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Disruptive Innovation Proceeds Steadily in Online Travel: the Key Trends

11/15/2014
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Online travel is currently going through an exciting period of growth and innovation, which is changing the way travel products are booked and travel companies communicate with their customers, and it is also increasing the power consumers have, not only to find information about products, compare and choose them, but also to reshape the whole industry. This article summarises what are today the key disruptive forces in this sector.

Mobile channel increasingly central

The rise of the mobile channel, which is seeing consumers increasingly use their smartphones and tablets to book travel and seek customer service, is the most powerful force changing the travel industry today in terms of consumer behaviour, and it is also, as a consequence, requiring companies to change their business models.

Smartphones and tablets are increasingly being used not only to search and shop on travel sites but also to book travel products. This trend is expected to constantly rise in the next few years, as long as consumers get used to finalising their reservations on smaller screens, the average size of the smartphone screens increases and travel companies learn to make purchases via mobile devices smoother. Mobile travel bookings are estimated to account for 15% of global online travel bookings in 2014 and are forecast to account for 35% of them by 2018.

Growing interest in mobile bookings of in-destination services

Mobile devices are also an important tool used to offer assistance and services in real time to consumers on the go, demand for which is constantly increasing among travellers. At the same time, they have become a tool used by companies to generate extra sales and ancillary revenue through the booking of in-destination services. This category is expected to grow healthily in the next few years and is attracting the interest of big players, as shown by the acquisition of online restaurant reservations company OpenTable by Priceline and of tourist activities company Viator by TripAdvisor.

Moreover, the number of devices available for consumers on the go is steadily increasing to include wearable electronics, such as watches and glasses, connected cars and in-flight screens, each of which can be used to provide customer service and make bookings.

Peer-to-peer trend disrupting the industry

Another key trend in online travel today is one which is seeing consumers increasingly empowered. Today not only do they have the power to affect the performance of travel companies through their reviews and to drive increased competition thanks to the degree of information they can access, but they are becoming providers of travel services, thereby competing with travel corporations. This trend, which started with the success of peer-to-peer holiday rentals, driven in particular by the Airbnb brand, is currently expanding to other tourist services, including transportation, meals, tours and activities, with disruptive potential for the industry.

The rise of personalised online marketing

A very important new development is also the rise of personalised , which is being made possible by big data analytics. Today companies own an amount of data, gathered through both internal and external sources, which has no precedent in the past. They also have the possibility to analyse this data in a more efficient way and to use it to suggest options to travellers through prescriptive analytics. Thanks to these technological developments , companies can today target consumers through a personalised marketing mix, which includes customised advertising, prices, channels and products.

To change to stay competitive

The rise of the mobile channel, of peer-to-peer travel services and of personalised online marketing are developments which are requiring all travel companies to be swift to make the appropriate changes to their business models in order to stay competitive in such a fast-changing environment.

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