Unpacking the new age of travel: 2023 trends.
Jun 21, 2023
Summary:
- Despite inflation and economic uncertainty, travel demand remains strong, with most brands seeing higher direct bookings and sharply rising average order values.
- Travelers are willing to pay more, and nearly all travel brands expect higher booking costs and continued growth in 2023.
- To justify higher prices and drive loyalty, brands are rolling out more luxury services and targeting business travelers and remote workers with tailored perks and offers.
- Limited investment in digital experiences risks pushing customers back to OTAs, yet many airlines and hotels are still underinvesting in technology and process improvements.
- A large majority of travel brands plan to integrate generative AI into the booking experience, primarily to enhance self-service and customer support, positioning themselves for long-term gains in direct bookings and loyalty.
Even with inflation, looming recession, and economic burdens weighing the masses down, travel demand has not faltered. But while these challenges aren’t putting a pause on booking, they certainly are impacting the way travel brands are approaching their priorities for 2023—and we have the update on how.
In our latest travel benchmark reports for hotels and airlines, we delve into the perspectives of digital leaders across those industries to get a better understanding of their strategies for the year as well as how those align with traveler behavior (referencing data from the Quantum Metric platform).
Let’s explore the top three highlights across our travel benchmark reports.
Despite the rising costs of travel, consumers are showing no signs of slowing down.
Even getting past the initial boom of “revenge travel,” the desire to explore continues to push travelers out the door. In fact, 70% of travel leaders say direct bookings with their brand have increased over the last 12 months. This trend is expected to continue, with nearly 88% of brands anticipating higher average booking costs this year compared to the previous year. Furthermore, a staggering 97% of travel brands expect consumers to be willing to pay more to travel in 2023. Average monthly order values (AOV) for travel more than doubled between Jan. – April 2022 and 2023. For airlines, AOV was three times higher YoY.
Q1 Monthly Average Order Values: 2022 – 2023
Higher costs are leading to more creative offerings for repeat bookings.
In the face of the rising costs, travel brands are leaning into niche offers to provide value for consumers and boost loyalty (aka repeat business). For instance, 62% of travel brands have introduced more luxury services to their customers in 2023. These services range from personalized services to fast-tracked check-ins, all aimed at providing a superior travel experience that justifies the higher costs. In addition to luxury services, 75% of travel brands are also focusing on a specific segment of travelers: business travelers and remote workers. They’re offering services such as high-speed internet, upgrades for more space, or mid-week deals for discounted rates. This strategy seems to be paying off, with 73% of brands reporting a growth of at least 25% in business travel bookings over the last year.
Survey responses: Which of the following best describes the type of new luxury services you now offer/ plan to offer?
Next few months to indicate how travel brands will compete with Online Travel Agencies (OTAs).
The future for airlines and hotels is not entirely worry-free. Particularly with how they will fare against OTAs. A significant 47% of leaders in the US express concern that limited investments in digital could drive consumers back to OTAs. Only 44% of airlines have made new technology investments or updated processes to mitigate customer frustrations due to flight delays and cancellations. Budget cuts to customer experience could cause travel brands to lose ground. However, those who invest in enhancing customer experiences today will be better positioned to realize longer-term benefits to direct bookings and loyalty.
Interestingly, a whopping 91% of travel brands plan to implement generative AI into their booking experience. While some have already quickly introduced new features like trip planning assistants, the majority (51%) will use it to enhance self-service and other customer support options over search or other flashy features.
The digital landscape for travel in 2023 presents some challenges and more opportunities. The continued appetite for travel presents an opening for brands to grow new customers and loyalty at the same time. However, capitalizing on this demand requires strategic investment. Brands need to invest in technology to enhance the booking experience, increase self-service capabilities, streamline employee operations, and provide real-time updates. This prioritization can help hotels and airlines stay competitive in the digital landscape and make 2023 a year of remarkable growth and customer satisfaction.
To get the full insights from the reports, download the 2023 Digital experience benchmark for airlines or 2023 Digital experience benchmark for hotels.