https://www.ana.net/miccontent/show/id/ii-2023-01-inflation-travel
As we emerge from the pandemic, it's only right to assume individuals will be more likely and willing to travel. According to Statista, the travel and tourism market is projected to reach $175.4 billion in 2022 and projected to grow to $211.10 billion by the year 2026. However, in this post-pandemic era, travelers have changed their sentiments drastically when it comes to travel. Trying to generate business based on pre-pandemic data may now be leading brands to target the wrong demographic.
With an increase in global inflation and a potential looming recession, among other macroeconomic factors, travel-related costs have significantly impacted the decisions of travelers. Travel and tourism marketers need to be strategic and thoughtful when delivering their messaging, ensuring that it is delivered to the right audience at the right time.
Instead of wasting impressions and ad spend on assumed audiences, wouldn't marketers want to know when, where and which consumers are actually traveling?
Who Is Traveling Based on Affordability?
Travel is arguably one of the hardest hit industries when a recession happens. For travel and tourism marketers, understanding travelers' sentiments and purchase intent in times when money is tight is crucial to identifying the right audiences.
Many currently assume that gen Z is the demographic to focus on; to an extent, that may be true. But many in that generation are only daydreaming about their Insta-worthy vacations rather than actually taking those trips. Age is an important factor to consider when building your target audience and messaging, however, it's important to focus on affordability in the current economic climate. The problem with affordability is its subjectivity.
For New England hotspot Cape Cod, for instance, the surge in travel-related costs impacted tourists' decisions this past summer. Semcasting analyzed consumer attributes of those who visited Cape Cod in the summer of 2021 versus those seen in 2022; the numbers were incredibly telling. When compared year-over-year, there was a massive 60 percent increase in visitors from one subset of the population and a severe 40 percent decrease in visitation from the other.
What caused this shift? Inflation sensitivity. Inflation sensitivity is crucial in analyzing overall affordability and finding the right audience for tourism campaigns.
Learnings
The analysis of Cape Cod summer tourism found those most sensitive to inflation were 26 to 39-year-old city-dwellers focused on building a career and family unit. The least sensitive were 52 to 64-year-olds who have invested wisely and have a long-term retirement plan in place that is safe from current market fluctuations, as well as 65 to 73-year-olds with comfortably luxurious lifestyles.
These more financially stable travelers who are less sensitive to inflation are likely not making their travel decisions based on where they've seen influencers vacationing with the best backgrounds for TikTok videos or Instagram Reels.
Those most sensitive to inflation tend to be younger individuals, which is to be expected as they haven't built up their wealth or equity. However, when looking at annual household income and discretionary income index, there was not a direct impact on the social matrix groups that were seen in these sample audiences; in times of inflation, the notion of affluence almost becomes irrelevant, and the intent of tourists is more important for people who are sensitive to inflation.
Despite younger individuals having the intent to travel during the summer, they don't necessarily have the lifestyle and funds to feel comfortable doing so during a recession.
Looking Forward
Though targeting a younger generation can benefit overall awareness given their perspective of affordability, they aren't the travelers actually booking vacations when financial times are tough. Therefore, it's crucial to expand strategy and target other and/or older generations. While marketing to gen Z is compelling, it may not always be the most effective choice, especially for the travel industry.
Inflation sensitivity is a crucial element to consider when finding the right audience for your marketing campaigns because it could significantly affect the bottom line. It is an important data point in our current climate to consider when building a campaign to reach desired audiences who are willing to spend money on travel.
The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.
Michael Skladony is GM of consumer services at Semcasting.
Semcasting : Feb 22, 2017 9:00:05 AM
