Business and leisure are generally the two main categories of travel. Business travel, of course, is necessary while leisure travel tends to be more emotionally driven. Whether planned or spur of the moment, leisure travel purchases stem from want, not necessarily need. The two plus years of isolation and travel restrictions during the COVID-19 pandemic created a ‘pressure cooker’ of travel demand which was unleashed on an unready marketplace once global restrictions were lifted. Travel volumes and passenger traffic rocketed higher in 2022 and 2023, almost eclipsing 2019’s pre-pandemic volumes. While business related travel is expected to reach pre-pandemic levels in 2024, ‘revenge travel’ purchases powering leisure travel demand may be losing steam as suggested by several key travel service providers. Alongside shaky global economic fundamentals, the era of the easy travel sell may be coming to a close and travel providers and marketers will have to re-energize strategies to maintain growth and market share.
Surging Leisure Travel Loses Steam
Two plus years of isolation created a phenomenon known as ‘revenge travel’. As lockdowns and travel restrictions kept wayward travelers at home or in place, the want and need to travel never waned and that demand sparked an impressive market rebound once restrictions were fully lifted. Recent news from key travel providers suggest that ‘revenge travel’ may have run its course as economic realities may slow the return to pre-pandemic volumes.
- Air Canada indicated slowing growth in leisure routes and has stretched out guidance to 2025 to return to 2019 traffic volumes
- Expedia warned of slowing growth in 2024 due to lacklustre performance from its VRBO vacation rental platform
- The Los Angeles Tourism & Convention Board reported 5.8 million international visitors to the city in 2023, marking 79% of 2019’s visitor volume
Capacity issues may also be hampering a full and fast recovery as air transportation carriers contend with ongoing quality issues in fleet equipment and a constantly shifting labor landscape. Gloomy signals could mean travel providers and marketers will have to work harder to acquire clients and convert them to purchasers. Travel businesses need an advantage in the marketplace and adopting technology can create more opportunities by optimizing two major facets of revenue generation, marketing and product offerings. The cliche: ‘Selling the right product to the right person at the right time’ has never been more true for the travel marketplace.
Traveling for Business is Still Essential
In spite of shaky global economic fundamentals, business travel continues to press ahead and is expected to recover to pre-pandemic levels this year (2024). At a recent investor conference for Delta Airlines, executives suggested that corporate traffic from Fortune 500 companies was ramping up as sales and technical teams head back out on the road. Amazon has matched 2019’s business travel spending and Microsoft intends to triple 2023’s outlay. Travel providers can utilize technology to benefit from the upward business travel trend by offering value added services to corporations. Technology in areas such as invoicing, time organization, trip tracking and group communications can bring benefits to the business while increasing the travel brand’s marketing presence before, during and after travel. In a fiercely competitive travel market place, offering benefits beyond the actual product or service can build stronger business relationships and increase repeat purchase and engagement.
High Tech Tools Help Drive the Bottom Line
Leisure travel was riding a wave of pent up post-pandemic demand that may be giving way to harsh economic realities. The travel marketplace itself is always shifting as leisure travel is mostly driven by consumer wants and emotionally driven purchases. Travel providers and suppliers have to quickly adapt to the constantly changing marketplace and can adopt technology to manage and optimize certain operational aspects of the business. Innovations in Artificial Intelligence can elevate marketing initiatives and product offerings by crunching large amounts of real time and historical data as well as monitoring trends and travel client behaviours. Travel brands can also offer technology as a value added service through mobile apps or other online conveniences. Technology can also help maximize each person to person interaction by efficiently creating opportunities that are appropriate to the individual client. Using technology in operations or for consumer facing engagement can give travel businesses an advantage in what is becoming a very competitive and unforgiving marketplace.
Low Hanging Fruit Almost Entirely Picked
Business travel may have a rosier outlook as volumes are slated to match pre-pandemic levels in 2024. Leisure travel, however, may be facing ‘pandemic fatigue’ as the emotionally driven travel purchases begin to slow down. In other words, the days of the easy travel sell may be coming to an end and providers will have to ‘work’ to acquire those clients and purchases. OTAs and consumer facing travel service providers are employing technology to gain an edge in marketing and product offerings. Person to person engagements in the travel industry can also benefit from technology by maximizing each client opportunity. Suppliers in the business category can use technology to improve customer experiences as well as offer value added services in a fiercely competitive marketplace. As the pandemic continues to fade in the rear-view mirror, travel business will need to get back to basics to increase market share and growth.
Sources:
https://ca.finance.yahoo.com/news/air-canada-reports-184m-q4-120811829.html
https://skift.com/2024/05/02/expedia-bosses-say-vrbo-will-drag-2024-growth/
https://www.travelweekly.com/North-America-Travel/Possible-cracks-in-domestic-leisure-demand
https://skift.com/2024/03/14/business-travel-could-stage-a-full-pandemic-recovery-in-2024/