25 February 2009

Travelmole Guest Comment: How the recession is impacting booking behaviour

Ian Stockley, managing director of Entire Direct Marketing, gives his analysis of the results of a survey of 2,000 consumers.

"As the economy slides into recession, with two consecutive quarters of falling economic growth, and most commentators predicting it will last well into 2010, it’s clear that the travel sector is set to see some major changes.

Lack of available consumer credit and a weak Pound will both play a part. The sector has also been damaged by a number of its most high profile brands hitting the headlines for all the wrong reasons.

Finally, and most simply, if the predictions of increasing unemployment, wage freezes and spiralling living costs are accurate, then there is every chance that holidays will simply become one more luxury that will have to be eschewed for more crucial expenditure.

To find out how the downturn will affect consumers’ holiday booking habits and to provide some context around motivations and decisions in booking travel this year, we asked 2,000 consumers the following questions:

How will your holiday plans be affected by the credit crunch?

Nearly a third of consumers surveyed claim the economic turmoil will not influence holiday plans, although of course, it would be interesting to monitor this figure throughout the year and establish whether worsening conditions claw this number back down. And there is then the fact that 18% of those surveyed say that they will go away less. Whilst a section of the market will remain steady, there is also a pocket of people who are already planning on cutting back.

Looking for the ‘cheaper option’ has already started in earnest, with 12% of people holidaying in the UK and 10% looking for cheaper overseas trips. Perhaps most interestingly for those working in marketing and advertising, we also see the importance of brand play a part as 13% of those surveyed state that they will opt for a financially reputable operator. Reputation is everything.

When choosing a holiday destination, what is the biggest factor in your choice?

Unsurprisingly, price is more important than ever. Nearly half of those surveyed claimed that price was the biggest factor in their choice of holiday. The worsening economic health will most probably increase this figure, and again there is a clear message for travel brands.

For the majority of the consumer audience, a strategy that emphasises reasonable pricing, and good return for that cost will be most engaging. Conversely, the environment has slipped ever further down the agenda at the other end of the spectrum, with just 1% of consumers saying it is the most important factor in their decision.

Marketing is a major factor for just 4% of consumers, a concerning stat for the industry, and a clear sign that agencies and clients alike must step up their game, if destination and travel brand marketing is to become a major influence. And, as the power or recommendation remains a force to reckon with, with 8% saying it is a major factor, marketers must embrace the newer disciplines that allow them to influence and drive the conversations consumers have. Having said that, travel brands must also get to their heart of their target market before they try to talk to them on the kind of informal level that creates onward recommendation.

Where do you go for advice?

The internet is clearly the central portal of advice for travel research with 66% - but again, the power of word of mouth is evident as it comes in second with 11% of consumers say they research their holidays via friends and family.

Whilst the internet remains a key channel, the enduring appeal of guidebooks and magazines (8%), means that effective marketing strategies are likely to also incorporate public relations and word of mouth activity. Ultimately, the activity must be customer-centric, so that that it is the consumer at the core of the activity, and it is their wants, needs and preferences driving the campaign, not necessarily the product itself.

Conclusion

The research highlights the changing face of the travel market. Although the market is likely to shrink in 2009, it will obviously not vanish completely. Consumers will still be looking to travel, with marketing only increasing its impact if the newer disciplines are embraced. Never has this been more important with the recession now really starting to bite.

Value for money, recommendation and reliability will become more important than ever. The brands that will ride the storm will be those that are able to demonstrate the reputation of their brand, evidence value pricing and communicate through targeted, relevant and innovative marketing.

Total sample size was 2069 adults. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+)."