9 out of 10 startups fail. That’s just one of the harsh truths the many entrepreneurs face. It’s also one that they try hard to drown out as they work feverishly towards making their startups survive and thrive.
That being said, It’s this very same awareness of the mortality of one’s startup that can actually drive entrepreneurs to make innovate choices. By understanding today’s evolving travel trends as well as the reasons why most travel startups fail, travel entrepreneurs stand a fighting chance towards getting it right.
To help make sense of it all, we’ve put together some of the key trends that highlight how travelers are using technology on the go, and how customer experience is changing the future of travel. Startups that deliver value to their customers are the ones that stand a chance at survival.
EXCESSIVE FOCUS ON PRODUCT vs. CUSTOMERS
Most startups are founded by individuals that are passionate about their industry. But many great products simply don’t have the kind of market size or need to turn into scalable businesses. More often than not, founders focus so heavily on building products, that they forget to assess if there’s really a need for what they’re creating in the first place.
Testing a minimum viable product (MVP), getting pre-orders, and in-depth conversations with customers all take a backseat to rolling out feature after feature. We’ve all seen it happen; startups that face that an inevitable early demise due to the fact that they fail to deliver a product market fit.
BUILDING SOMETHING NEW OR 10X BETTER
There’s a cardinal rule to startup success – build a product with a massive need that doesn’t exist or build a product that’s at least 10 times better than its competitors.
Given the friction when it comes to adoption of new products, a product that is only slightly better than existing solutions will find it hard to scale and dominate the market. And yet more than 70% of travel tech startups are trying to reinvent the wheel; with slight improvements, or worse, without understanding how travelers use technology on the go. This again is a quick recipe for failure.
ONLINE TRAVEL AGENTS (OTAs) RULE THE TRAVEL JOURNEY
Originally designed to sell excess inventory in times of slow demand, OTAs have broken the traditional mold of being a travel booking middleman. Instead, they own the journey, encouraging and recommending passengers to take trips based on their profile data, spending pattern and content consumption.
OTAs drive the majority of bookings around the world. They are a primary source of revenue for most hotels. Currently, Four major brands control the OTA market. Expedia, Priceline, Orbitz Worldwide, and Travelocity control about 95% of the market in the United States, according to Forbes. Recently, Expedia acquired Travelocity and announced plans to buy Orbitz.
Additionally, Google is slowly encroaching the OTAs’ turf with multiple launches that are clearly taking the business off the OTAs and metasearch rivals, such as offering exclusive hotel discounts via its Google One cloud storage platform, “hotel-plus-flight” travel package, as well as a global price insight feature on mobile devices. If you’re building a business in the OTA space, you better come prepared with very deep pockets.
PERSONALISATION AND USER GENERATED CONTENT
As travel becomes more experiential and aspirational, travelers want experiences that are uniquely suited to their tastes and preferences.
Research has found that 97% of millennials use social media while traveling and at least 80% post every day, Instagram is the most preferred platform. With so much user-generated content available, travelers want to move from cookie cutter travel plans to more unique travel experiences which push the envelope. Despite this, many travel brands still struggle to meet the personalization demands of consumers.
Millennials comprise 32 percent of US travelers and are the fastest-growing age segment in travel. Millennials don’t usually book travel more than 3 months out; as spontaneity matters to them. And impromptu plans are very common.
Travel-related searches for “tonight” and “today” have grown over 150% on mobile, over the past two years.
72% of all mobile bookings made by U.S. travelers happened within a 48-hour window prior to the booking.
ARTIFICIAL INTELLIGENCE AND CHATBOTS
On one hand, travelers are looking for more authentic experiences that make them feel connected. At the same time, artificial intelligence based chatbots and cutting-edge products like Alexa powered concierge services (rolled out at the Marriot International) are becoming more and more commonplace.
Chatbots and digital personal assistants are being used by the hospitality and travel industry to create a more efficient and convenient experience for customers.
70% of requests to Google Assistant are expressed in natural language, meaning that people are getting more comfortable having conversations with computers.
There’s still a long way to go towards making personal assistants a common part of one’s travel journey, however, the opportunities are certainly there.
85% of travel bookings are happening on mobile devices. Both millennials and Gen Xers have moved to smartphones as their primary device when it comes to travel. Whether its travel information, last minute deals or flight/hotel bookings.
The key is for every startup to be passionate about customer behavior and customer insights to the point of paranoia. Only then will they have the product and technology edge required to survive and scale.
These are just some trends when it comes to traveler behavior. Each startup will have its own unique customer patterns and insights based on the travel niche in which it operates.