Skift Take

Travel companies have long tried to woo their current customers into buying more, but their promotional tactics have tended to be generic and blunt. Not anymore. Brands are now adopting sophisticated technology to make their sales pitches relevant and effective.

Series: Megatrends 2019

Skift Megatrends 2019

In January we released our annual travel industry trends forecast, Skift Megatrends 2019. Download a copy of our magazine here and read on for additional individual trends in the coming days.

Travel brands are adopting next-generation marketing tools, helping to persuade more of their current customers to splurge on extra products and services in their never-ending quest to boost revenue on the edges.

No prizes for guessing that airlines lead the way. Carriers famously sell more than tickets to fly. They long ago pioneered charging for nearly everything. Now, like other travel suppliers, they’re moving away from one-size-fits-all, open-to-everyone promotions.

Airlines have long known they could boost their sales of high-margin products and services if they better understood how to target relevant offers to different customer segments at ideal times. However, they struggled to do that because they had divided their customer information among a jumble of separate databases, such as reservation systems and customer relationship management software.

Today, airlines and other travel companies are solving that problem by merging the data in various ways. Some are pooling their information into so-called data lakes, where artificial intelligence-powered software connects the dots on customer behaviors and preferences. In this effort, the travel industry is taking cues from Amazon and other retailers, which are data-mining pioneers.

“Travel brands find they’re more successful at upselling when they show only a few offers that match customers’ likely interests,” said Kabir Shahani, CEO of marketing tech firm Amperity. “Having an integrated view of all their data enables them to do that.”

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Airlines have also been giving travel management companies more insights into cross-sell options for corporate travel, such as adding ground transportation to a flight reservation. They’re using new communication methods to talk with newly enhanced reservation systems from travel tech middlemen Amadeus, Sabre, and Travelport. More airlines this year will display visual representations of their ancillary products, such as access to expedited airport security lines, which will encourage agents to attach more products to corporate travel bookings.

For consumers, airlines are increasingly communicating with chatbots, which show promise as an upselling tool. Finnair, for example, debuted a chatbot via Facebook Messenger to help passengers book tickets. Finnair’s bot has recently been suggesting ancillary products, such as a guided northern lights observation trip.

Chatbots make it easier to find out what a customer wants in the moment, and artificial intelligence can help companies provide relevant extras. If a Finnair customer asks about how to get from Helsinki Airport to downtown Helsinki,for instance, the chatbot can sell several ground transport options, such as a 48-hour public transit card.

Airlines are debuting new upselling tricks, too. A case in point: Many airlines send flight confirmation emails with the option to let customers add their trip details as an event alert in their digital calendars.

“Expect airlines in 2019 to start testing the calendar as a communications channel where they can remind travelers to book airport parking or activities at their destination,” said Bruce Buchanan, CEO of marketing tech startup Rokt.

Other travel sectors besides airlines are upping their marketing games, too. Cosmopolitan Las Vegas found that hotel guests who text its chatbot, Rose, spend as much as 30 percent more than those who don’t.

Hotels will be able to get more creative with upselling this year. Like the airlines have done, many hotels are linking their various databases together with the help of tech vendors such as Amadeus, Channex, Impala, Mews, Oracle, Sabre, and Shiji.

“Many hotel groups have centralized a customer’s transaction, profile, and preferences data into a so-called golden record,” said Tim Sullivan, chief revenue officer of hotel marketing tech firm Cendyn. “Now they can analyze a customer’s record and tailor offers to what the person will have the highest propensity to like.”

The lines between selling and upselling are beginning to blur. Some hotel groups, such as Hilton, InterContinental Hotels Group (IHG), and Marriott, have been experimenting with replacing the standard list of generic room types for a new booking interface, called attribute-based booking, on their direct websites and mobile apps.

“In an attribute-based booking, the concept of one-size-fits-all room types is eliminated,” said Joe Youssef, executive vice president for marketing and corporate development at Amadeus’ hospitality unit, which is providing the tech for IHG’s effort. “Consumers instead select desired attributes that add an incremental price to the base room rate — for example, a king bed with a sea view on a high floor — to create a room that meets their needs.”

The widespread consumer use of mobile devices is fueling in-the-moment sales pitches. Hotels have been learning how to time their promotion emails and push notif ications with the help of data science.

“A big theme of 2019 for hospitality companies will be the improved timing of offers,” said Jason Bryant, CEO of hotel upselling tech startup Nor1. “Hotels are now able to tap machine learning to know precisely when to send, say, a special discount for the hotel’s restaurant or an invitation for a late check-out in exchange for a nominal charge, to a particular type of guest.”

Online travel agencies will also increasingly use data science to become more effective at cross-selling products. In June 2018, Expedia debuted Add-On Advantage, which lets customers who have booked a flight or rental car see hotel rates that the company claims are up to 43 percent cheaper than booking a hotel separately.

Expedia Group CEO Mark Okerstrom explained why his company finds the move to be lucrative. “Generally, when hotels get booked with a flight or something else, you get lower cancellation rates, and you get longer lengths of stay,” he said.

Smaller independent hotels are also trying upselling solutions. For example, in 2018, about 700 hotels signed up for upselling services from Amsterdam-based startup Oaky, in a sign of popularity for such functionality.

“Consumers also prefer marketing that’s pertinent,” said Justin Steele, vice president of product development at travel tech company Switchfly, which has seen semi-personalized promotions from its partners result in increased transactions.

To illustrate, American Express has curated a collection of luxury hotels and resorts it calls Fine, and it tends to reserve its marketing message for them to Platinum and Centurion cardholders who have top-tier status in airline programs. The reason? It believes those travelers are the type who would most enjoy the elite properties.

Cruise lines are finding that personalization can help with coaxing travelers into spending more money. Exhibit A: Regent Seven Seas launched an interactive mobile quiz where travelers could choose between various options to build the perfect Alaskan cruise. With each response, Regent learned about customers’ latest preferences for excursions. The cruise line then emailed travelers promotions based on what it had learned thanks to help from marketing tech startup Jebbit.

Some consumers may grumble about what they see as a shakedown, but travel companies are looking at it differently. “Travelers are typically in a good mood when they’ve just booked a trip,” said Buchanan of Rokt. “It’s a moment when consumers are especially receptive to add-on offers, which can sustain the positive mindset.”

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Tags: booking technology, hotels, megatrends 2019, upselling

Photo credit: Travel brands are adopting next-generation marketing tools, helping to persuade more of their current customers to splurge on extra products and services. Vanessa Branchi / Skift

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