The reality is that travelers are willing to share a certain level of personal information if there’s a clear answer to the question, What’s in it for me? Oftentimes brands see the answer to this question as coupons, deals and discounts. While this can be effective, there are also other opportunities in travel retail for brands to use personalization well.
New Sabre research on the UK consumer reveals some underlying personalization trends applicable across all travelers — and most especially to any travel supplier serving this region. The key takeaway is that the near-majority of travelers expect some form of personalization: 49% of the 2,000 surveyed prefer personalization, but only if companies send “offers and services that are relevant to my interests or situation.” So what does this mean for travel?
The travel retail opportunity
Well, it means that travel retail still has a massive upside. And it’s not just travel retail when referring to consultants and low-fare search. The consumer’s openness to personalization means that travel suppliers must first not take advantage of the trust that a large proportion of consumers are willing to give. Second, the brand must implement data scrubbing processes that create clean, accurate databases. Only then can an effective analysis be layered on top of the data to deliver the targeted offers.
While hotels are often associated with personalization — 21% of survey respondents associate hotels with personalized service — this same association does not extend to airlines. In fact, only 8% of consumers felt that airlines were offering personalized services. This split was also apparent when splitting the data up by age. Those over 55 were much more likely to associate personalization with hotels and airlines than the younger generation.
For suppliers, this is of paramount importance as strategic personalization is never one size fits all. More experienced travelers are much more likely to expect personalization, so this expectation must be managed. For the younger travelers, a strategy should include explaining the benefits of personalization and gaining buy-in from this next generation of travelers.
How much is that ancillary in the window?
Comparison shopping translates well to the mobile experience. Each traveler places a value on each aspect of the journey, whether it be a more comfortable seat, early boarding, or a cheap price. Given that the traveler has a certain price elasticity, personalization can work to mine this band of elasticity to target the most appealing ancillary at the best price to the right traveler.
This is the personalization sweet spot: the overlap of a traveler’s need (what I want at the price I want) and the supplier’s primary objective (make the most revenue).
It’s hard to say whether the “pay-to-personalize” trend is what’s driving the popularity of ancillaries, or whether the Great Airline Unbundling drove this behavior into overdrive. In some regards, it doesn’t even matter. The majority of travelers prefer to pay only for what they use:
According to Phocuswright, European hospitality companies see only a half percent (0.5%) of overall revenue from ancillaries. For hotels, this shakes out to quite the opportunity to enhance the guest experience through personalized offers. While some respondents were not interested in spending anything extra (30 percent), the rest of the cohort was willing to spend money on extras during their stay. That’s 70 percent of guests eager to spend more — at an average of £56 per guest. Out of those, 17 percent would even spend over £100 for additional extras. Within those varying bands of price elasticity, hotels can further segment to match ancillary offers and deliver a more personalized guest experience.
There are also significant differences between age groups when it comes to the willingness to spend money on extras during travel. For more on that, as well as the rest of the research, check back soon. Or join us at London Tech Week, as we present the research on retailing as well as how consumers use social media to research travel and communicate with travel brands.
This research is a part of London Tech Week’s EnvisionUK event, an industry discussion on the future of personalization, social media and communications in travel.
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