TRAVEL TRENDS 2011, presented at USTOA by Forrester

Prospering In 2011
Henry H. Harteveldt, Vice President, Principal Analyst
Twitter: @hharteveldt

December 10, 2010

2010

We depend on the kindness of strangers
but by better understanding our customers and their
use of technology, we can be more independent and
successful.


Source: Warner Bros.

Agenda

What is the 2011 outlook for leisure travel?
How do different generations of leisure travelers interact
with technology to plan and shop for travel online?
What affects the decision making of different generations
when planning a trip—and what should you do to
succeed?


Agenda

succeed?


Numerous factors can affect economic recovery and
consumers‘ willingness to travel

Sources: Google Images

College grads are twice as likely to be employed as
people with only a high-school degree


Source: Bureau of Labor Statistics

Q3 2010 Customer Confidence -3 Points from Q3 ‗09


2010 consumer retail sales are ahead of 2009,
creating hope for 2011
$ millions
$450,000
$400,000
$350,000
$300,000
$250,000 2008
$200,000 2009
$150,000 2010

$100,000
$50,000
$0
Jan.Feb.Mar. Apr. May Jun Jul Aug Sep Oct Nov Dec
Source: US Dept. Of Commerce, US Census Bureau Monthly Retail Trade Report
2010

Most travelers intend to spend about the same on
travel in 2011 as they did in 2010
“How do you and members of your household expect your travel-related spending
will change in the NEXT 12 MONTHS?”

Seniors (66+) 13% 10% 57% 8% 12%
Older Boomers (55-65) 16% 11% 58% 4%10%
Younger Boomeers (45-54) 12% 11% 56% 6% 14%
Gen X (31-44) 15% 8% 58% 6%11%
Gen Y (18-30) 13% 13% 54% 4% 15%

0% 20% 40% 60% 80% 100%
Spend at least 10% more
Spend 5% to 10% more
No change in travel spending
Spend 5% to 10% less
Spend at least 10% less
My household spends no money on leisure travel
Base: US online leisure travelers
Source: North American Technographics Retail, Travel, Customer Experience, And Financial Services Benchmark
10 © 2009 Forrester Research, Inc. Reproduction Prohibited Survey, Q3 2010 (US, Canada)
2010

Forecast: $840 million of tours and packages to be booked
online in 2011 in the US, up from $790 million in 2010

$120

$100

$80
Tours/packages
Cruises
$60
Rental cars
$40 Hotel
Air
$20

$0
2010 2011 2012 2013 2014
Source: Forrester‘s US Online Leisure Travel Forecast, 2009-2014
2010

Travelers embrace ―neoFrugal Chic‖

 Saving as a point of pride
 Every major purchase is
heavily researched and
considered
 Travel is a reward, not an
entitlement


Source: Google Images

Agenda

How do different generations of leisure travelers
interact with technology to plan and shop for
travel online?
succeed?


More than half of online travelers are under age 45

US leisure online travelers

10% Gen Y (18-20)
22%
Gen X (31-44)
19%
Younger Boomers (45-
54)
Older Boomers (55-65)
30%
19% Seniors (66+)

Source: North American Technographics® Travel Online Study, Q1 2010
2010

Boomers spend the most on leisure travel
Index of reported 2010 annual leisure travel spending
Average

Seniors (66+) 95

Boomers and Seniors account
Older Boomers (55-65) for 51% of leisure travel 109
spending

Younger Boomers (45-54) 110

Gen X (31-44) 99

Gen Y (18-30) 88

2010

Technology is a means to an end

 The younger the traveler, the more open
they are to technology
 Travelers may like technology, but…

 Most don‘t see technology as being
―important‖ to them
 Put customer benefits at the forefront of
any technology solution you offer – don‘t
let technology get in the way


Travelers may find digital channels easy to use, but most
don‘t enjoy the online travel planning and booking process
Percent who agree with the following statements
(4 or 5 on scale of 1 (disagree completely) to 5 (agree completely)

70%
Gen Y (18-30)
51%

72%
Gen X (31-44)
49% It's easy to use the
Internet to plan and buy
Younger Boomers (45- 70% travel
54) 45% I enjoy planning and
buying travel on the
67% Internet
46%

55%
Seniors (66+)
35%
2010

We make it increasingly confusing for our customers
to buy our products and get the value they seek

Do I have to pay to Is it a nice hotel? Is it
check my bags? safe? Which is
How much? Are you better, a superior or
kidding me? deluxe room?

Would I save money
When is the weather if I went on another
best? day? Or a different
month?

Where are some
nice places to eat
How can I trust what
and shop? What
you‘re telling me?
else is there to do?

Should I buy the cheapest fare or something else?
Remember, this is your inheritance we‘re talking
18 © 2010 Forrester Research, Inc. Reproduction Prohibited about.

Compared to 2008, 22% more US leisure travelers in
2010 would use a travel agent if they could find one

Source: North American Technographics® Travel Online Study, Q1 2010; North American Technographics® Travel Online Study, Q1 2008

We‘re not setting ourselves up for success in 2011

 Most leisure travelers in 2010 don‘t feel that travel Web sites allow them to
obtain the information they need to make well-informed decisions about
what to buy
 Boomers and Seniors don‘t feel they‘re able to obtain the value they seek
and expect from travel Web sites

 A critical mass of travelers don‘t trust the Internet to give them accurate
travel information


The majority of US online leisure travelers buy at
least some portion of their travel online

Gen Y (18-30) 70% 14% 16%

Gen X (31-44) 75% 14%11%

Bookers
Younger Boomers (45-54) 73% 14% 13% Lookers
Sideliners

Older Boomers (55-65) 71% 14% 15%

Seniors (66+) 57% 21% 23%

2010

Bookers buy both online and offline, so you need a
multichannel selling presence
Percent of leisure travel researched and booked online

66%
Gen Y (18-30)
72%

71%
Gen X (31-44)
76%

71% Book
Younger Boomers (45-54)
77% Research

67%
73%

65%
Seniors (66+)
65%
Base: US online leisure Bookers
2010

No two generations of traveler uses exactly the same
mix of channels to research their trips

70%
Offline travel agency
60%
Call supplier directly

50% Offline travel agency Web
site
40% Metasearch site

30% Travel sales & specials site

20% Opaque travel agency site

10% Online travel agency

0% Supplier Web site
Gen Y (18- Gen X (31- Younger Older Seniors
30) 44) Boomers Boomers (66+) General search
(45-54) (55-65)
2010

Younger travelers tend to use online intermediaries,
older travelers tend to book directly with suppliers

50%
45%
40%
Offline travel agency
35%
30% Call supplier directly

25% Offline travel agency Web
site
20%
Opaque travel agency site
15%
10% Online travel agency

5% Supplier Web site
0%
Gen Y (18- Gen X (31- Younger Older Seniors
30) 44) Boomers Boomers (66+)
(45-54) (55-65)
2010

Prepare for new channels and entrants to affect the
way you distribute and sell your products


Agenda

What affects the decision making of different
generations when planning a trip—and what should
you do to succeed?


How we sell

When do When do How
Where Where
you want you want many in
are you are you (Etc.)
to to your
starting? going?
leave? return? party?


How travelers buy

―How much do I want to spend?‖ ―What else do I want
included in the trip?‖
―What do things look and feel like?‖
―How long do I want to
―How do I want to feel stay away for?‖
when I return?‖
―What do my friends think/know?‖
―Who‘s traveling with me?‖
―What‘s the nightlife like?‖
―What do I want included in the price?‖
―Will the hotel be clean?‖
―How long do I want to be
away for?‖ ―How much comfort will I pay for?‖

―How do I know this place is safe?‖ ―What do I feel like doing?‖


We‘re retailers – to prosper, we can‘t push things to
our customers, we have to tempt them


Travelers don‘t always know where they want to go


Many travelers are focused on saving money…


I will accept some 39%
inconveniences in order 42%
47%
to save money when I 46% Gen Y (18-30)
travel 61%
Gen X (31-44)
36%
In general, I select the 37% Younger Boomers (45-
lowest-priced travel 39%
43% 54)
options available
54% Older Boomers (55-65)
Staying within my 42% Seniors (66+)
budget is more 38%
important than going to 48%
my first-choice 48%
destination 51%
2010

Yet some travelers will consider trading up – given
the right mix of rational and emotional reasons
45%
40%
35% Travel is an area in which
30% I'm willing to indulge
myself
25%
I will pay above-average
20%
prices for noticeably
15% better quality travel
products or service
10%
I will pay above-average
5% prices for travel products
that save me time and
0% hssle
Gen Y Gen X Younger Older Seniors
(18-30) (31-44) Boomers Boomers (66+)
(45-54) (55-65)
2010

How to view traveler brand loyalty as we enter 2011


Adding to your challenges: It‘s tough for marketing
messages to reach an increasingly self-directed traveler
45%
40%
35% Travel advertisements help
30% me decide what to buy

25%
I'm annoyed by the
20%
amount of travel
15% advertising today
10%
I rely a lot on
5% recommendations from my
friends/family when
0% making travel purchases
Gen Y Gen X Younger Older Seniors
(18-30) (31-44) Boomers Boomers (66+)
(45-54) (55-65)
2010

Social media can help travel sellers get around and
through travelers‘ resistance to ―formal‖ marketing

Percent of US online leisure travelers who participate in
social media
72%
63%
58%

2008 2009 2010
2010

Social media may have been created for younger
consumers, but everyone now uses it

Percent of US online leisure travelers who do not
participate in social media
43%
35% 36%

21%
16%

Gen Y (18-30) Gen X (31-44) Younger Older Boomers Seniors (66+)
Boomers (45- (55-65)
54)
2010

Social commerce, just starting now, will be expected
by the next generation of customers


Video engages travelers of all ages – and can lead to
more sales

Travelers are 3X more likely to watch a
brand‘s video than a video posted by
another traveler

A typical Smartphone in 2010 has the same amount
of computing power as Apollo 11

=


Devices are evolving – it‘s time to rethink mobile


Gen X travelers lead in Smartphone ownership – for
now
Percent who own a Smartphone device
25%
21%
20% 18%

15% 13%

10% 8%

5% 3%

0%
Gen Y (18- Gen X (31- Younger Older Seniors (age
30) 44) Boomers (45- Boomers (55- 66+)
54) 65)
Base: US online leisure travelers who own a mobile phone
2010

Augmented reality overlays on mobile devices will enhance a traveler’s
journey, and create sponsorship or advertising opportunities for smart
travel companies

What should you do to prosper in 2011?

2010

You have multiple opportunities and channels in
which to sell – create your ―story arc‖

Story arc

Planning Purchase Departure Trip Return Next Trip


Take steps to make your digital channels as flexible
and comprehensive as your offline channels


Create new ways to help travelers find the value you
offer


Make it easy for travelers to open their wallets


Make sure you offer the right written and visual content –
and enable to traveler to configure it to her needs


Let travelers share your content in their social
networks


Plan to become mobile-friendly


Thank you

Henry H. Harteveldt
+1 415.206.0889
hharteveldt@forrester.com
Twitter: @hharteveldt
www.forrester.com

© 2009 Forrester Research, Inc. Reproduction Prohibited

TRAVEL TRENDS 2011, presented at USTOA by Forrester

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