Traveler Behaviour – Thoughts from Phocuswright

With half of travelers worldwide reporting that they intend to take more vacations this year, it’s clear that now the world is opening up. People are excited to get back out and explore new places again. But the Covid-19 pandemic and rising global prices have dramatically impacted how today’s travelers search, shop, book, and experience their holidays. As we navigate this new world, how can the travel industry adapt to meet these new customer demands, and what are the big customer behavior trends to be aware of to increase conversion and customer loyalty? Four industry experts share their views on the Three Biggest Travel Trends:

Nishank Gopalkrishnan, Chief Business Officer at TUI Musement, thinks the three biggest trends currently impacting the industry are:

1. Revenge travel – this is the most immediate short-term trend to be aware of right now. Despite the madness we see at airports and other travel hubs, people will travel this year, especially during the traditional ‘peak season’ summer months leading up to September. This is the hangover effect of so many of us being unable to get away during the Covid-19 pandemic.
2. Thoughtful travel – an emerging trend we expect to see after the summer holiday rush is that customers start feeling the full impact of inflation on their wallets. We predict that they will begin taking shorter but more purposeful trips, such as ones to visit friends and relatives, short, domestic flights and choosing more sustainable travel options, such as driving instead of flying.
3. Segmented travel sees a long-term trend of greater segmentation in the customer merchandising process. Airlines will unbundle seats, luggage and various customer services more than they do today. Still, even hotels, tours and activities companies will start adding value-added differentiators to improve their bottom line. This will essentially help tap into consumer willingness to pay.

Pete Comeau, Managing Director at Phocuswright Inc, broadly agrees with Nishank’s first point, as he notes the strong customer appetite to travel. His top three trend predictions are:

1. Uncertainty abounds and will continue – however, consumers’ desire to travel remains strong. With research showing that holiday bookings are almost back at pre-pandemic levels, consumer confidence is growing with no signs of slowing down.
2. Hybrid trips are here to stay – today’s travelers crave the flexibility that allows them to work remotely and enjoy travel experiences simultaneously. The pandemic proved to many that work is what you do, not where you do it. Airbnb this year announced a ‘live and work anywhere’ initiative-showing travelers destinations for long-term stays where they can work remotely. I don’t think they’ll be the only company to do this.
3. Customers want (even more) digital options – a particular result of the pandemic is the acceleration of digitization. Consumers are increasingly using online channels to transact all aspects of their travel and expect companies to be able to accommodate this. Companies which aren’t ready to meet customers online risk missing out.

Aurélie Krau, Head of Customer Success at Hubli, also notes the importance of the impact of digital transformation on consumer behavior. Her trends are:

1. Digital Tech and Transformation – digitization and increased traveler demand for contactless experiences present the industry with new opportunities to adapt. This is influenced by the uncertainty we’re all facing, emphasizing the need for travelers to access real-time information.
2. The New Environment for Travelers – Today’s travelers face a whole host of uncertainties, from the pandemic to the impact of climate change to economic instability. These uncertainties have consequences on traveler experience in terms of sustainability and geo-Political and Environmental risk.
3. Travelers Changing Behaviors – Demand for international and domestic travel is strong, but travel companies must be aware of the impact of environmental awareness on future travel patterns. Mitigating risk remains front and center of importance to travelers; the whole experience of preparing for a trip has changed, so flexibility remains critical. We’re seeing more people take a hybrid approach to business and leisure trips, which will affect traditional holiday bookings. It’s also important to consider the “Instagram Effect” – where travelers choose destinations based on how ‘instagrammable’ they are – and the effect this has on over-tourism.

Finally, Pattern’s President, Noam Shapira, shares his predictions:

1. Financial protection is essential – with so much unpredictability, having the option to cancel and not be out of pocket is important to travelers. Offering straightforward travel insurance options, which provide reassurance and peace of mind to bookings, help.
2. Demand for online booking won’t go away – today’s consumers are used to to doing everything online and don’t expect travel to be any different. Booking websites must be optimized for mobile – the European Travel Commission found that the smartphone is the most important device for Gen Z users when researching, booking and canceling trips.
3. Flexibility is key – with so much uncertainty still surrounding travel, people are actively looking for flexibility when they make a booking. Having an easy process to move or cancel a trip will help travel companies attract hesitant consumers.

Noam notes that uncertainty is the only thing that’s certain with travel. However, embedding relevant, personalized insurance in the user journey reassures today’s travelers, and helps increase consumer confidence and secure bookings.

The above insights were shared during Pattern’s roundtable session at PhocusWright Europe 2022. To find out more about how embedded insurance can help increase your customer confidence and conversions, get in touch: sales@patterninsurance.com