What travel and hospitality brands need to know before the critical holiday season

Here’s what marketers with travel and hospitality brands can do to beat consumers’ “inflation anxiety” and outsmart their competitors.

Publication date: June 14, 2022

(Photo credit: Gerd Altmann/Pixabay)

Travel hospitality brands have shown incredible resilience in the past couple of years as people around the world have drastically cut back on vacations and business trips. For global airlines and hotels, the number of American consumers traveling abroad fell in 2020 and is still at about half what it was before the pandemic began. While traditional hotels have been hoping to see opportunities for a major rebound in the past year, much of that revenue has gone to increasingly popular alternative accommodation brands like Vrbo and Airbnb.

However, hope is on the horizon for all players in this sector. Travel and tourism is expected to generate $8.6 trillion globally this year, just 6.4% below pre-pandemic levels.

At the same time, Americans are said to be on the fence about how much money – if any – they want to spend on their summer vacations because of inflation. With this travel and hospitality season fast approaching, let’s take a look at what brands need to know to maximize their business results.

Advertising spending is going digital

Travel and hospitality brands should not skimp on advertising budgets because the competition will likely do the opposite and, therefore, own more of the summer market. In 2021, travel marketers spent 38% more than they did the year before, and they are expected to spend 36% more this year than last year.

Marketers in this field seem to have understood the message that they need to invest in order to win. Recently, we saw Vrbo, Expedia, and Booking.com buying expensive broadcast ads to nearly 100 million consumers during the 2022 Super Bowl. Airbnb also recently launched a major advertising campaign that focused heavily on TV.

But while television communicates the brand’s message to a wide audience of potential customers, marketers have little control over targeting and whether sales are the result of advertisements. This is why advertising dollars are turning more and more towards digital.

With targeting and scaling far above broadcast, digital advertising provides an audience segmentation that broadcast and off-air advertising cannot, allowing travel and hospitality brands to find the right consumers closest to the point of purchase. Through data and analytics, travel and hospitality marketers can identify consumers who are planning to go on a trip, who are likely to shop through traditional or non-traditional accommodations and then identify ads for the most likely buyers.

Most importantly, they are able to see exactly how successful the campaign is at a precise level with the help of incremental measurement. For this reason, in the coming year, travel and hospitality brands are expected to spend 70% of their budgets on digital advertising, an increase of 63% from 2020.

Digital advertising also allows marketers to tweak campaigns mid-journey, seeing what’s working via real-time performance data. They can change the design, offer cashback or discount, and segment the audience depending on what’s happening in the market and ad performance, improving campaign results in real time. You don’t have that level of insight or timely results with broadcast media.

So this year, expect more travel and hospitality brands to change the meaning of “big expansion,” investing more in online inventory and less in media. Brands adapting to this shift could capture more of the pent-up demand for travel we’ll see this summer and beyond.

‘Inflation anxiety’ is real, but it’s an opportunity

For now, inflation is likely to make consumers reluctant to book flights that they would otherwise buy. Travel costs are up about 16% compared to 2019, and the average price change for transportation (up 30%), accommodation (10% increase), recreation (up 5%), and food and beverages (up 14%) are also annoying for consumer wallets.

These costs actually give travel and hospitality brands an opportunity to build loyalty with consumers who may have “inflation anxiety” by helping them get cashback, rewards, and discounts. These offers will encourage consumers to not only take a trip but also reflect on the brand that has made it financially viable.

More recently, DoubleTree New York, Waldorf Astoria Las Vegas, and Arizona Biltmore have tended to be loyal, offering $70 to $90 cash back for an overnight stay on digital ad platforms. In a less than ideal economic environment, these hotels want to build loyalty and it is wise to do so.

Brands with strong loyalty marketing programs grow their revenue 2.5 times faster than their competitors and generate up to 400% higher returns for shareholders. And 79% of consumers say loyalty programs are more likely to keep brands.

In conclusion, travel and hospitality brands are not in an ideal economic environment due to inflation, but the disruption is not as bad as it was two years ago. The pent-up demand will still be there because family and friends are ready to meet up at destinations to take full advantage of their vacation time. Marketers who are using digital advertising to their fullest and relieving consumers of their fears by giving them cash will get the most out of their revenue this summer.

Sasha Trivonak is Vice President, Travel & Leisure Partnerships at Cardlytics.

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