Travel companies advised not to compare economic cycles

Travel companies have been advised not to compare the past 12 months with previous economic cycles as the sector continues to battle with extreme trading conditions.

At Travolution’s Advisory Board meeting, Google’s industry leader Robin Frewer said the market had changed and described what the industry has experienced this year as ‘exceptional circumstances’ in terms of rising fuel prices, fluctuating currencies and interest rates.

These factors have put pressure on consumers to be careful with money and seek value and, in turn, this has increased pressure on businesses in terms of margins and overheads.

“This year is all about survival for a lot of businesses,” said Frewer.

He added that smart businesses have been spending time understanding the cost of each of the distribution channels, and while the cost of sale may be similar to last year average booking values have decreased.

The drive for value from consumers has led to them searching around more and arming themselves with as much information as possible to ensure they are getting great value.

“Consumers need to know they are getting a deal and have to have the perception that they are getting something for a great price or money off. The whole economy is built around that at the moment,” said Travelsupermarket travel expert Bob Atkinson.

Google figures show query growth for travel year-on-year is about 15% up, with hotels up 17% and flights up 11%, while figures from web analytics company Compete in August show travellers visit more than 20 sites before making a purchase.

Frewer also said consumers were getting more sophisticated in how they search, with searches getting more specific and there is significant growth in longer queries.

Google has recognised this trend across a number of geographies and expanded the size of it search box at the beginning of September.

Board members also questioned whether consumers would continue to demand the same value when the recession lifts.

“A lot of the hotels have had to get any kind of revenue in and drop yields to get business in. That expectation will hold on because people get used to paying that price,” said Atkinson.


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