Marketing Review — Fall 2008 - (Page 42)

NEW CUSTOMER REPORT BROUGHT TO YOU BY THE HSMAI FOUNDATION AND HSMAI’S HOTEL DIRECTOR OF SALES & MARKETING SIG Effectively Weathering the Economic Cycle’s Ups and Downs Traveler acceptance lessons learned for the hotel, airline, rental car sectors [ LISA M. ALLEN] he current economic crisis has many in the hospitality business—along with most American industries—on edge about the future. Will consumers continue to cut back on travel and how can the hospitality industry best prepare for volatile economic times? New research from the HSMAI/DKSA “Traveler Acceptance Index” (TAI) reveals a cyclical pattern over the last eight years in consumer attitudes about their travel experiences. This latest research offering looks at the TAI, which integrates the perceived value and satisfaction in three interdependent sectors—hotel, airlines and rental cars—over the current business cycle from 2000 through 2008. “We wanted to look at the broader components of the travel experience this time around,” says DKSA President Doug Shifflet. “If you just look at hotels without understanding the impact of transportation, the picture is less complete and therefore less actionable. We’re now seeing the TAI as an indicator of how the market is going and how people are reacting to marketplace issues.” As part of the TAI, DKSA asks over 50,000 U.S. households each month to rate their most recent travel experiences including their transportation and hotel stays on satisfaction and value using 10point scales. The data presented here looks at changes in their rating combinations from 2000-2008 in hotel stays, car rentals and airline travel in both the leisure and business travel segments. T “We’ve noted significant trends in the relationship between economic highs and lows and consumer attitudes toward their travel experiences,” says Shifflet. “When coming out of a poor economy and prices for travel are being held down, value is particularly positive, based largely on the low prices. During the more stable middle period of the business cycle, travel prices begin to quickly escalate and peak as you approach the end of the cycle. If the product hasn’t improved commensurately, then you find perceived value begins to drop and the TAI turns down—this is a critical turning point for the cycle.” Shifflet says airlines generally experience the lowest levels of acceptance in the three travel sectors, with rental cars and hotels tending to run in close parallel. The rental car industry is considerably more volatile, Shifflet says, largely because rental car companies can make improvements to their fleets and services relatively quickly or reduce product levels more rapidly than hotels do. Hotels are also less susceptible to fast changing external factors such as rising fuel costs than the other sectors and thus see more consistent levels of satisfaction provided they continue to deliver solid product quality and value. ings. While the airlines start out well below the hotel and rental car sectors in acceptance, compared with the other sectors, the airlines reap the greatest early TAI score gains. The TAI rises dramatically during this period which includes the aftermath of 9/11. For total airline travelers the greatest increases are seen in early satisfaction gains followed by strong value ratings which then level off in 2003 to 2004, but satisfaction continued to grow, bringing up the overall TAI. The airlines gain their greatest traveler acceptance level through pleasing their business flyers 2000-04, who more than double their satisfaction and reported value ratings during this period. Leisure travelers show marked gain in satisfaction and even more in value ratings throughout the 2000 to 2004 time frame. When they peak in 2004, the airlines loft their TAI to their sector’s closest alignment with hotel and rental car TAIs. 2000-2004: Travel Sectors Weather Tough Times AIRLINES—Airlines started the new century at a very low overall passenger acceptance rating (TAI score), based on poor satisfaction and negative value rat- RENTAL CARS—Beginning in 2000, the rental car TAI starts higher than the other sectors and shows increasingly happy customers particularly following 9/11 through the end of the 2000-2004 time frame. Leisure customers are particularly delighted, reporting high satisfaction nets along with strong sector increases in value ratings. Robust gains in satisfaction ratings from business customers brings a 2002 gain for rental cars which then moderates into 2004 while leisure ratings carry the sector upward. In this initial rising period from 2000 to 2004, rental cars post a solid HSMAI MARKETING REVIEW • FALL 2008 42

Table of Contents Feed for the Digital Edition of Marketing Review — Fall 2008

Marketing Review – Fall 2008 Contents The Online Marketer Success Stories Forecasting Trends Ian Schrager: The Revolutionary Man Leaving No Stone Unturned: The Quest for Ancillary Revenue Gaga Gadgets for Execs on the Go: Functional New Portable Technology to Make Life and Work on the Road More Hospitable Effectively Weathering the Ups and Downs of the Economic Cycle Experiments in Podcasting Higher Transportation Costs and a Slowing Economy Shift Hotel Room Demand

Marketing Review — Fall 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.