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Year in Review and the Year Ahead: Phocuswright’s Summary of 10 Critical Trends (and Non-Trends) for Destinations and Tourism Marketers

by Chris Adams, Director of Research and Online Marketing, Miles Partnership

On December 7, 2016, Phocuswright VP of Research Douglas Quinby joined our webinar series for impactful analysis of 10 major trends, challenges and opportunities for tourism marketers.

Douglas is a veteran of online travel and one of our industry's thought leaders; Phocuswright has been a global leader for 20+ years in decoding and interpreting the exciting but complex and fast-changing intersection of travel and technology. Their Phocuswright Executive Conference held each November in the U.S. (and related conferences in Europe and Asia) are arguably the most important in the sector.

Douglas highlighted 10 major trends that destination and tourism marketers and decision makers need to focus on in the year (and years) ahead. Here is summary along with critical takeaways to action:

#1: Election Unknowns

The U.S. Presidential election has created uncertainty in global travel. Early research in Europe by Phocuswright has highlighted some potential impacts on inbound travel to the U.S. Depending on the Trump administration's actions in immigration and trade policy with key U.S. source markets of Mexico and China (and their reactions), plus broader perceptions in the global community, there could be challenges for U.S. destinations—and perhaps opportunities for other parts of the world. Conversely, as someone experienced in the hotel and tourism sector, and a consummate promoter, Trump could be a positive for the U.S. industry.

Takeaway: For now it is simply wait and see.

#2: Funnel Revolution

DMOs must work harder in an ever more complex digital media landscape. “Funnel Revolution" was the theme of the Phocuswright Executive Conference—describing the increased fragmentation, sophistication and complexity that is happening in online travel planning and booking behavior. Precise targeting and personalization of content is moving to another level, driven by technology and Big Data. Travelers are accessing dozens of website in their trip planning: Expedia's latest Path to Purchase research study in the U.S. estimates more than 100 websites are commonly accessed during typical trip planning—from “dreaming" to in market.

Takeaway: Miles has used the term “Hyper-Informed Traveler" to describe this new “normal." Both the expectations of travelers and the competitive sources of destination and travel information have moved to another level. DMOs must work harder to remain relevant in this new landscape by delivering rich, contextual destination content in the right format, at the right time and place.

More: See the Phocuswright research and analysis (sponsored by Expedia) on consumer's trip planning behavior plus the State of the American Traveler: Generations Edition from Destination Analysts (sponsored by Miles) on the travel planning and behavior across generations of U.S. travelers.

#3: OTAs vs. Hotels

The battle for control of hotel booking (and the guest) heats up. Online Travel Agencies (OTAs) globally are dominated by two groups: Priceline (owner of and Expedia, which control two-thirds of all OTA bookings. Based on innovative digital marketing and strong branding, they have continued to build market share and loyalty in many markets—particularly amongst younger travelers. Hotel Groups are belatedly fighting back with improved technology, revamped loyalty programs, aggressive direct-booking discounts and industry consolidation.

Takeaway: While it is unclear who will emerge the strongest, revitalized hotel groups may in particular be better, more active marketing partners for destinations—given the association of DMOs, funding from bed taxes and hotel partnerships around meetings in many destinations. More: See a recent Miles Blog where I summarized the Risks and Rewards of OTAs and how hotels can build direct business.

#4: The State of Mobile (Actually)

Mobile is moving to the center of travel planning. However, for certain traveler groups and for some trip-related behavior (e.g.: booking), desktop and/or multi-device usage (and even offline media) remains critical.

Takeaway: Your website and all digital marketing must be responsive and mobile ready—not just in adapting to a new screen size but in the often unique location and behaviors of travelers using mobile.

More: View Phocuswright's research on how useful smartphones are across the trip planning process, plus the DMO Global Mobile Readiness Index Miles sponsored with Ryerson University for more on how 230 DMOs globally have adapted and a specific discussion on the pros and cons of apps vs. mobile web solutions.

#5: Will Travel Planning Ever Be Fixed?

“No" was the consensus—partly because it may not be broken. Douglas Quinby urges caution when identifying a problem in travel planning that does not exist. He notes the complex and time consuming trip planning process is enjoyed by many travelers

Takeaway: Quinby noted that online trip planning and itinerary tools designed to streamline the process have seldom (if ever) worked. Miles can verify this through our experience across many destinations and more than 20 years of building, supporting or observing DMO websites: these type of technology solutions have almost never provided a positive ROI. It is possible someone will develop a breakthrough tool or platform, but be careful and considered before investing in these types of technology solutions.

#6: Google's Moves

Google's investment in destination content has DMOs nervous. As Miles has been summarizing over the last 12 months (see our blog series), Google's move into curated destination and travel content (see figure below) is a challenge to destinations, hospitality businesses and other tourism supplier's historic traffic from organic search. At the November 2016 Phocuswright conference, Oliver Heckman, Head of Travel and Shopping for Google, noted in an interview that their strategy is still developing and they are open to consultation with DMOs.

Takeaway: Apart from careful observation of Google's actions in this space, the industry should take Mr. Heckman at his word and take a proactive and coordinated approach to discussing with Google how DMOs can help influence and inform the content Google is delivering.

#7: “In Destination" Has Arrived

Digital and mobile is reshaping in-market trip planning. Douglas Quinby highlighted the size and significance of activity and attraction planning and bookings, which can make up around one-quarter of the value of all travel and that often takes place in market.

Takeaway: DMOs need to be part of this marketplace, including through a reshaped (more digital and virtual) visitor center strategy.

More: View Phocuswright's summary and presentation of research on in-market travel behavior around activities, attractions and tours.

#8: Homes vs. Hotels

Airbnb and many others create both opportunity and challenges. It's rapidly growing, topical and often controversial. The sharing economy and “alternative accommodations" have grown rapidly in many global markets—making up around one-third of room nights in some U.S. cities (Phocuswright's “A Market Transformed – Private Accommodation in the US," 2016). It has also emerged as a major issue in many markets bringing both benefits (additional accommodation at peak times) and costs (increased housing and rental costs).

Takeaway: Destination marketing and management organizations need to focus on the management issues and help facilitate a fact-based consideration of the market and how to regulate it in smart, sensible and innovative ways.

#9: Travel like a Local

Mainstream travel trend or a more limited opportunity? Douglas Quinby outlined the results from some of the latest research on travelers who stay with Airbnb properties that “Living like a Local"—while it is a major part of Airbnb's marketing—is not central to how most travelers want to stay and enjoy a destination.

Takeaway: While appealing to some travelers, there are other, more important, drivers such as opportunities to interact with local culture, cuisine and activities that are far more important drivers of travel—even for those staying in alternative accommodations.

#10: The Rise of Artificial Intelligence and Messaging

The latest bright-and-shiny technology or more? Artificial Intelligence, including voice recognition search and the related trend of chatbots are offering new and powerful technology-driven service solutions.

Takeaway: These technologies will have implications for destinations and their industry (e.g.: hospitality) including visitor centers and booking solutions. As with other new, exciting technology solutions like virtual reality and augmented reality, DMOs should be careful to identify a clear target market and clear objectives before investing. Across all these technologies, “High Touch" (e.g.: great customer service; opportunities to interact with locals) as well as “High Tech" is likely to be even more valued by travelers.

More: See Phocuswright's analysis of messaging and related AI technologies

- Chris Adams, Director of Research and Online Marketing at Miles Partnership,

Miles Partnership is the official marketing partner of Brand USA. Miles Partnership creates integrated marketing solutions that engage users and generate results.