Last year around this time, the team at PhocusWire was kind enough to publish my piece on the five “truths” that marketers needed to pay attention to in 2023. It wasn’t your typical prediction piece. Rather than prognosticate, my goal was to help travel marketers prioritize their year, based on what we were seeing in the industry at large.
Here’s an update to the five areas covered in 2023, with thoughts on what might still be true as we slide into 2024.
This is (finally) the year to get serious about first-party data
Unlike real ID requirements for airport security in the United States, the removal of the third-party cookie is actually happening in 2024. For once, the airlines could actually be ahead of the curve with their treasure trove of rich first-party data stemming from their very profitable loyalty programs.
If you didn’t heed the call to "get serious" about your first-party data last year, don’t fret! Google Chrome, the browser of choice for 63% of global internet users, is only phasing out third-party cookies for 1% of users at first, so there’s still time to act.
For hospitality brands, your central reservation system (CRM) and/or property management system (PMS) is a valuable source of first-party guest data. Of course, larger brands have data scientists whose sole responsibility is to mine these platforms and work with sales, marketing and product teams to harness data for customer acquisition and retention.
But if you’re a marketer at a smaller, independent property, there’s a strong case to make the switch to a PMS or CRM that allows you to be the master of your own data universe. You can also look towards a company like Triptease that is helping hotels to devise and implement first-party data strategies.
The third-party cookie phaseout is also important to tours and activities operators. These brands rely (or should rely) on repeat bookings to bring down customer acquisition cost (CAC) and reduce reliance on Google Ads as a first-touch channel. This is especially true for larger, global multi-day operators, with a product catalog that encourages loyalty and repeats as well as for single-day online travel agencies like Viator and GetYourGuide who have an abundance of varied supply. Good use of first-party data means the ability to push targeted messaging at the right time to the right customer through all owned channels.
Finally, 2023 saw the transition from Google Analytics Classic to GA4. Despite the blowback from many users, GA4 is here to stay. Collecting first-party data begins with your branded .com. Make sure you’ve properly converted your Classic GA view to GA4 and double check that events and conversion data are pulling through to your reporting.
Generative AI is a friend; and a foe
A piece about marketing truths wouldn’t be truthful without a mention of generative artificial intelligence.
Last year I said: “The travel industry is awash in predictions on how tools like ChatGPT will or won’t change the way we do business. It’s probably not binary, and the truth is likely somewhere in between, depending on what your business is and how you use the tool.”
I’ll admit that I slightly underestimated the impact generative AI would have on the industry in year one. But I still believe the old tech adage that people tend to overestimate the impact that any new technology will have in the first year but greatly underestimate the impact it will have in the next 10.
Although we’ve gone from ChatGPT v.1 to v.4.0-Turbo in a blink of an eye, collectively, we are still mostly naive about how this technology will impact travel going forward. Many future use cases have yet to be defined.
What we do know from a marketing perspective is that generative AI has reduced the barrier to creating content to nearly zero. Hence, Google is playing catch-up in deciphering which of the billions of documents on the internet are worth ranking for a given search query.
For travel startups, 2023 saw the rise of many versions of the same thing: generative AI as a wrapper for some sort of search/discovery/itinerary creation engine. These are what early stage venture capital fund NfX calls "Level 4" AI companies on its AI spectrum model.
It goes on to say this about Level 4 companies: “AI is seen as the central selling point. This is a fragile place to be, as AI for the sake of AI isn’t something that we believe is new or interesting.”
On the contrary, truly disruptive products will integrate AI so deeply into their product design that everything the company does is impossible without AI.
We saw some of these companies, such as Autoura and Mobi, present at The Phocuswright Conference last November.
All that said, I still stand by this quip from last year: “In this hyper-polarized world, where consumers crave authenticity from brands, marketers would be wise to practice restraint with tools like generative AI, using it as a complement, not a replacement.”
Google won’t be unseated as the primary acquisition channel for travel
2023 could have been a complete disaster for Google. OpenAI had a seemingly massive head start, and Google’s anti-climatic launch of Bard caused its market capitalization to dip 8% in a single day.
But the environment has since changed and things are looking up for the search behemoth.
OpenAI nearly collapsed over the span of one weekend in November, and Google has gained ground with Bard and its Search Generative Experience (SGE).
While SGE’s beta officially completed in 2023, most search marketers believe it’s likely to be rolled out further to their core search functionality. Yes, the world of SEO is evolving, but it remains very much alive for brands that are able to stay current on recent happenings.
In fact, a substantial amount of searches still start on Google; more than 40% according to recent research. Expedia, Booking and other online travel agencies still spend billions of dollars a year on Google Ads.
Meanwhile, about 34% of travelers were influenced by TikTok in 2022, according to an annual survey by MMGY Global.
For better or for worse, Google remains the dominant "go to" source for acquiring customers, either organically or via performance channels.
Wall Street seems to agree on Google’s continued resilience; GOOG was up 62% in 2023 while the broader Dow Jones Index was up only 14% over the same period.
Independent hotels can compete with Airbnb on marketing experiences
Experiences continue to be a hot sector. Klook and GetYourGuide both announced sizable investment rounds last year and private equity continues to take interest in companies like Hornblower Group and Context Travel.
Better still, the demand is there to support investors’ optimism.
According to Arival, travelers are doing seven experiences per trip. That’s seven transactions of tours or activities where hospitality players can get a piece of revenue.
Yet, Airbnb is still yet to resurrect its own experiences business from pre-pandemic days.
In the meantime, startups like Holibob, Way, Mount and Key offer short-term rental hosts, property managers and hoteliers various methods to merchandise and sell higher margin ancillaries like tours and activities.
Even GDSs are getting in on the action. Amadeus is doubling down on its Amadeus Discover distribution platform that reportedly has access to hundreds of thousands of in-destination tours and attractions. I had the opportunity to meet with its team at The Phocuswright Conference this past year and its depth and breadth was impressive.
As hotels continue to carve out their unique value propositions among a sea of new brands, soft brands and incumbents, curated and personalized experience offerings are one way to stand out from the competition.
The word “carbon offset” can’t be thrown around in marketing messaging like it was in years past.
This "truth" was spot on. Regulators got real in 2023 regarding carbon claims. The proof can be seen in the recent European Union ruling that will ban the use of “carbon neutral” or “eco” claims by 2026 unless the company behind it can prove the claim is accurate.
The burden for climate action has all but entirely shifted away from individuals and onto corporations.
A tour operator CEO who provides multi-day tours for singles in their 20s and 30s recently shared with me that even her climate conscious target market is less likely to pay a premium to offset or neutralize their experience. They expect that the company is “doing good” by default.
This insight supports recent research which shows most travelers want their trip to be good for the planet but are not actually willing to pay more for it to be so. In fact, in a study of 63,520 bookings made with a European airline, only 4% of bookings included extra compensation to cover carbon offsets. And this was in Europe!
So what are travel brands, and the marketers in charge of their climate communication plans, to do? The good news is that companies are not on their own when it comes to tackling climate change. Startups such as Chooose, which recently raised $15 million, work with brands such as JetBlue, Trip.com, and AMEX GBT to bring legitimacy to their climate initiatives.
Weeva, another Phocuswright Launch presenter, is offering hoteliers a SaaP (Sustainability as a Platform) solution to more accurately track and report on emissions.
Where do we go from here as an industry? I’ll leave you with a thought from last year that still rings true now: It starts with a holistic approach to sustainability. It’s not just about the environment, but how your brand enriches and engages local communities. Or it could be about your company’s approach to animal welfare or policies to prevent human trafficking, in the hospitality space.
Speaking genuinely about what you are doing, and being transparent about the gaps, is almost always better than insulting your audience with language that has since been deemed untrustworthy.