Brazil Travel Market Sees Big Increase in Online Bookings
The Brazil travel market is seeing a steep increase in online bookings, thanks to Latin America’s populations becoming more and more tech-savvy. It looks like going forward, 40 percent of sales will be made on the internet in the Brazil region by the year 2020. Phocuswright’s Latin America Online Travel Overview Third Edition delved deeply into analysis of the LATAM travel market, covering online vs. offline bookings based on travel segment and channel.
Internet activity and business is growing; online travel penetration is expected to show an average increase of ten percentage points in the years to come. Although 2015 showed a decrease in online travel sales, a recovering trend is expected over the next 4 years; data shows that online bookings pace will grow at about two to four times that of the total market through 2020. By 2017, 2014’s online sales levels will be exceeded, and by 2020, those sale levels are anticipated to reach $29 billion.
Due to the growth in e-commerce, online travel agencies saw rapid rises in business. OTAs like ViajaNet, Despegar, and Best Day collectively took in point-of-sale bookings of $10.3 billion in 2015 and are expected to keep increasing revenue by 8-12 percent each year over the next four years.
Mexico’s largest OTA, Best Day, expects to do twice the amount of business it does now by 2020. ViajaNet is rapidly gaining market share in the region and expects to see a 20% growth rate in 2016 alone.
The significant consolidation trends seen in other parts of the world is now being observed in the LATAM region, and this is contributing to the growth factors. Major OTA players like Expedia and Priceline are competing strongly to get market share in that region, and a big part of that is through acquisitions and partnerships on the local level. Priceline made a temporary investment in Hotel Urbano, and Expedia made an investment of $270 million in Despegar (the largest LATAM online travel agency). Priceline’s Booking.com is also seeing rising popularity in Latin America.
Google Research Shows Millennials Booking Hotels through Smartphones
Recent research conducted by Google shows some significant trend among Millennial travelers compared to non-Millennials. This report reveals that smartphones play a major role in the booking decisions made by many consumers, but that Millennials dominate the landscape in terms of mobile shopping and purchasing. The numbers not only reveal a look at current behavior, but shed light on what we can expect to see going forward.
The numbers demonstrate that Millennials have confidence in flight and hotel information found on smartphones, and often purchase on a smartphone after shopping on the same device. Here is a breakdown of the trends found by the report:
- 27 percent of Millennial travelers say they have used their smartphone to shop for hotels, compared to only 19 percent of travelers over 35 years old.
- Two-thirds of Millennial travelers are comfortable planning their entire trip on a smartphone, while only one-third of travelers 35 and older say the same.
- 66% of millennial travelers are confident they can find all the same flight and hotel information whether searching on a mobile device or a desktop computer, while only 43% of travelers over the age of 35 are confident they can do the same.
- 64% of millennial travelers say they typically book a hotel room on a smartphone after shopping on one, compared to only 42% of those who are 35 and older.
- 59% of millennial travelers say they typically purchase a flight on a smartphone after shopping on one, while 44% of those who are 35 and older say the same.
These trends shed light on the importance of mobile booking and should indicate to marketers how important mobile websites are the success of travel business now. Research like this is likely contributing to recent changes in the tech business, such as Google’s choice to shift to mobile-first indexing.
Growth in Hotel Online Bookings Compared to that of Short-term Rentals
Short-term rental companies such as Airbnb have made a lot of noise with their recent debut into the travel market, and have shown growth despite some concerning events such as regulatory disputes and discrimination battles. Additionally, the launch of new products such as Trips only serve to add to that growth in the month and years to come.
While year-over-year online bookings for short-term rental companies are expected to grow at better rates than those of hotels, recent research conducted by Euromonitor International shows that hotels will not be seeing any decreases in growth from 2015 – 2020.
Hotels have the upper hand when it comes to value; they simply have higher value than short-term bookings, and it is likely that hotels will continue to keep this upper hand through at least 2020.
While it’s true that Airbnb and other similar companies have record numbers of guests during single nights or peak times of the summer, their numbers are still only a fraction of the number of guests seen by hotels.
In contrast, short-term rental companies have the upper hand in terms of online bookings. In 2015, 50.3 percent of all short-term rentals were booked online, with 62 percent expected to be booked online by 2020; comparatively, only 36 percent of hotels received their booking online in 2015, and only expect to see 46 percent in 2020. Less than half of global hotel businesses will be booked online by that time.
But in terms of growth per industry, those numbers tell a different story: in general, online hotel bookings will see more growth than short-term rental companies. From 2015 – 2020, online hotel bookings will grow by 28 percent, while short-term rental online bookings will only grow by 24 percent.
Notably, smaller year-over-year growth among hotels’ online bookings is expected through the next four years; many major hotel brands went on direct booking campaigns this year, but OTAs are expected to see slightly stronger growth year-over-year through 2020.
Various factors add to the complexity of the forecasts, but outcomes look positive for hotels based on some of these factors. For example, offline short-term bookings are oftentimes more difficult to make than offline hotel bookings. Customers also cannot typically call rental hosts the way they can call hotels, and they can’t use travel agents to book short-term rentals, either. Hotels simply offer more convenience and flexibility. So while short-term rental bookings will increase at faster rates than hotel bookings, hotels still have more value to guests than short-term rentals and this will help ensure the continued growth and success of hotel companies moving forward.
Taj and Shangri-La Hotels to Merge Loyalty Programs
Taj Hotels Resorts and Shangri-La Hotels and Resorts have signed a deal to merge their loyalty programs into something called “Warmer Welcomes.”
The deal is set to launch in March of 2017 and will introduce Warmer Welcomes, which is a combination of Shangri-La’s Golden Circle and Taj’s Inner Circle programs.
Together, the two companies’ loyalty programs have about 6 million members. Warmer Welcomes will offer the following:
- Recognition: Members can redeem the benefits of elite status when they stay at any Taj or Shangri-La hotel with top-tier status matching.
- Points earned across the globe: Points can be earned at 200 hotels in 27 different countries and at 131 destinations. Members in either program can choose to redeem points in the program of their preference while staying with Taj or Shangri-La.
- Seamless redemptions: Members can convert points and redeem awards between both programs.
The CEO of Taj Hotels, Rakesh Sarna, stated that this move is a strategic step taken to bring greater synergies among two brands renowned for reputable hospitality. According to him, guests and loyalty members of both brands had shared desires for wider hotel selection and key destinations. His idea is that this new alliance will enable deeper engagement of guests and members, who will now be recognized seamlessly at top-tier hotels worldwide.
Shangri-La Acting President Madhu Rao said that the two companies share similar values and service philosophies, yet have minimal property overlap; this put them in a unique position to be able to establish a seamless alliance. He said that this alliance goes beyond a multi-hotel distribution platform or marketing partnership, but instead “bridges two iconic Asian brands and opens up a world of new experiences for our loyal guests.” His vision is to be able to enhance brand awareness and increase market share by providing members of both loyalty programs with increased value, and more reason to stay with Taj and Shangri-La.
Airbnb Drops Lawsuit Against New York
Airbnb agreed to drop their lawsuit against New York City on Friday. The lawsuit, filed two months ago, challenged the New York law signed by Gov. Cuomo which calls for fines of up to $7,500 for those who illegally list their properties on short-term rental platforms such as Airbnb.
The law, created in Airbnb’s largest market, stands to hurt the rental company’s business. The company states that such fines can deter hosts from using the platform, and that the law impaired their revenue in NYC. Last year, NYC hosts generated about $1 billion in revenue for Airbnb, and a portion of that went to the company in the form of fees.
Airbnb agreed to drop the lawsuit as long as New York City agrees to only enforce the law against hosts and to not fine Airbnb. The settlement was set to take place Monday, December 5th.
State Assemblywoman Linda B. Rosenthal, who wrote the law in question, deemed this settlement “an astounding about-face” by the company. But Airbnb said it was “a material step forward” for their hosts.
Airbnb and New York authorities have been fighting for years over the legality around short-term rentals, and this agreement was a victory for those who oppose the company.
In 2010, it became illegal in New York to rent out an apartment for fewer than 30 days. In October, Airbnb took action on people renting out multiple homes in a bend to pressures from New York politicians and tenants’ rights groups. These groups stated that the presence of short-term rental companies made it more difficult to find affordable housing in New York, a city already notorious for its high rental and cost-of-living rates.
New York isn’t the only city Airbnb has battled with. In recent months, Airbnb has also fought with governments around the globe over similar legalities, including those in Amsterdam, San Francisco, and New Orleans.
Rosenthal stated that this was “a win for everyone,” and said the city can now begin cracking down on the “serial lawbreakers” who have been converting affordable housing into illegal hotels.