When a virus attacks a computer, it infiltrates its operating system, replicating itself onto other programs and files and infecting them with malicious actions from stealing data to file corruption. Sounds familiar in the current climate, but this is not the point. The interesting part is what comes after – how technology responds to a virus. The evolved response is for the technology to upgrade the computer’s operating system, making the software more robust and less vulnerable to outside dangers that threaten its healthy function.
The virus Covid-19 has wreaked havoc on the global economy and brought to light the fragility of the travel industry, with many vulnerable areas of attack, such as inflexible payment terms, narrow market dependency, and high customer acquisition costs for travel and hospitality businesses. It’s a system that has been shaken by the sudden halt in the free movement of people. But just like when a virus attacks a dated operating system, there exists the same opportunity in how it responds – as it upgrades from the old system to a new one that serves its external environment more sustainably. Our view at Flux is the best way to empower the travel industry to operate more sustainably, is by leveraging technology to upgrade to a new “operating system”. One of the crucial prerequisites to this new operating system is your travel brand’s website.
In this piece, I speak to why your brand’s online presence, starting with it’s website, is one of its most important tools for sustainability and survival over the years to come.
Covid-19 has shown the vulnerable position businesses are placed in when their connection to the end consumer is plagued with distribution challenges. Businesses with a lack of online presence have taken the brunt of this dependency, particularly those in service-orientated industries such as travel and hospitality where intermediary sales support via traditional brick-and-mortar retailers were the first to be closed.
The result of this global shutdown on travel has been the forced requirement for travel and hospitality businesses to lean quickly into direct engagement with the end consumer wherever demand is present – be it existing or, in many cases, entirely new source markets. This can be seen in the many hospitality establishments that have had to adjust marketing and pricing strategies to meet domestic or regional market needs as international borders largely remain shut. This has presented one of the key advantages in having a strong online presence;
Establishing a website setup with the necessary functionality and social channels ensures you, as the brand owner, have the ability to speak to the right audience at the right time. A website for a hotel or lodge that leverages its social media channels such as Facebook, Instagram or LinkedIn, can create highly targeted campaigns that speak to a specific audience. These can be “turned on” within days, rather than weeks or months, with a well-considered content strategy. The ability to identify and communicate with your desired audience, who can be targeted down to a street level, and market your brand using a phased domestic-to-regional-to-international audience becomes possible with a strong online presence. Timing and flexibility in marketing strategy have never been as highly valued as now, especially as travel and hospitality brands need to manage erratic border reopenings and communicate new booking terms and conditions, not to mention Covid-19 protocols.
Another advantage of having a strong online presence is the lowered traveller-acquisition costs relative to non-direct channels. With the rise in internet penetration and a USD 1.13 trillion online travel market projected by 2023, reaching your desired guest or traveller online is only going to become more accessible and cost effective. For example, a luxury hotel, lodge or tour operator’s cost of sales via non-direct techniques such as trade shows, PR, and third-party commission can range anywhere from 20 percent up to 40 percent or more of total sales revenue. Comparatively, if set up efficiently, online marketing channels cost of sales can be estimated at anywhere from 4 to 10 percent of online sales revenue. The advantage of having a strong online marketing presence is that you can easily reach a highly targeted audience of 100 000+ people on a shoestring budget, at speed, through our interconnected online world.
Although short term gains are non-negotiables right now, the real advantage of investing in your website emerges with the mid- to long-term rewards. In order to operate in an evolving travel and hospitality industry, we need to imagine the environment we will find ourselves in the mid-long term. One only has to reflect on our own behaviour to know that if your business is not readily available online, it runs the risk of being almost entirely irrelevant. Within a travel and tourism context, recent data indicates that by 2023, 70 percent of travel and tourism revenue will be generated through online sales. By the same year, there will be an estimated 1.1 billion active paying users of travel and tourism products online. This coupled with a millennial demographic inheriting the greatest wealth transfer in modern history ($68 trillion passed down from baby boomers), paints a clear picture as to the importance of having a website with the ability to engage with an audience that highly favours online as their purchasing channel.
Data is now considered the new gold. You only have to look at the ongoing feud between Facebook and TikTok, and the politicized quest for control over data to recognize its value. Despite the varying intents behind the use of data, the common understanding is that it creates a clear window into the world of your ideal traveller or guest. Data enables deep insight into your brands varying user persona’s and their profiles, creating opportunity to best serve your desired audience through better information. It allows for speaking to the right audience at the right time through targeted advertisements. This is the mid-term reward – but compound this over time with the accumulation of past traveller data and the ability to directly communicate with your audience via your website, and eventually traveller retention and advocacy for your travel brand shows its evergreen value. Websites with end-to-end tracking tools, if set up correctly, can empower your travel brand with true understanding of your target audience, and create a community of repeat-and-referral business that continues to reward you in the future.
Search Engine Optimization is a long-game strategy, as it’s a function that’s continuously evolving along with technology and how the world’s leading search engine, Google, rewards the user experience and search intent behind your website. Over the past 10 years, Google has continuously updated its algorithms and results page features to improve these two critical areas. Due to the level of competition on search engines and requirement for continuous refinement, the return on investment has a longer realization timeline, but is still a crucial marketing strategy for the long-term sustainability of client acquisition. This is because sole dependency on paid online advertising, or non-direct client acquisition, will continue to erode and in many cases decrease profitability with increased competition over time. Conversely, investing in your website’s SEO will over time improve your website’s traffic, attract targeted audiences, increase conversion rates, and result in healthier returns and organic “free” leads that you no longer have to pay for.
Diversity via a healthy business mix of direct and non-direct is the foundation of a sustainable client acquisition strategy. Having a heavy dependency on one customer acquisition channel, whether it be entirely online or non-direct, is a high-risk strategy. There’s significant opportunity cost if the choice is to ignore the current evolving consumer behavior and not upregulate to meet new demands. The best part about a healthy mix of direct online and non-direct business is it ensures you cater for a wide demographic range, from Baby Boomers (ages 55-73), to Gen X (ages 39-54), and Millenials (ages 23-38 which have now become the largest living adult generation). Importantly, pursuing this healthy business mix of both direct online and non-direct does not necessarily have to mean a zero sum game to partners in sales support to your travel brand.
As the fog of Covid-19 begins to slowly dissipate, there’s a sense that the clock has been reset and currently sits at zero for most travel brands. The all important strategic decision as to how to invest marketing budget lies before many travel businesses – whether to stick to an old operating system, or use the opportunity to upgrade to a new operating system. A system that’s well set up for revenue generation, brand building, upselling, and repeat-and-referral business for many years to come.