A recent report from UN Tourism paints a bright picture for the travel industry. Over 285 million people traveled internationally in the first quarter of 2024, a 20% increase over the same period the year before. Volume and traffic pushed to 97% of pre-pandemic levels during the January – March period, suggesting a strong and sustained recovery for the travel industry. With increasing traffic, travel businesses are laser focused on maximizing each and every guest interaction to drive revenue and increase profitability. Turning to technology, travel businesses have powerful tools and platforms that can drive that additional revenue outside of core products and services. Innovations in customer facing and backend technologies can help maximize each of those very important guest interactions.
Facility Retailing Generates New Opportunities
The business model behind hotels and resorts is filling rooms with paying guests but this category of travel has untapped resources in the form of real estate and hoteliers are shifting focus from a RevPAR, Revenue Per Available Room, to RevPAM, Revenue Per Available Meter.. Hotel Retailing utilizes free and available real estate to market goods and services to guests that fall in line with the individual experience. Using marketing and retailing backend technology, accommodation providers are remapping common areas and customer facing sections in an effort to drive accessory revenue. Some categories hotels and resorts are diving into are:
- Off site excursions and tours that are booked directly through the facility
- Expanded offerings and merchandising at lobby ‘general stores’
- Increase in facility marketing of on site services and amenities
- Unique in room services and amenities opportunities that are appropriate to the particular guest
- Experience and merchandise offerings that are distinctive to the local market
Customer facing technology, such as dynamic digital signage, can quickly pull up offerings that are relevant to the guest as they check in. This type of targeted real time marketing can create additional revenue opportunities by using the very real estate the business is built on.
Travel Businesses Look to the Fan Base
Large Online Travel Agencies (OTAs) spent around $4.6 billion for marketing in the 2nd quarter of this year. That’s up $400 million over the previous year (https://www.phocuswire.com/ota-marketing-spend-q2-2024) and suggests that marketing still plays a key role in generating bookings and revenue. Travel brands and providers will look to laser focus their marketing efforts by heavily engaging social media outlets and their users as well as a strong focus on mobile marketing and offerings. Trip.com reported recently that 65% of their international bookings come from mobile platforms, suggesting a strong preference for researching and booking travel on mobile devices. Travel brands are also taking a high tech approach with loyalty initiatives and are ramping up marketing efforts and offerings that hone in on the wants and needs of that valuable group of clients.
Artificial Intelligence and the Travel Business
Big travel providers have made splashy investments and roll-outs in regards to AI as the technology is poised to revolutionize how consumers research and purchase travel. Customer facing AI platforms can help travel providers generate additional revenue through suggestive selling, associative products and lucrative but meaningful add-on services. Highly interactive and intuitive, AI systems can quickly probe and discover consumer wants and showcase products and services that are the most appropriate for that particular client. A survey from WiT suggested that travel consumers spend an average of 5 hours researching travel before actually making a purchase. Optimized AI technology can provide faster output and capitalize on a real time decision making mindset. Travel providers are looking to AI based technology to provide an all in one solution to current and potential customers that can handle research, data collection and purchase finalization in one complete interaction.
One Guest, One Customer and One Interaction at a Time
The outlook for travel in both leisure and business categories looks rosy in the near term but travel providers are now highlighting opportunities to increase revenue through non-traditional ways. Outside of core products and services, travel businesses are using technology to promote revenue sources such as retailing and merchandising at the facility level as well as increasing social media and marketing engagement with followers. The travel industry is placing big bets on AI technology to help clients plan and purchase travel which will generate opportunities for upselling and accessory selling during the interaction. Volumes and traffic are slowly returning to pre-pandemic levels but the travel industry is shifting focus to generating as much revenue and maximizing opportunities from each guest and client interaction. Travel businesses are quick to adopt customer facing technologies and backend infrastructure to help drive the revenue mandate and elevate guest experiences to increase chances of loyalty and of course, reputational marketing.