Monday, June 23, 2014

Income inequality and the travel class divide

There is an unmistakable correlation between the growing income inequality in society and the increasing gap in economy and luxury classes in both airlines and hotels. It should be no surprise being that tourism depends mostly on the disposable income that is most sensitive to income disparity.

On one hand, we have the extraordinary growth of LCC (Low Cost Carriers), the shrinking seats in the now spartan economy class of legacy carriers, the emergence of branded very low cost accommodation like Tune hotels (built on the AirAsia operating model) while on the other hand the airlines upper classes are getting more spacious, with better and bigger seats, with more amenities and services and 5-star hotels up their offering, refurbish to more lavish rooms and more services.

Monday, June 16, 2014

Where is the future of travel agents?

A dead-end or a detour?
There is a great debate about the future of travel agents as it has become easier, faster and cheaper for consumers to buy their travel online. While the debate focuses on what can traditional travel agents can do to compete with OTA (Online Travel Agents) and survive in the industry, both are facing the same problem in the long-term: the declining perceived value of their services, the specialized information from which they derive their revenue, as that information becomes increasingly more localized, relevant and current on the Internet. Viewed from that angle, OTA are actually worse off than traditional travel agents as they compete within the same realm than the free specialized information lives in, while the traditional agents retain the advantage of the personal contact dimension with customers. But traditional travel agents face another problem: as there is nothing to physically deliver to the customer any more as tickets, hotel bookings and travel insurance contracts are all delivered electronically, there is no compelling reason for the customer to visit their store or office.

Monday, June 9, 2014

How to find luxury customers

The new frontier in luxury tourism
The luxury market is somewhere around 5% to 15% of the total tourism sector depending how you count and how you define luxury. Certainly more than a niche market, but nevertheless a rather smallish piece of the tourism and leisure pie hotly contested by many more stakeholders than the true size of that segment can sustain. Making matters worse is the way luxury is often being marketed, glorifying generic superlatives on the assumption that luxury customers are a class by themselves, all fitting the same profile. While in fact they are simply the upper range of the very diverse tourism and leisure audience with many distinct needs and responses. Selling luxury is not about knowing luxury, it is about knowing your audience.