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It's Now a Brave, New World in the Travel Industry

Image: It's Now a Brave, New World in the Travel Industry
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By    |   Thursday, 08 February 2018 09:48 AM

Global tourism has changed to accommodate the new generation of travelers – money has flowed into the pockets of Millennials and many of them are now flexing their newfound wealth by taking more vacations than ever.

When looking at numbers, millennials take an average of 2.38 vacations each year, almost 25% more than the previous boomer generation.

Millennials also travel differently than boomers, they are far more reliant on technology and dependent on a sharing economy.

The Travel Mentality Shift

The movement towards embracing technology has caused huge disruptions in the travel industry, especially with the rise of application-driven services such as AirBnB and Uber. The massive $2.3 trillion global travel industry has seen revenues move more and more to technology companies such as TripAdvisor or AirBnB at the expense of traditional travel services, such as travel agencies, which are slowly being replaced.

This change in the industry highlights how millennials are pursuing a different travel experience, one that is more focused on experiences and less on leisure. Authenticity is at the forefront of the travel experience more than ever before. The movement towards experience-based vacations is due to two main reasons: cheap information and greater transparency.

In the past, travelers relied on the knowledge and expertise of expensive travel agencies in order to discover the best restaurants or experiences, but this is changing with the emergence of crowdsourced review sites such as TripAdvisor.

These review sites are free and list a tremendous number of options, far in excess of what a single travel agent would know. Ultimately, information makes finding relevant experiences easier for travelers, allowing them to create a customized vacation plan on their own.

Inherent Bias in Crowdsourcing

However, technology-driven travel is not perfect as free information is highly susceptible to manipulation. There is considerable incentive for restaurants or experiences to be rated number one, as it virtually guarantees the success of the company.

For example, the #1 search result on Google gets an average share of 32.5% of all traffic, whereas #2 is just over half at 17.6% and #10 obtains only 2.4% of all traffic. Almost a third of all interested parties will select the top result, making it an incredibly valuable spot to be in.

What this means from a business perspective is that obtaining a highly ranked TripAdvisor search result and maintaining the rating is incredibly important. While this has created the opportunity for some business to reach a global audience, the nature of these services results in an incredibly toxic atmosphere plagued with fake reviews.

Premier services such as TripAdvisor pride themselves on being able to monitor and capture fake reviews, but it is not possible to keep up with the millions of reviews that pour in each day.

In fact, the system can be manipulated to an astounding degree. In 2017, one of the top restaurants in London on TripAdvisor was named the Shed at Dulwich. It was an “appointment-only restaurant that had been operating privately for years.”

The restaurant was praised by fake reviews that catapulted the business into the coveted number one rated restaurant in London. The only problem was that the restaurant never existed.

The inherent bias in review aggregation sites means that not all results are entirely reliable since businesses are incentivized to boost their own ratings and lower those of competitors through whatever means possible. Taking the time to sort through and find only real ratings is expensive and time-consuming, oftentimes impossible, and catching fake reviews months later is too late as the damage has already been done.

The Trust in Local Experience

The ability to manipulate crowdsourced reviews has heralded a new shift in the travel industry. With a focus on trustworthy advice from locals coming to the forefront, new companies have risen in order to address this demand and existing companies have begun to bring to light local experiences – such as the new AirBnB local experiences, which look to connect travelers with locals.

Perhaps one of the most successful new companies to tackles this need is Cool Cousin, a company that looks to create a bespoke travel experience by connecting travelers with locals that share similar interests.

The idea here is twofold – the local “cousin” can create a customized itinerary based on the travel dates of the visitor, provide 24/7 online support and take care of operations associated with travel, such as accommodation, dining, or event booking. Cool Cousin is looking to reproduce the costly bespoke travel agency experience of the past, only for much cheaper.

Personalized travel companies, not just new ideas

Cool Cousin’s growth has been exponential ever since it was launched in 2017. The company already has over half a million travelers using its application to book travel across 70 cities. The growth has not stopped either, the user base has grown by 350% over the past six months, a new city is launched every five days, and new locals are added every day. It’s clear that the idea is taking off.

The New, More Connected Travel Experience

Millennials travel differently than the previous generation. Instead of looking for a leisurely vacation, they are driven to pursue experiences and get closer to locals. The growth of the sharing economy through applications demonstrates this shift.

With the desire to find the best experiences, current avenues for information are becoming increasingly untrustworthy so travelers are turning to local resources instead.

While the shift is still early, sites such as TripAdvisor and Yelp may find themselves to be obsolete in the coming years – victims of the increasing connectivity that technology brings.

Jim Hoffer is founder and managing director at Hoffer Financial Consulting. Follow him on Twitter.

© 2018 Newsmax Finance. All rights reserved.

   
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Global tourism has changed to accommodate the new generation of travelers – money has flowed into the pockets of Millennials and many of them are now flexing their newfound wealth by taking more vacations than ever.
travel, industry, brave, new, world
948
2018-48-08
Thursday, 08 February 2018 09:48 AM
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