chooses to create for their markets.

2 Jeff Huber. “ITA Software acquisition cleared for take-off” http://googleblog.blogspot.com/2011/04/ita-software-acquisition-cleared-for.html

http://googleblog.blogspot.com/2011/04/ita-software-acquisition-cleared-for.html

http://googleblog.blogspot.com/2011/04/ita-software-acquisition-cleared-for.html



Page 30

The relentless march of innova-tion splinters the travel market-place into an ever-increasing num-ber of devices. Mobile platforms and social networks are power-ful new media that are inspiring much of travel innovation today. This section details how consumers are interested in using these new media to support their travel needs.

SECTION HIGHLIGHTS

• Receiving alerts, looking up itiner-ary information and checking in hold the most appeal in terms of travel-related mobile activities

• Sharing pictures/stories from trips and getting recommendations top the list of social network activities

• Discretionary travelers in the emerging markets generally show more interest in both mobile and social activities than their counter-parts in the developed markets

MOBILE

One would be hard pressed to find an executive who does not believe wholeheartedly that mobile plat-forms will play an increasingly important role in digital commerce. The ambiguous factor is the pace at which mobile commerce will grow its share of transactions, and at what point it will begin to plateau. But beyond the realm of transactions, the mobile Web will become critical in supporting decisions that may be

executed through other channels.

Across the range of travel-related mobile activities, travelers show the most interest in elements that make relevant bits of scattered information convenient and easy to retrieve (see Figure 19). Mobile check-in is also appealing to many travelers, as is using the mobile device as a board-ing pass. The boarding pass feature shows a relatively consistent response across markets, whereas other fea-tures often show a wider variation. German travelers are consistently less interested in most mobile-related activities in comparison to the other markets, though the U.K. is not far behind. Three in 10 travelers in the European markets currently have no interest in using their mobile phones for travel-related activities.

As seen in other measurements of appetite for advanced functionality, discretionary travelers in emerging markets show a stronger interest in general. U.S. travelers, however, break away from European travelers for mobile activities. U.S. consumers show levels of interest comparable to emerging markets for many infor-mational and operational mobile features (alerts, check-in, etc.). Nevertheless, when it comes to travel planning – shopping or booking – enthusiasm wanes and U.S. travelers fall back to levels just slightly ahead of the European markets. Updating social networks is a unique example where Russian responses fall rather low, similar to U.K. and German

results. This trend may be connected to Russian travelers’ strong propen-sity to travel internationally, which is similar to U.K. and Germany. While features and functions that directly relate to travel needs are popular in Russia, high interna-tional data costs may deter shar-ing on social networks (which often has less urgency) while traveling.

Looking ahead, interest in mobile activities in the developed markets will rise. In the emerging markets, however, it may actually stagnate or even recede as travel becomes more accessible to the broader public. The discretionary traveler group represents the elite of these markets today – it will become less exclusive as middle class life-styles become more widespread.

SOCIAL NET WORKS

Though interest in sharing travel experiences and pictures on social networks is mediocre on mobile, sharing pictures and videos tops the list of travel-related activities on social networks in general (see Figure 20). Russian travelers demonstrate a particular affinity for fellow traveler perspective within the framework of social networks. This trend is consistent with their heightened use of traveler review websites during destination selection and shopping. Despite this enthusiasm for reading others’ opinions, Russians are not as interested in voicing theirs. When it comes to sharing stories and updates

The Progress of New Media



Page 31

about travel experiences, Russia falls behind the other emerging markets.

U.S. travelers again display a con-sistently higher interest level in comparison to Europeans, but their

interest in travel-related activities on social networks remains far below the emerging markets. U.K. travelers are least likely to have interest in any travel-related social network activities (43%), followed by Germany (35%).

This trend suggests that the realm of social networks might not be quite as distinct in emerging markets as it is in developed ones. Interactions typically conducted on a company website in the developed markets

Figure 19Interest in Online Activities via Mobile Phone

Question: Please select the travel-related activities you do or are interested in doing online using a mobile phone?Base: Internet users via mobile phone (Weighted n – U.S. 477; U.K 469.; Germany 531; India 579; Russia 655; Brazil 584)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.


Receive travel/�ight status alerts

Look up itinerary information

Check in

Use as boarding pass/ticket (such as for a �ight or train)

Update a social network to share my travel experiences/pictures

Reserve/purchase travel products

Get information about travel products

Adjust existing travel reservations

Reserve/purchase local activities

I have no interest in using my phone for online travel-related activities

Get information about local activities

0% 10% 20% 30% 40% 50% 60% 70% 80%



Page 32

might be conducted more often in the social network space in emerg-ing markets. For travelers who have not grown accustomed to planning and booking travel online a certain way over the years, social networks

may be a natural source of informa-tion for both user and company-generated content (such as pricing and room descriptions). In devel-oped markets, travelers may not be as likely to seek company-generat-

ed content on their social networks because they habitually use other websites like OTAs, supplier sites, etc.

Today the walls of social networks are distinct, often because of privacy

Figure 20Interest in Activities Through Social Networks

Question: Please select the travel-related activities you do or interested in doing through an online social network?Base: Social networks users (Weighted n – U.S. 665; U.K 831.; Germany 581; India 585; Russia 741; Brazil 756)Source: PhoCusWright Inc. © PhoCusWright Inc. All Rights Reserved.


Share pictures/videos from my travel experiences

Get recommendations from friends about local activities in a destination I am going to

Search for travel reviews written by people like me

Browse/search for deals and special o�ers from travel companies

Search for travel deals that companies are o�ering

Share stories/updates about my travel experiences

Plan trips collaboratively with my friends/family

Get advice from friends about which travel products to purchase

Keep up with my friends' travel itineraries and/or share mine

Keep up with latest announcements from travel companies

I have no interest in using online social networks for travel-related activities

Get advice from friends about where to go on vacations

0% 10% 20% 30% 40% 50% 60%



Page 33

concerns. The advent of Facebook Connect has started to break these walls down, as friends’ likes begin to pop up all over the Internet. When searching for a hotel in Paris, a trav-eler might see that her friend stayed at a property and liked it enough to “like” it. Immediately, without hav-ing to communicate directly with that friend, the traveler has received a recommendation. Google would very much like to replace the Facebook framework with its own, of course, but even the search giant may be unable to dethrone the mighty incumbent.

Ultimately, there are three core com-ponents to hotel decision-making – price, quality and location. The ability to access information about each of these three variables has been enhanced tremendously by technol-ogy, but the quality component is the where the social factor really comes into play. Once upon a time, con-sumers relied on professional ratings (stars, diamonds, etc.). With user generated content, another layer was added – providing a satisfaction score and validation against the quality rat-ing. The social component will add

yet another layer – connection to a personal reference. The context is of course subject to the complex nature of people’s personalities and relation-ships. Being liked may not always be helpful for the “liked” company – if Max is a party animal and he “likes” a hotel, then perhaps it is best to avoid it on a family trip. But even in this context, the informa-tion provides useful knowledge that helps the consumer make a decision.



Page 34

The online travel industry’s first mis-sion was to bring the world’s travel products and services to the digital dimension. This foundation-build-ing is far from over, particularly in geographies where independent (and largely unplugged) hotels dot the landscape. Local OTAs are in the midst of a race alongside global giants to stock their virtual shelves around the world. But while the focus in emerging countries is still largely this first wave of progress, the game in developed countries is changing. In markets where the shelves are teeming with options, discretionary travelers are faced with overwhelming choice. The next mis-sion for travel technology must there-fore be to contextualize and curate the vast stores of information to return relevance versus abundance.

To explore the collective imagination around the possibilities for travel planning, PhoCusWright conducted interviews with OTA executives and other thought leaders around the world, including each of the markets covered in this study – the U.S., U.K., Germany, India, Russia and Brazil. This section presents con-cepts that emerged when envisioning travel search in the year 2020, as well as some of the hurdles that will be overcome in the intervening years.

HARDWARE AGNOSTICISM

Mobile platforms have inspired start-ups and veterans alike with a shiny new medium for consumer interac-

tion. Unlike the desktop Web, loca-tion-based services, NFC and mobile payment systems will change service delivery profoundly, perhaps even more than they will impact distri-bution. As companies grapple with how to navigate the ever-shifting landscape of devices and platforms, they must strive to adapt to the consumer on the go, and strike the right balance between simplicity and rich functionality. The key to success in this early stage of mobile devel-opment is to tailor the experience with a custom fit for mobile needs.

Over time, however, the distinctive-ness of mobile platforms will not be so important. The limitations of clumsy fingers on small screens may be around for good, but voice and image/visual recognition will make input easier. Stored informa-tion will become more sophisticated, enabling travelers to move beyond the confines of individual activi-ties on individual devices. Shoppers will be able to spread one task over multiple sessions and platforms, picking up wherever they left off. Ultimately, the “Splinternet” cre-ated by platform proliferation (PC, phone, tablet, gaming system, TV, etc.) will once again converge.

THE TRULY PRIVATE “PRIVATE SALE”

For many years, retailers have been pushing discounted promotions with some level of targeting, but no true personalization. Today, the cacoph-

ony of flash deals sites sprouting in markets around the globe thrive by rejecting the mantra that more prod-ucts are better. But their relevance is singularly built on the back of deep discounts, and the collective noise has become so loud that people are beginning to tune them out. To sup-port long-term engagement, deal-centric brands must master a new (yet very familiar) mantra – serve the right product to the right customer at the right price at the right time.

Flash sale brands distort the elements of the old revenue management say-ing – they serve random products at too low a price to everybody for a short time. As a result, purchas-ers may wonder how they ended up with product they never really wanted in the first place, and sellers wonder what they really got out of it all. With both buyers and sell-ers often walking away unclear on the benefit, the proposition is ulti-mately flawed. In their current state, signing up for a flash sale brand (public or membership-based) results in one’s inbox getting hammered day after day with a general (rath-er than personalized) list of offers.

But there is a different kind of flash sale that technology will eventually make possible. With consumer seg-mentation and behavioral targeting becoming ever more sophisticated, demand management will be able to go a step further, allowing sellers to microtarget offers to specific con-sumers. Companies would be able to

2020 Foresight: The Future of Travel Planning



Page 35

identify target segment parameters on a much more granular level. A mix of profile and behavior-based targeting would allow sellers to “shop” for cus-tomers and go beyond 1:1 market-ing. It would be more like 1:1 sales – a truly private sale that drives rel-evance for both the buyer and seller.

CUMUL ATIVE “INTELLIGENCE”

As scores of struggling start-ups can attest, straying from the standard shopping widget is not as easy as it might seem. Consumers can only evaluate so much information at once. With hundreds of options for even a destination/date-constrained search, shoppers are often overload-ed. Eventually though, regardless of the form of input, programs will be able to “learn” from an individual’s behavior over time. When someone executes a search for the fifth time, the results should be more relevant than the first time. Perhaps it will never be truly 1:1, but microse-gmentation at the very least will enable companies to deliver increas-ingly intelligent results by analyzing behavior.

It is easy to describe this capability in conceptual terms, but it is a phenom-enally difficult endeavor – mainly because people tend to be extremely inconsistent. An endless array of situ-ational aspects, such as trip compan-ions, the reasons for taking the trip and volatility in personal finance, can materially impact what an indi-vidual is looking for. On top of this natural variation, travel is often con-nected to the desire to do/see some-thing entirely new. Perhaps the most

confounding factor is the reaction consumers have to deals – which can induce them to select options that might normally be outside of their consideration set. A consumer might have wanted to stay on the beach, but Hotel Z has a fantastic pool and is on sale right now, so even though it is not on the beach, she chooses Hotel Z. Consistent consumer inconsis-tency makes individual profile-based personalization inadequate. For the vast majority of travelers, vacations are simply too novel to have a ritual formula.

Yet, search algorithms are just that: formulas. How can anyone crack the code when people don’t have one? As a result, much of today’s personaliza-tion is accomplished through recom-mendations that are determined by clustering the products considered or purchased by many shoppers, a la Amazon. This system is appealing because consumers, not companies, are defining the alternatives. The trade-offs and inconsistencies do not have to be dissected, as the observed shopping behaviors inherently incor-porate them all. Instead of trying to understand complex decisions, the goal is to observe and aggregate com-mon behaviors. Some OTAs have begun using this technique to for-mulate recommendations for alter-native hotels. It is a compelling first step, but it lives relatively deep in the funnel, since it is attached to an individual property.

The key to better search results is bringing the framework up the fun-nel. A more advanced version of utilizing common consideration sets might dynamically adjust search

results based on selections made dur-ing the session. For example, after selecting hotel type x to view in more detail, upon returning to the full list of search results, the order would automatically readjust to pull more of hotel type x toward the top. The social layer enabled by social networks will add valuable context for defining and understanding the commonalities.

SMART SYSTEMS AND THE VIRTUAL PER SONAL ASSISTANT

No pop culture vision of the future feels complete without the requi-site robot assistant. From Star Wars’ C-3PO to the Jetsons’ robot maid, Rosie, we can easily identify with the desire for technology to serve us and make everyday life easier. More likely than an actual robot (at least for 2020) is the notion that devices themselves will be “smart” and interconnected. Computer chips might be in everything from coffee machines to light fixtures. Your heat will turn on just in time for the room temperature to be comfortable right when you get home. In these house-hold examples – coffee machines, lights and thermostats – timers can already regulate these things. The dif-ference will be that in the future, the manual nature of programming them will likely be replaced by intercom-munication between devices. But, since most people will not require the computing power to play Angry Birds on their coffee machine, a central application will likely act as a hub that distributes instructions (i.e., on/off ).



Page 36

The domestic scenario is easy enough to imagine, but the interactivity of systems (without human interaction) will also translate into the virtual world. Today, our Internet experi-ence is compartmentalized much like individual appliances are today. We will still use different websites for different things in the future, but a program that collects and stores this information may act as a virtual personal assistant – recognizing and processing inputs from the sites we visit and what we do on them. Just as a human personal assistant would know that your son is graduating from university in May, a virtual assistant could also “know” it and cross that information with travel prices to alert you that now is a good time to book that graduation trip. As the system would turn on the coffee machine, it would track prices on your behalf. How this virtual assis-tant “knows” you need to take the trip, of course, is the sticky question. To be effortless, this program would need to be able to access and process everything – like a very “smart” cook-ie. But it’s one thing for your com-puter to “hear” from your car that you’re on the way home, and another for it to scan email or track spend-ing to “watch” everything you do.

The virtual assistant simply never may come to be because for most consum-ers, an omniscient program would make them feel that their privacy has been violated. Transparent, detailed user controllability over what infor-mation it collects may make it more

palatable. But ultimately, the “creepy line ” is drawn on shifting sands. And it has a persistent tendency to creep ever closer into our privacy.

BIOMETRICS AND THE “CREEPY LINE” CREEP

Today, biometrics are commonly based on physiological traits and designed for security purposes, like fingerprint scanners. There is another realm of biometrics, however, that focuses on behavior. Both involun-tary and voluntary indicators such as pulse, eye movement and facial expression, can “tell” a computer how someone is reacting, without requir-ing the individual to input something directly. Today it is typically the stuff of lie detector tests and psychologi-cal experiments. Though perhaps a bit far-fetched for 2020, biometrics (in addition to enhancing security) may someday provide valuable input that helps computers gauge people’s preferences and helps programs “learn” to provide more relevant results with no additional user effort.

Biometrics might also enable pro-grams to be more proactive. A com-puter might be able to sense user stress or “understand” the physical signs of someone who is overworked. This biometric input could someday be read as mundanely as location is today, and companies could utilize the information to customize their offerings. The prohibitive issue is, as with the virtual personal assis-tant, privacy and the “creepy line.”

The notion of privacy and the mental line that defines what is acceptable is constantly weighed against the ben-efits of sharing information. While inserting computer chips into peo-ple’s bodies may sound frightful, the benefit of knowing that a child with a severe medicine allergy will not acci-dentally be given that medicine in the emergency room opens the mind to helpful possibilities. With any powerful advancement of technol-ogy, there is potential for great good and great harm. Mobile technology enables flash mobs regardless of their intent – to loot a riot-stricken neigh-borhood or dance in a mall. In the wrong hands, the information a vir-tual personal assistant collects could be used with terrible impact. Used as intended, a personal assistant can facilitate tasks, generate helpful ideas, and save time and money. As we con-sider the possibilities, we should also consider that elements that seem to cross the creepy line today, might be readily accepted in a decade’s time.

***

Recalling life a decade or so ago brings remarkable perspective to the spectacular pace of innovation. It was the early days of the online travel industry. OTAs were busy revolution-izing the way travelers planned their trips, despite what would now seem like agonizingly slow connection speeds. Apple unveiled the first iPod and Mark Zuckerberg was filling out an application for Harvard. Yahoo! was the top search engine and Google



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was somewhere around the tenth. What a difference a decade can make.

History lets us see how far we have come. Envisioning the future helps us imagine what is possible and dis-cover what problems there are left to solve today. Cultural differences will be more important than ever

as new travelers leave their borders for the first time. Already prone to last-minute/in-destination booking, Chinese travelers may rely on mobile offerings in unprecedented ways. The lack of lodging infrastructure and the strength of social networks in India could catalyze a powerful C2C lodging network like Airbnb

within the walls of Facebook. All the while, Google and rival search engines around the world are edging deeper into the decision-making fun-nel. While we certainly can’t predict what travel will be like in 2020, we can predict with certainty that the next decade of online travel will be as wondrously dynamic as the last.

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