With the pandemic behind us, global air traffic continues to recover as the travel industry strengthens progressively. However, looking deeper we see that while there has been a recovery in leisure travel, which has surpassed pre COVID-19 levels, volumes in the business travel market are not back to where they were.
With the pandemic behind us, global air traffic continues to recover as the travel industry strengthens progressively.
However, looking deeper we see that while there has been arecovery in leisure travel , which has surpassed pre COVID-19 levels, volumes in thebusiness travel market are not back to where they were.
For those of us charged with assessing our industry, and where it might be headed, this puts a renewed focus on the leisure traveler and how to engage with them.
The ‘occasional leisure traveler’ – who takes two-to-three trips each year – now constitutes the largest segment of the whole market, accounting for 53 per cent of total travel spent, industry-wide. However, these travelers are difficult to engage with, having just 1.1 interactions with a travel player each year.
Rethinking loyalty
In this new world, traditional measures of engagement, such as ‘earn-and-burn’ loyalty schemes based on frequent interactions, are not enough. These programs reward repeat purchases by providing incentives – such as money off or air miles – for future purchases.
At the same time, customer acquisition costs (CAC) for the occasional leisure traveler are expected to continue to increase, particularly with the imminent demise of the third-party cookie, the digital trail we leave behind as we navigate the internet.
Against this background, the need to rethink loyalty schemes - which are a means to reduce CAC for leisure travelers – has become a hot topic.
At Amadeus we are playing our part, looking deeper into the issue so that we can find ways to put the traveler first. We have developed a comprehensive view on which vectors – both traditional and non-traditional – can be used to engage with the occasional leisure traveler.
Occasional leisure traveler
So, what is it that builds loyalty in our sector – what keeps a leisure customer returning to the same travel seller time-after-time?
In our view, there are three key components…
Firstly, the provider must make the trip significant, creating a valued experience for the traveler.
At the same time, the provider must contribute to the inspiration and planning phase of the trip, helping a traveler realize their ambitions.
Finally, the provider must interact with the traveler outside the trip, adding further interactions both pre- and post-travel.
Much of this is already known and it might seem strange our industry has not addressed these changes already. However, there are good reasons.
Today, very few travel players have the scope and capability to address all three attributes. At the same time, the technology to do so may only have become available very recently. As our industry develops, innovative solutions such as Amadeus Hey! , Amadeus Discover and Traveler ID will create new opportunities, drawing on modern technologies such as conversational artificial intelligence (AI).
Meeting expectations
Let us look a little closer to see what is behind our three components.
Firstly, how to create a valued experience during a trip. The key here is that the occasional leisure traveler typically wants to enjoy an experience during a journey, and this is what leads to the selection of the destination.
A good example might be “I am interested in scuba diving – what are the best locations for this activity right now?” or “I want to post on social media about my trip – where are the coolest locations and what are the best activities to do there?”. What this means is that what makes a trip a valued experience is not only the airline or hotel, but also whether the traveler can fulfil their expectations with respect to experiences.
Among other things, the travel provider will need a depth of local content, including information on what can be experienced in a destination, to effectively provide the service the traveler expects.
Of course, the airline and hotel portion of the trip is important to ensure the journey is not a negative experience, but they are not sufficient, alone, to ensure a holiday creates a valued experience.
This thinking also lays behind the second of our components – inspiration.
Local, detailed destination content will be vital during the planning phase. On average, a traveler takes two months to put together a trip, and this is plenty of time for the travel industry to interact with them. Here we can harness recent technology, such as generative AI to facilitate the process.
The final element is interactions and here travel providers have two options.
Firstly, they can participate in loyalty schemes offered by third parties who have more frequent contact with the customer outside of the travel space. Credit card providers are a good example. Alternatively, they can dive deeper into local content, providing travelers with the means to organize leisure time outside of holidays, highlighting local content for the hometown of the traveler.
In our next blog, we will investigate these strategies a little more.
They are both – independently or in combination - expected to be leveraged by our industry to further engage with the occasional leisure traveler in order build a closer relationship and win loyalty, unleashing the full range of benefits for all stakeholders.
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