Have a nice trip: inside the travel industry's own life-changing digital journey

  • Technology
  • October 28, 2014
  • Jessy Edwards
Have a nice trip: inside the travel industry's own life-changing digital journey

Whether it's booking flights, deciding where to stay or finding your way when you're on holiday, the internet era has turned the travel industry on its head. Jessy Edwards looks at how some of the traditional businesses like Destinations, For the Love of Travel and House of Travel are transitioning and how new businesses are profiting.  

In ancient times, before smartphones were de rigueur​, I went on my OEWe started in Paris. Mum used a desktop computer to book me and my best friend seven nights in a hotel she found in the printed Wallpaper guide. We went to a branch of STA Travel to book flights. We bought hard copies of Lonely Planet at the airport. It was a wild world.

Once we arrived, we were on our own. No iPhone, no TripAdvisor or Airbnb that we were aware of. We had to physically go to an internet café to book our next flights and accommodation. No Google Maps either. Maps were things that unfolded blanket-sized and could be used for lighting survival fires or getting in people’s faces on trains. That was in the dark days of human travel history, back in 2010.

These days the young ones have it easy. In just four years, travellers now have functional fare-compare sites, review websites, targeted Facebook ads that know what we’ve been browsing, online travel guides and apps.

The way we book travel is changing, and with it the way advertisers are targeting potential holidaymakers. Brochures are on the wane and more and more Kiwis are bypassing the traditional travel gate-keepers, booking flights directly with airlines, using websites like airbnb.co.nz and bookabach.co.nz to suss themselves out with accommodation, and buying fewer travel publications to help them decide where to go. 

Nielsen reports that 33 percent of Kiwis overall usually plan and book their holidays online nowadays, an increase of 13 percent compared to just two years ago. But there are plenty of New Zealand travel companies out there refusing to take the digital assault lying down, and trying to innovate their way out.

STORY OF A MAG’S BATTLE TO SURVIVE

One is glossy travel title Destinations, which, having launched in 1996, is almost 20 years old.

Struggling in a wintery publishing environment, this year the title was thrown a lifeline by publisher Stephen Brown, who acquired the mag in June.

Marketing director Cola Larcombe says when they picked up the magazine they had a bit of work to do to take it into a new era.

“We didn’t want to be the mag that just created a big story off a brochure – we wanted to bring the quality up, and I think we’ve done that.”

After a hefty redesign, the launch of a brand new website and fresh content strategy, Destinations was re-launched in September by Auckland mayor Len Brown.

So what’s the plan?

Great design: The magazine has launched with an inspirational showreel by Deliverance.io and a new look that they say is so beautiful people will buy it as a coffee table read – and with a print run of 10,000 that’s quite a lot of people.

New angles: the magazine is taking its focus off New Zealand, Australia and the Pacific and looking towards other horizons, not even necessarily on this earth. In its latest edition, graced by Richard Branson, the magazine gets a briefing on the galactic travel of the future.

Digital: Destinations has relaunched with a beautiful website and plenty of digital capabilityIt's using Layar app technology which allows the reader to scan over a page of the mag with their mobile device to access digital content like video and audio.

“We want to become the go-to site for you to jump on and see different places and different stories and watch beautiful videos and photos,” Larcombe says.

One of the biggest changes from the former Destinations magazine is there will no longer be sponsored editorial.

“We don’t do that. Obviously you’ve got to have a commercial reality but I think we really wanted to keep the integrity in the mag and that’s why it’s the biggest change from what it was.”

Larcombe says while they respect other magazines that are doing sponsored editorial well, they are pouring in large investment to keep the content pure.

“At a huge expense we’re trying to first and foremost to keep the quality of the product, and we do believe that is by not selling off editorial or having big sponsorships.”

It’s a risky move that acknowledges the highly refined advertorial-radar that consumers have developed, and perhaps why so many paid media titles have tanked.

Destinations is in no way in denial about the state of the magazine industry.

“It has been in decline for a while. But the magazine industry here is still very staunch and strong we’re a small community,” Larcombe says.

Larcombe says it’s “a hefty investment” these days to stay around, and magazines need a strong promotion plan, lots of support in store for retailers, and a strong distribution arm.

“You have to be well set up to survive. It’s about creating something that’s valuable to the reader, and there is a lot of competition in the market.”

FOR THE LOVE OF TRAVEL

Competing Kiwi consumer-facing travel magazine For the Love of Travel is also ramping up its digital product.

The magazine has been in publication for eight years, and last year redid its website to keep up with digital demand and “ride the digital wave”, general manager and head of digital strategy Harmeet Sehgal says.

“The thing with digital is it’s a revolution that you can’t escape, especially in the travel space where more and more Kiwis are researching travel online. Expedia is spreading its tentacles worldwide and TripAdvisor now is a $10 billion company, and eight to nine years ago we would not even heard of them, let alone them being such big forces in the online world,” he says.

Founded in 2000, travel review website TripAdvisor is an unstoppable force, with 280 million unique monthly visitors, an entity that greatly democratises travel as well as greatly threatening travel agents and publications.

There are over 170 million reviews on TripAdvisor covering more than four million hotels, restaurants and tourist attractions. TripAdvisor operates in 43 countries across the world and runs 17 brands, Forbes reports.

As of today, TripAdvisor has market capitalisation of about $12.6 billion and Expedia is slightly more than $10 billion.

Sehgal says these sorts of companies illustrate the growing trend of people who want to be more in control of their travel plans and are doing it by researching online and booking direct, rather than through a travel agent.

Magazines need to be in the online space to capitalise on this.

Advertising has changed, but Sehgal says it’s not the quantity of advertisers that's the problem. 

“It’s never been a challenge to get advertising, it is just the way we advertise and have it in context to what our audience is searching for without compromising on user-experience. "Obviously print is nice, and glossy strategic ads bring big brand value out but an online ad in the same brand-safe environment gives an opportunity to the advertiser to take a tactical approach and a better call to action." 

He says as online catches on, brand loyalty is coming down.

“Because it’s so price-driven people say, ‘Well, if we're getting a 30 percent cheaper price here, why don’t we go and try it,’ and they are rarely disappointed.”

As part of its digital strategy, the magazine is “absolutely” looking at apps.

“There is a lot of research going in and stage three of our digital strategy would be apps.”

OTHER TRAVEL COMPANIES GOING DIDGE

House of Travel is one travel agency fighting decline with an app and a focus on Facebook.

Of the Kiwis who travelled domestically in the last year, a whopping 69 percent chose to book online themselves, versus just 12 percent who opted for a travel agent, Nielsen reports (Nielsen Consumer and Media Insights Q3 2013 – Q2 2014). 

But it’s not all bad. When it comes to international trips travel agents have better odds, with a more modest 52 percent of those who travelled last year booking on the net, and a solid 34 percent booking with an agent. And there's still a big market in corporate travel. 

House of Travel is 28 years old and holds ten percent of the travel market in New Zealand and 25 percent of the travel agent category.

In its willingness to adapt, it's developed a full service app that pulls hotel and flight bookings into one place with your itinerary. Users can also book flights and search deals through the app, as well as accessing content about destinations.

It's supposed to cover the whole journey of booking, talking, interacting and selling, which can be fragmented with customers easily lured to competitor agents, and it signals a new balance in media spend.

"Of the total media spend, 32 percent was spent on traditional media (radio and outdoor) for support, and the rest was spent on digital," said House of Travel's digital manager Tim Paulsen. And around 40 percent of the digital marketing was through Facebook. 

From an ad spend point of view, House of Travel is starting to flip, House of Travel public relations manager Jo Wedlock says.

“Two years ago we would’ve put a campaign together to sell holidays to Europe, and 70-80 percent of it would have centered around press, and maybe radio. If we could afford it we would’ve added TV depending on stage of year, and we’d probably be lucky to have ten percent of budget for 'digital stuff'." 

In 2013, Flight Centre had one of its best ever years, with its share price doubling (this year wasn't quite so good, however, with writedowns and fines leading to a 16 percent dip in profits). And when FCB Media was awarded the media business, managing director Derek Lindsay said, contrary to popular opinion, it's still a great business.

"They are transitioning the business. Clearly there are a lot of point-to-point online bookings these days, but there are a lot of people who want help from an education point of view and increasingly there are people who are doing more complicated travel so there's still a dependency on someone to help with the bookings." 

INFLUENCE OF THE SHARING ECONOMY

Another challenge for the travel industry is the growth of the sharing economy, the consumer-to-consumer model of sharing out a room in your house, your bach, your car or even your digital camera for a fee.

The sharing economy plays into the trend of consumers wanting to discover and book things themselves, and is led internationally by companies like Airbnb and Uber.

A leader in the New Zealand sharing economy space is bookabach.co.nz, the online platform that connects New Zealand bach owners with people looking to book a holiday home.

The story of BookaBach illustrates how far the sharing economy has come over the last decade, co-founder Peter Miles says.

“We started in October 2000, the end of the first dotcom era, before TradeMe and before online banking, when the average person was terrified to put their credit card details in online,” he says.

In the last 12 months the company processed $50 million in gross rental transactions, and it has grown by 1000 – 1500 listings per year for the last six years.

Last year it was partially acquired by HomeAway.com, a global vacation rental company based in Texas with more than 1 million listed rental properties.

“It gives us more growth in [overseas inbound bookings] than we’ve ever seen before, but it’s still a small proportion of our bookings [most are Kiwis travelling domestically],” Miles says.

While he agrees that businesses in the sharing economy have been highly disruptive to traditional business models in the travel sector, he does not think BookaBach quite fits into that category.

“We are less head on head disruptive to traditional accommodation than say Airbnb is. Airbnb in cities is versus hotels and motels, and Uber is versus taxis. I would argue that a bach is quite different from a hotel. We actually open up whole places in the country to people where there are no motels." 

He hasn’t seen much competition from Airbnb in New Zealand yet, but no doubt there will be growing competition for everyone as the sharing economy gains momentum.

“I think the thing about this stuff is it’s not going to go backwards, it’s here to stay,” Miles says.

THE STORY OF LONELY PLANET

If Lonely Planet led the world in unbiased, comprehensive travel publishing when it was first published in 1973, perhaps it can lead again on this digital adventure.

Lonely Planet guides, once the go-to travel companion for any traveller, was one of the first to be cannibalised by smartphone technology.

Who needs printed maps anymore? Reviews? And who wants to carry one kilogram of book around from country to country?

So the story goes, reclusive Kentucky billionaire Brad Kelley bought out the tanking travel title in mid-2013 and put 24-year-old wedding photographer Daniel Houghton at the helm.

Houghton promptly fired 75 of the 383 full-time employees in favour of a more user-generated model, and is trying to bring Lonely Planet into the digital era, with a view to creating apps that changes the way people travel.

Speaking to Outside magazine, Houghton wouldn't comment on the company's profits since he took over, but he says that digital now accounts for 30 percent of Lonely Planet's revenue.

ADVERTISING FOR THE FUTURE

Destinations magazine marketing manager Cola Larcombe says she doesn’t think the travel booking service industry will ever die, but we need to accept that people are starting to look for different sorts of experiences.

“I don’t think theres ever going to be a problem with letting someone take care of it all for you and do it, but I think it’s finding more of those that actually have what we’re looking for, and that’s maybe why were going to smaller indie agencies who do have these really cool offers.”

While there may have been a decline amongst paid travel titles as a whole, certain sectors of travel are doing particularly well.

Larcombe says some of their biggest markets, alongside baby boomers looking for luxury travel options, are young professionals looking for something different, and young families looking to have a really unique experience.

“Families no longer want to go to the Gold Coast on their five day package where everything is stuck inside one area for the kids to play and eat and they can’t move out of the resort. That’s the diversity of us, people want to do interesting things with their young kids.”

And while many advertisers have been neglecting print over the past wee while, Larcombe is optimistic they will come back to magazines offering the right audience and the right channels.

She believes that with the change in the media landscape advertisers have been using their budgets to try out different means of advertising and may be ready to come back to print.

“They can’t be everywhere and across everything. I hope once their digital plans have been valued and they know where they can go they’ll come back to print with some discretionary spend or when they see we’ve got digital and print and we can maximise that spend for them.”

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