Consolidation in the UK Travel Market
There is perhaps no industry in the UK online space as diverse as travel. With such a wide range of products and a number of choices when it comes to booking (online, in store or on the phone) it can be a minefield when it comes to managing paid search. With the “Big 4” UK travel companies recently becoming the “Big 2,” and with mergers and acquisitions going on all over the place, the face of search changes on almost a daily basis. Thomas Cook merged with MyTravel whilst TUI, aka Thomson, merged with First Choice – both mergers will affect the wider travel markets and not just the UK. All 4 companies have overseas assets. The reasons for the mergers have been two-fold;
1)To cut overhead costs, through consolidations of staff, offices and retail shops
2)To decrease overall stock and capacity in a bid to boost profitability.
The package market is diminishing – fewer people are taking “traditional” package holidays to the “traditional” destinations – more people are either packaging their holidays themselves or turning to previously “niche” products such as experience/adventure holidays, as well as cruise or luxury product. There has also been a cultural shift in people taking more frequent, shorter holidays (e.g. city breaks) rather than one long holiday. Since the mergers, several acquisitions have been made by the consolidated groups to try and gain more of a hold in these growth markets. Google’s new ruling on trademark bidding is likely to shake things up further.
As well as using search engines to research and book their holidays via major operators, UK consumers are consistently starting to use meta-search sites (sites that have listings supplied either by means of a feed or other technology and who make their money charging for outbound clicks to client’s sites, e.g. Travel Supermarket) to conduct price comparison, visiting aggregators (sites like Hotels.com or Opodo who “aggregate” or combine lots of one particular product and operate on commission – they sell leads rather than product) to see as wide a choice as possible, and using online review sites to get recommendations and opinions on their potential choice.
Recent events, such as the purchase of HolidayWatchdog.com (a UK review site) by TripAdvisor, the purchase of Hotels4U.com (a hotel aggregator) by Thomas Cook, and even the purchase of TripAdvisor itself by Expedia all highlight the growing importance of these channels for consumers, and the role they play in the booking journey.
There have been many high profile TV campaigns designed to increase awareness and drive consumers online, and these appear to have had the desired impact. To try and take advantage of the extensive advertising being done by companies such as Travel Supermarket or Hotels.com, search executives should see what advertising opportunities are available on these and other sites. TripAdvisor, Travel Supermarket and Travel Zoo all offer text advertising that can be paid for on a CPC basis – rendering it paid search rather than anything else (although most of these sites do offer other advertising opportunities as well). The Travel Supermarket feeds also operate on a cost-per-click basis (you pay when a visitor clicks through from the search results to your website).
Article by Arianne Donoghue