Lodging and Leisure Travel

Globalization, cost pressures, and digital technology are revolutionizing both consumer demand in tourism and how products and services are delivered.

The industry must transform how it conducts business to meet shifting customer expectations while keeping operations lean. The leading players combine a deep understanding of international markets and modern consumers, including how to build customer loyalty with innovative digital strategies. Companies should also be on the lookout for profitable collaboration opportunities.

Create an Advantaged Digital Strategy in Lodging

As digital disruption gives more power to consumers, companies in the lodging industry are being challenged to adapt to new market realities. Four principles can guide lodging companies in creating an advantaged digital strategy:

Design a digital marketing strategy that supports the brand promise and business objectives. The digital world opens up lots of choices, but technology is expensive and resources are limited. If a brand is rooted in value and efficiency, spending big on digital concierge services makes little sense. A mobile check-in/check-out capability, on the other hand, should appeal to target customers.
Establish an organization design that combines a cost-effective mix of internal and outsourced capabilities. Online spending still accounts for less than one-fifth of the amount that companies devote to traditional media, but it’s growing at an annual rate of almost 15%, while traditional media spending is contracting. Compared with companies in other industries, travel companies are spending 30-60% more online each year, experimenting with different approaches.
Find the right balance between centralized and local control of the brand. Decentralized approaches are best at enabling local customization but reap few economies of scale. Centralized control allows for the amortization of technology and development costs over multiple brands and properties. Whatever the approach, the principal challenge is to establish a map of priorities that the organization can follow in building its digital functionality while maintaining a consistent message.
Build a culture that embraces digital interaction and encourages experimentation. This requires leadership and a willingness to embrace both new technologies and a “test and iterate” approach. Digital marketing tools can provide access to a wide variety of customer data and the ability to measure results with a high degree of precision—but only if they’re properly employed.

Chinese Travelers Like Long-Haul Destinations

China’s rapidly growing travel market offers enormous opportunities for players that can build their brands and gain the loyalty of Chinese travelers. The path to success in China involves identifying the most profitable segments of the market and understanding the country’s unique travel needs.

The color and size of the circles show the growth in TripAdvisor China’s unique visitors by outbound destination.

Mobile Changes the Travel Game

Mobile is just getting moving. According to TripAdvisor’s most recent Trip-Barometer survey, 4% of travelers worldwide now book their trips using mobile devices. The percentage is higher in many emerging markets, where mobile technology is leapfrogging PC-based access.

While most travel companies recognize the rapid ascent of mobile, they’ve yet to develop a full understanding of its reach and impact. Mobile rearranges the relationship between a travel company and its customers, much the way the original wave of digital disruption did, scrambling established patterns of behavior in different phases of the travel journey.

Travel companies must understand that the dynamics of interaction on a mobile device are very different from those on a desktop, and anticipate how technology will change over the next decade.

Franchisor and Owner/Operator Collaboration Pays in Global Lodging

Companies in the global lodging industry that collaborate with their owner-manager partners to provide a high-quality experience will win the battle for more customers and higher rates. The delivery of brand basics is critical to the customer value proposition.

Thanks to their increasing use of franchising, hotel companies are giving up direct control of brand delivery. But this comes at precisely the time when consistency of delivery has never been more important.

How a Rewards Program Creates Value

The value of a loyalty program can be determined by its “loyalty margin”: the benefits that the program offers to customers relative to the cost of those benefits to the company. The design of a rewards program can have a substantial impact on three critical factors: loyalty margin, incremental share, and program size. These three factors can be calculated in the following ways:

Loyalty Margin. The value of benefits such as airline miles and upgrades to consumers minus the cost of benefits to the program.
Incremental Share. The total expenditure per member minus the original expenditure per member.
Program Size. The total company revenues minus share of revenues generated from loyalty members.

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