Jonathan Sullivan - Managing Director, Travel Cloud First Industry Captain
The dramatic pandemic-induced collapse in demand for international and domestic business travel has left airlines shifting their route portfolios towards leisure markets.
The good news is that there is an expected and significant pent-up demand in this segment. Accenture’s research has found that, globally, 58% of consumers are likely to make travel plans in the next six months. Across age groups, customers with savings are looking to spend, and that is only going to increase as COVID-19 vaccine rollouts continue.
However, the leisure opportunity comes with challenges. Not only have leisure travelers historically generated less revenue, but also, given their focus on business travel, many airlines are not currently set up to properly capitalize on the leisure market.
The following are some key considerations that airlines need to take into account to change this trend:
- Attract attention. Leisure requires a fundamentally different approach to customer acquisition. Airlines will therefore need to rethink their strategies for travel inspiration channels and social media, looking to get more customers onto direct booking channels and scaling up their content production and advanced customer personalization.
- Shop and save. The whole end-to-end experience of buying and taking a flight should be simpler, leisure-friendly, and more streamlined. Leisure travelers shop for low prices and often have a positive emotional response when they find them. Retailers use this knowledge to design better shopping experiences, but it is not yet the predominant experience with many airlines.
- Create combinations: How might future business demand be combined with leisure? What about enabling travelers to add a leisure element to a business trip, making it easier to split an invoice, or selling “shuttle passes” between city centers and leisure destinations? Or perhaps capitalizing on the trend for working in “third spaces”—a huge 79% of people told Accenture they would like to work from a location other than their home or workplace.
- Leisur-ise loyalty. Loyalty needs a fundamental rethink for the leisure market. Points-based programs are far less effective, since only big spenders make enough leisure trips to earn their way into the top tiers. So why not sell access to those who are accustomed to travelling with the little perks? Leisure-based programs should be centered around experiences and recognition and other kinds of “emotional” or trust-based rewards.
- Cloud for customers. Cloud technology and customer data are both key to unlocking the leisure opportunity. Data because it enables the advanced customer segmentation and personalization needed. And cloud technology because it provides a cost-effective route to the shopping engines, organizational agility, innovation, and data analysis at scale airlines need to capture more of the leisure market.
There is no doubt these are difficult times for the industry, yet there are big opportunities for airlines that can pivot quickly to capture growing demand in the leisure market. With the right digital experiences, technologies and data, airlines will be better positioned, not only to maintain revenues in the short term, but also to build a deeper sense of consumer loyalty and brand affinity that will be vital for the long-term growth of the business.