Travel Industry Gaining in Growth, Losing in Love
While travel is taking on more and more importance as a global generator of revenues, brand love and loyalty is on the decline
May 16, 2019
While the travel industry shows plenty of robust growth now and pointing toward the next five years, brand intimacy in the travel sphere has shown cause for concern.
According to international marketing and consulting group, MBLM’s, Brand Intimacy 2019 Study, the top U.S. brands for travel have declined in revenue and popularity over the past few years.
To start, the net profit of commercial airlines worldwide has declined. In 2017, global profits were $37.7 billion, compared to $32.5 billion in 2018. According to the International Air Transport Association’s Economic Performance of the Airline Industry, the post-tax profit of airlines in North America fell from $18.7 billion in 2017 to $14.7 billion in 2018. The industry’s continued poor performance in MBLM’s study correlates with the decline in its financial performance.
“Travel brands continued to disappoint in our 2019 study,” noted Mario Natarelli, managing partner, MBLM. “These brands have become associated with inconvenience and mistrust, as consumers have become frustrated with baggage fees, delays and cancellations. The airline approach appears more transactional than relationship oriented, which we believe would be a much more compelling strategy and one that creates stronger bonds and more powerful connections.”
Other significant travel industry findings in the study include:
• American Airlines was the #1 brand for millennials
• JetBlue ranked first for users 35 and older and for those with incomes of $100,000 or more
• Southwest Airlines was the #1 brand for users with incomes under $100,000
• Delta Airlines was the top brand for women
• Air France placed first for men
For 2019, the industry is showing some small signs of improvement; however, they continue to be transactional. For example, Delta recently implemented free Wi-Fiin all cabins on 55 U.S. flights. Alaska Airlines updated the passenger cabins of its A321 jets with seats from Recaro, a German manufacturer of seats and buckles. On the other hand, American Airlines, Delta, United and Alaska Airlines all raised their ticket prices in May, and continue to charge customers for basic amenities, including checked bags.
In an article also released this month, “Southwest Airlines Continues to Soar,” MBLM analyzes the solid performance of Southwest. The airline leads the travel industry in its ability to build the strongest kinds of bonds with users: its level of Brand Intimacy with those earning less than $100,000, and its percentage of users who have been using the brand for more than 10 years. It also has a broader appeal amongst age groups than other brands in the industry and goes out of its way to be intimate with its passengers. Its heart logo, “LUV” ticker symbol and company mission all take the brand a step ahead of its competitors in creating relationships that are powered by emotion. If other airlines can learn from Southwest in making decisions, commitment and programs that resonate emotionally with their passengers, perhaps Brand Intimacy will take off for the travel industry as a whole.
Meanwhile, a study by Freedonia Focus Reports shows that the US travel service industry revenues are forecast to advance 7.2% annually through 2023. Travel service providers will continue to benefit from higher volumes of leisure travel, supported by rising disposable personal income levels both in the US and abroad. Growing demand from business travelers, supported by the expanding number of companies operating over geographically dispersed areas, will further support gains. Even so, the increasing ease with which travelers can book transport or accommodations directly with the providers of such services and through alternative services, such as Airbnb, will restrain faster advances.
The travel and tourism sector advanced more in 2018 than nearly any other economic sector, contributing a record $8.8 trillion to the world’s combined Gross Domestic Product – up from $8.3 trillion in 2017. Globally, travel & tourism accounts for 10.4 percent of the world’s total economic activity.