While travelers face more fees, restrictive fares and bad customer service, home rentals give vacationers additional lodging options and gas prices are down. (Photo: iStock)
By Liz Weiss
As the new year comes into focus, now is the time to reflect on the ups and downs for travel in 2015, allowing us to learn from past mistakes as we turn our attention to improvements ahead for 2016. While the past year introduced an impressive crop of tools and innovations (hat tip: the sharing economy), there certainly were some misses along the way (think: added airline fees to propel profits). Some trends became clearer: Travel-booking apps are on the rise, enabling us to travel smarter and clinch better deals. But other developments only raised more questions. For example, as travel brands continue to consolidate, will those mergers translate to higher value for consumers? And though the travel trends for 2016 are still shaking out, here’s a review of the things that worked well –and those that didn’t – and insights from travel experts on navigating the change ahead.
Popular home-sharing rental site Airbnb caused a stir this past fall when it posted controversial ads across San Francisco. The marketing campaign highlighted the $12 million worth of taxes local Airbnb hosts and guests generate each year, suggesting several ways the city could better use the new revenue source – including keeping the library open later and creating more bike lanes. The Airbnb billboards were met with harsh criticism from San Francisco residents and were pulled down in light of the backlash. But despite city dwellers’ gripes with the ads, which to many came across as tone deaf and insensitive, the company succeeded in it’s opposition to Proposition F, an initiative to regulate short-term housing in San Francisco, with limitations such as restricting the number of nights a unit can be rented annually.
Related: How This Guy Made $200K on Airbnb
Increasing Loyalty Program Changes and Restrictions
“In terms of successes, travel industry profits are out of control,” says Christopher Elliott, a consumer advocate and journalist. “That’s particularly true for airlines. Low fuel costs and capacity ‘discipline’ are propelling the airline industry to higher earnings,” he says. In other words, airlines are restricting the number of flights and available seats for passengers, translating to increased airfare and higher revenue. And in addition to turning a rich profit, airlines have also scaled back points and perks through their affiliated frequent flier programs. For instance, upcoming changes to American Airlines’ AAdvantage program in 2016, including a shift to a fare-based model, will increase the amount of miles required for travelers to benefit from expanded flight options. “Those programs were far too rich and unsustainable. What’s more, they deceived an entire generation of air travelers,” he adds. “Airlines are just just getting started, by the way. The era of free miles is over.”
Sacrificed Customer Service with Consolidation
“Generally speaking, when times are good, the travel industry takes its customers for granted,” Elliott says. “You see a lot more fees, restrictive fares, stories of bad customer service.” And with increased consolidation among major companies, this is especially apparent, he adds. “With only three legacy airlines [Delta, American and United], they can pretty much name their own price for airline tickets –and they have.” But it’s not just the airline industry consolidation that’s impacting the customer experience. “Marriott is acquiring Starwood. Does anyone really think that will lead to better customer service?” Elliott asks. Though time will tell what the creation of the world’s largest hotel chain will bring, major changes for loyalists in both programs are likely underway. And beyond consolidation among hotels and airlines, online travel agencies are also merging, but the outcome of such partnerships remain to be seen. Take Expedia’s acquisition of Orbitz and Travelocity, for example. “Even combined, they are still dwarfed by Priceline. So much for an online travel powerhouse,” Elliott says.
HotelTonight Hampered by Newer Hotel Booking Apps
Five years ago, HotelTonight redefined the hotel-booking landscape after launching its same-day booking technology. Today, the company faces steep competition in a saturated market and is reportedly looking for a buyer. According to Skift, the company is reportedly considering a sale after letting go of 20 percent of its staff in November. With an increasing number of competitors branching into the same-day hotel booking market, including behemoths like Expedia and Priceline and companies like Hipmunk and Jetsetter, competitors in the mobile-booking space are growing, making it harder for the industry’s first major company to continue accelerating forward.
A Lack of Female Representation in the Travel Industry
More women pilots! (Photo: Thinkstock)
While women comprise a lucrative segment of the travel market, there are just a handful of female leaders in the travel space, explains Jeff Manheimer, COO of Tripping.com. As a result, it’s challenging for female executives to break into the traditionally male-dominated travel industry. Manheimer recalls a poignant moment when Tripping.com’s CEO Jen O'Neal gave a brief talk at a Phocuswright Conference. After her remarks, female attendees flocked to O'Neal, feeling empowered and asking for her advice. “She was serving as inspiration for these smart female entrepreneurs,” he says. “I think it would be a different industry if you saw more female leadership.”
A Shrinking Economy-Class Cabin
“Well, this one happens every year – airlines take a little room away from economy class passengers and give it to the folks in business class,” Elliott says. “This year, they even made the bathrooms smaller,” he says, pointing to Boeing’s move to add cramped bathrooms onto its upgraded economy-class cabin on 777-300ER planes. “What will they think of next? Mostly, they are not good for the average consumer,” he adds.
“I think customers are getting a lot smarter about the little tricks the travel industry is playing to get them to part with their cash,” Elliott says. “Maybe we’re at the beginning of a consumer empowerment movement,” he adds.
The Rise of Home Rentals
“The trend toward instant booking is making the vacation booking much more accessible,” O'Neal says. Easy-to-use meta-booking platforms are attractive to younger travelers and are opening the market across all demographics, she adds. Beyond the rise of instant booking sites, which allow users to book their stays directly rather than booking on a partner site, the home-rental space as a whole is flourishing. In fact, the percentage of U.S. travelers who rented a home or a unit within a home, spiked from 13 to 25 percent in 2014, according to an August 2015 report on private accommodations in the U.S. from Phocuswright. And the the MMGY Global 2015 Portrait of American Travelers report found that 23 percent of U.S. travelers chose to stay in a vacation rental as an alternative to a hotel this year, a 2 percent increase since 2014.
Lower Fuel Costs
“For regular travelers like you and me, the best success was low fuel prices, which made travel by car more affordable,” Elliott says. In fact, according to AAA Travel’s Fuel Gauge Report, national oil prices are now hovering at the lowest rate in six years, with prices expected to slide to less than $2 per gallon in the upcoming weeks. And gas prices have fallen by 65 cents to the gallon compared to the same period last year, making 2015 an especially cost-effective time to plan a road trip.
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