A LOOK BACK ON TRAVEL IN 2016 AND A LOOK FORWARD TO 2017

David Atkins | Strategy Director | DigitasLBi Hong Kong | December 2016

3 POLITICS  5 START-UPS  

9 LOYALTY 7 CSR

21 CHINA

13 DESTINATIONS 11 TECHNOLOGY

15 HEALTH & FITNESS 17 SOCIAL MEDIA

19 TRANSPORT

23 CONTENT

POLITICS: LOOKING BACK ON 2016

SEPARATIST SENTIMENT

[We will] “no longer surrender this country or its people to the false song of globalism”, President elect Donald Trump barked in reference to a freeloading world. Like Britain’s EU exit vote, Turkey’s post-coup retrenchment and China’s increasingly aggressive patriotism, America is gripped with combative ethic nationalism in which nostalgic self interest is placed above freedom and equality. It’s inconceivable that isolationist policies, xenophobic rhetoric and tightening visa requirements won’t effect traveller’s decision making process in 2017.

Image: Economist

POLITICS: LOOKING FORWARD TO 2017

A NEW THREAT

The outlook for 2017 is frighteningly uncertain for some of the world’s top tourist destinations. Will the ascension of Thailand’s monarch elect remain peaceful? Will France unite around a credible alternative to Marie Le Pen? Will Rodrigo Duterte continue to push The Philippines into despotism? Who knows!  2015’s terror attacks cost Paris an estimated €750m in lost tourism. It’s not inconceivable that nationalist policies could have a similar effect in 2017.

DLBi Take: For the first time consumers may be looking to hospitality brands for honest and impartial advice. Brands must be prepared to take a stance and establish processes for providing guidance.

START-UPS: LOOKING BACK ON 2016

A LOSING BATTLE

Even by the fickle standards of start-up survival, 2016 was a bad year for disruptive entrants into the travel sector. Venture capital investment is expected to fall by 50% from 2015 to US$3billion. To put that in context, Expedia’s purchase of HomeAway and Ctrip’s purchase of Skyscanner saw US$4.6billion changing hands.

The lack of significant entrants in the past couple of years, coupled with a strengthening of the dominant player’s  positions, has spooked many would be investors and could hamper truly disruptive innovation.

START-UPS: LOOKING FORWARD TO 2017

ONE APP TO RULE

THEM ALL

In 2017 we expect the dominant technology vendors to really flex their muscles. Both Google (through Google Trips) and Airbnb (through – you guessed it – Airbnb Trips) have recently sought to reduce travellers’ reliance on a multitude of different sites and applications. By facilitating every aspect of a trip – from planning through to experience – Google and Airbnb are making themselves invaluable to travellers. If OTAs get in on the act the environment for travel brands will become even tougher.

DLBi Take: Along with start-ups there’s a very real danger of traditional hospitality brands being left in the wake of the large tech companies. To prevent this brands must develop a tightly defined utility and niche service that appeals directly to their customers.

CSR: LOOKING BACK ON 2016

TOURIST BACKLASH

2016 was a hot year… and not in a good way. Eleven of the past 12 months were the highest on record. For the first time in 5million years global levels of CO2 rose to a landmark 400ppm. And as demonstrated by the recent news that areas of The Great Barrier Reef had lost an average of 67% of its shallow-water corals in the past nine months, tourism will increasingly feel the impact. Tourism now accounts for 10% of global GDP. The unprecedented number of visitors to popular tourist attractions is having a negative impact on cultures and communities. So much so that the Seychelles has banned large hotel developments, Santorini will enforce a cap of 8,000 tourist per day and Koh Tachai will now turn all tourists away.

CSR: LOOKING FORWARD TO 2017

CONSCIOUS CONSERVATION

The United Nations has declared 2017 the International Year of Sustainable Tourism.

The inexorable rise of Airbnb demonstrates tourists’ desire to forego the conventional. However, this creates an awkward tension between the desire for the authentic & unexplored and a sense of social responsibility.

Whether it’s Cuba losing its character or The Arctic losing it’s ice caps, the long term success of tourist destinations will increasingly rely on limiting numbers and development. Destinations will have to make tough decisions about the relative importance of tourist dollar and conservation. History states that the former is likely to win, but at what cost?

DLBi take: Brands can get ahead of the curve by taking a strong stance that has a demonstrable impact on short-term sales

LOYALTY: LOOKING BACK ON 2016

SHAREHOLDER OVER

CARDHOLDERS

One loyalty story dominated 2016. Although penned in 2015, the ink on the Marriott/SPG merger remained persistently wet into 2016, with members of both programmes furiously scanning online forums for clues of potential changes. The acquisition of SPG was encouraged in large part by the fierce support from their 21million members, highlighting the critical importance of loyalty programmes to hospitality brands.

Both Marriott (YouAreHere) and Hilton (Stop Clicking Around) launched their largest ever marketing campaigns in 2016, focusing not on the core brand, but the merits of the loyalty programme.

LOYALTY: LOOKING FORWARD TO 2017

TEAR-UP THE RULE BOOK

For all the conversation and consolidation there has been very little meaningful development in hospitality loyalty. While brands in virtually every other category are moving away from prosaic points make prizes programmes, travel brands remain stubbornly committed.

While most travel brands are happy to tinker around with the value points (BA and Marriott slashed value in 2016) genuine innovation is very thin on the ground.

DLBi Take: Whether it’s through tech innovation (MyStarbucks) or loyalty mechanics (MyWaitrose), the sector is waiting for a brand to rewrite the rules of loyalty. The first brand to do so will reap the rewards.

TECHNOLOGY: LOOKING BACK ON 2016

VIRTUALLY THERE

For years virtual reality feels like it’s been on the precipice of the mainstream. Until recently VR headsets have been reserved for the sweaty foreheads of men living with their mothers and in the briefcases of reluctant sales reps. However, Field Trip From Mars has opened collective eyes to truly exciting opportunities in the virtual world (given the budgets are large enough). In the real world, Artificial Intelligence feels like it’s at an equivalent tipping point. This year, 19 year old Joshua Browder saved motorist $4m via his virtual lawyer chat bot, DoNotPay. AI has become democratised and universally accessible for brands.

TECHNOLOGY: LOOKING FORWARD TO 2017

AUGMENTING EXPERIENCE

Although the utopian adult playground of Westworld might be some way off, we do expect to 2017 to herald a new era of human-like machine interaction.

2017 should be the year that hospitality brands begin to augment experience rather than replicate it.

AI empowered travel agents (SnapTravel), and concierge (IBM’s Connie as the new face of Hilton Mclean) are here and we can expect the pace of change to be pretty quick from here.

DLBi take: Customer experience mapping is now commonplace in the hospitality industry. Brands that intelligently invest in VR and AI across the experience are likely to reap the rewards.

DESTINATIONS: LOOKING BACK ON 2016

CU in the NT

As this wonderful map demonstrates, destination advertising has always been somewhat lacklustre (It will take more than the promise of ‘experience to discover’ to make me visit Saudi Arabia in 2017). However, in 2016 we saw many countries bucking the trend with truly distinctive campaigns.

Perhaps the best example is Call Sweden. Following the success of handing their national Twitter handle to citizens, the Swedish Tourist board went one step further and provided would be visitors with a direct line to the nation’s biggest advocates. And then there was the campaign for the Northern Territories.

DESTINATIONS: LOOKING FORWARD TO 2017

BOURDAIN NOT BORING

Beyond the obligatory support of flag carrying airlines, destinations rarely develop mutually beneficial partnerships with brands. Turkish Airlines bucked the trends by showcasing the delights of Gotham City in the run-up to the Batman vs. Superman movie. The film was a spectacular mess but the sponsorship was inspired, playful & engaging. With such competition for consideration in 2017 real world destinations are going to have to work a lot harder for the attention of the well travelled and cynical consumer. DLBi take: In 2017 we will likely see destinations join airlines and hotels in developing rich journalistic content (beyond top ten lists) that displays their true nature and personality.

HEALTH & FITNESS: LOOKING BACK ON 2016

SPORTS LUXE

2016 saw the consummation of two unlikely bedfellows. The bloated bourgeoisie and fitness fanatic have come together in the form of the $15,000 de Grisogono smart watch. Powered by Samsung, the watch tracks sports activity with the aid of a diamond-set gold bezel. In the world of travel, the Mandarin Oriental Barcelona offered marathon runners a package featuring personalized coaching, spa treatments; and a five-day training plan designed in collaboration with a local sports medicine clinic.

HEALTH & FITNESS: LOOKING FORWARD TO 2017

ARCTIC ADVENTURES

Experience is the travel word du jour, having moved quickly from contemporary to convention to cliché. That said, the increased pursuit of health tourism, escapism & exploration means that brands cannot ignore travellers’ desire for unique experience.

Typically the reserve of students with trust funds, whose temporary lapses in morals take them to hedonistic hideouts, more and more people are looking to take prolonged, multi-destination trips. International trips of two weeks or longer top the list, seeing increased demand with a marked boost in adventurous destinations such as the Arctic.

DLBi take: in 2017 brands will stop playing lip service to experience and begin to design truly differentiated health programs and customised adventure.

SOCIAL MEDIA: LOOKING BACK ON 2016

A PICTURE PAINTS A

THOUSAND WORDS

2016 was the year of live video. The arrival of Facebook Live was enigmatically marked by the uncontrolled laughter of a middle-aged lady from Middle America.

Visual media continued to go from strength to strength this year, with Instagram and Snap Chat securing their places at the centre of the travel inspiration eco-system.

And the importance of the travel industry in monetising social platforms continued to drive innovation such as intuitive and engaging 360° photos.

SOCIAL MEDIA: LOOKING FORWARD TO 2017

WE’RE LIVE ON THE SCENE

Facebook's focus on video will continue into 2017 with the launch of a new Snapchat- style camera function. However, the really big news brings together 360 video, virtual reality and live broadcasting in a single function. We should expect a number of new releases in 2017 that build towards this vision. Along with increased functionality around stories and live streaming, Instagram’s big push will be based around e-commerce. Twitter won’t die in 2017… but a medically induced coma is likely. We also expect Snapchat to struggle as the big boys continue to steal their toys.

DLBi take: the adoption of new functionality now occurs at breakneck speed. Brands can no longer sit back and wait to see what consumers engage with.

TRANSPORT: LOOKING BACK ON 2016

BABY BOOM

It’s a cliché but also a truism to suggest that time is a luxury. With high-speed rail in China picking up (ahem) steam and Richard Branson’s plans for supersonic air travel (ahem) taking off, the world is increasingly small.

What's more, there is a veritable space race continuing between SpaceX, Virgin Galactic and XCOR competing to create a sub-orbital space tourism industry.

TRANSPORT: LOOKING FORWARD TO 2017

SIT BACK, RELAX,

ENJOY THE RIDE

Transport is no longer about getting from A to B. In 2017 Airbus will be rethinking the entire passenger experience through modular cabins in which coffee bars can be replaced with cabins as easily as loading and unloading luggage. Detroit has been having a Kodak moment (not the picture-perfect family caught for nostalgic prosperity type of moment, but the agonisingly slow death type of moment) for some years. Led by a search engine – a bloody search engine – autonomous vehicles will begin to be a mainstay of Northern Californian roads in 2017.

DLBi take: in an industry preoccupied with it’s richest customers the experience of those in cattle class is often lacking. In 2017 we will see brands make a concerted effort to change this.

 

CHINA: LOOKING BACK ON 2016

NǏ HǍO WORLD

For a long time, the exponential growth of outbound Chinese tourism has been hard to ignore (increasing to 200million by 2020 from 130million today). But, was 2016 the year that Western brand sat up and really took notice? Brands such as BA and Lufthansa launched campaigns dedicated to wooing more RMB.

Many Western brands will not have the luxury of choice. Ctrip’s acquisition of SkyScanner and China’s HNA Group taking a 25% stake in Hilton signals a more hostile encroachment into the strategies of Western travel brands

CHINA: LOOKING FORWARD TO 2017

CONSOLIDATE TO COMPETE

For all the domestic demand Chinese hospitality brands have failed to build a reputation from which to compete internationally. We believe that 2017 could be the year that changes.

Despite healthy domestic passenger numbers Chinese airlines lack the reputation of the likes of Cathay Pacific and Singapore Airline. The consolidation of the three major state-owned Chinese airlines has been touted for years now. With unavoidable hit of enormous fuel charges in 2017, it’s possible that the powers that be decide now is the time for a shake up.

DLBi take: Whether it’s through acquisition, state funding or large injections of private capital, there will be big developments in 2017. Incumbents must stay ahead of the curve.

CONTENT: LOOKING BACK ON 2016

SHOW ME THE MONEY

With 17.2million views 2016’s most watched online travel video was an Arabic language infomercial. Does this signal a cultural shift in geo-economic power or the death of carefully planned long form content? No, it depressingly reiterates the requisite need fora large media budget (as one ex-executive puts it, “No one wants to face the reality that [Google] is an advertising company with a bunch of hobbies.”).

Like Facebook, Instagram also introduced an algorithm based feed, rather than a chronological one this year, making organic (free) reach all but impossible.

CONTENT: LOOKING FORWARD TO 2017

Despite its explosive emergence, travel brands have been relatively slow on the uptake of live video. In 2017 we will see brands shrug off the niggling doubt and dive into selfie journalism - or rather hire a multitude of micro-influencers to do so for them. Although it comes with increased risk and lower production fidelity, brands will have no choice but to work with emerging influencers if they are to avoid the cost & headaches associated with vacuous mega influencers. Finally, bands will make better use of content across the entire eco-system and customer journey. That will mean content that in more customer-centric than conceptual and also increased focus on repurposing content DLBi take: an overarching theme of 2017 will be content accountability. Brands must have mechanisms and measures for tracking content effectiveness in place.

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