U.S. Travel Firms Flex Marketing Muscle to Lure Travelers Seeking Sun and Sand

Skift grip

The charts in this article illustrate the conundrum of Airbnb, Booking Holdings and Expedia Group. Online travel agency groups need their revenue to grow faster than their marketing spend as the pandemic recovery unfolds.

Sean O’Neill

US travel booking agencies are spending big on marketing to get more people to book flights and accommodation on their apps and websites as they seek to make the most of a post-pandemic tourism boom in the during the next summer season.

After becoming one of the biggest victims of the health crisis, companies like Airbnb, Booking Holdings Inc, Expedia Group Inc and Tripadvisor Inc quickly turned the page due to the pandemic due to travel demand from Americans tired.

On six out of 10 Americans have planned to take at least one summer trip this year, according to monthly data from a nonprofit company United States Travel Association released in April.

“This could be the greatest summer travel of our lives and the last thing anyone would want to do is miss it,” Bernstein analyst Richard Clarke told Reuters.

The U.S. travel industry is expected to spend 14.2%, or about $4 billion, of its marketing budget this year on digital advertising, according to market research firm Insider Intelligence.

Although increased spending is expected to create a dent in profits in the near term, the benefits of this effort could far outweigh the costs in the years to come as travel demand is only expected to soar.

Source: Reuters.

“Customers are willing to pay high prices for reservations. There have been a lot of savings over the past two years … so even with inflation there are enough customers who will pay higher prices just to travel,” the managing director of HotelPlanner told Reuters, Tim Henschel.

For example, March ticket prices for US domestic flights were 15% higher month-over-month, according to Adobe Digital Economy Indexbut that rise hasn’t hit demand for flights, suggesting that Americans are ignoring the impact of soaring inflation, at least for now.

Ride a boom

Tour operators are doing everything they can to attract holidaymakers and are taking all possible measures, from redesigning their websites to offering innovative services.

earlier this month, Airbnb Chief Financial Officer Dave Stephenson said the company was growing its “relatively dollars,” although it would remain constant as a percentage of revenue.

On Wednesday, the San Francisco-based company revamped its vacation app and website to allow travelers to split their stay between two properties and book homes by browsing through a long list of categories without needing to type in a destination.

Meanwhile, Booking said it expects marketing spend in the second quarter to represent a slightly higher percentage of its gross bookings compared to pre-pandemic levels, while rival Expedia plans to “spend on the resumption (of travel)”.

Marketing and advertising costs form the bulk of the overall expenses of most travel companies, which must seek new and innovative ways to keep people interested in their products.

Booking’s marketing expenses accounted for about 46% of its total operating expenses in the first quarter, while Expedia’s sales and marketing expenses accounted for nearly 60% of costs and expenses.

Source: Reuters.

“We believe this year, in a recovering travel market, there is potentially a once-in-a-generation opportunity to really look at both marketing and merchandising,” said David Goulden, chief financial officer of Booking. , earlier this month.

(Reporting by Nilanjana Basu and additional reporting by Abhijith Ganapavaram in Bengaluru; Editing by Anil D’Silva)

This article was written by Aishwarya Nair and Nilanjana Basu from Reuters and has been legally licensed through Industry Dive Content market. Please direct all licensing questions to [email protected].