A COMMISSIONED STUDY CONDUCTED BY FORRESTER CONSULTING ON BEHALF OF MASTERCARD, JULY 2024 Improving Customer Experience And Growing Revenue In The Travel Industry With Advanced Analytics Solutions
Executive Summary Many airlines and hotels struggle with gaps in skills, technology, and analytic insights that reduce customer loyalty, slow revenue growth, and inhibit innovation. Mastercard commissioned Forrester to explore evolving trends within the travel sector. In April 2024, Forrester surveyed 228 leaders at airlines and hotels in North America, Europe, LATAM, and APAC involved with setting and/or executing their company’s customer marketing, engagement, loyalty, pricing, or experience strategy. The study found that airlines and hotels stand to benefit greatly from analytics solutions that help capture, analyze, and act on diverse datasets to engineer highly personalized, connected, and anticipatory experiences, as well as unlock new revenue streams. ABOUT FORRESTER CONSULTING Forrester provides independent and objective research-based consulting to help leaders deliver key outcomes. Fueled by our customer-obsessed research, Forrester’s seasoned consultants partner with leaders to execute their specific priorities using a unique engagement model that ensures lasting impact. For more information, visit forrester.com/consulting. © Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. [E-59698] Project Team: Lane Abernathy, Market Impact Consultant Contributing Research: Forrester’s Technology Consumer & Digital research group © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 2 3
Airlines And Hotels Strive To Meet Heightened Customer Expectations For airline and hospitality executives responsible for customer marketing, engagement, loyalty, pricing, or experience strategy, the most relevant trends come down to a deeper understanding of customer needs, behaviors, and personalized interactions. NORTH AMERICA (N=67) LATIN AMERICA (N=52) EUROPE (N=54) APAC (N=55) Top Industry Trends Impacting Strategic Planning By Region 63% Changing travelers’ behavior due to blending of business and leisure travel or flexible work environment 56% Rising expectations for digital user experiences 61% Rising expectations for digital user experiences 58% 49% Increased loyalty fraud 48% Increased loyalty fraud 46% Increased loyalty fraud 42% 46% Impact of inflation on consumer spending 48% Impact of inflation on consumer spending 43% Impact of inflation on consumer spending 42% 40% Increased demand for personalized experiences 46% Changing travelers’ behavior due to blending of business and leisure travel or flexible work environment 41% Increased business travel 40% 34% Expansion into new revenue streams 46% Strained capacity due to return to pre-pandemic levels of travel 37% Increased demand for personalized experiences 38% Increased demand for personalized experiences Changing travelers’ behavior due to blending of business and leisure travel or flexible work environment Increased loyalty fraud Impact of inflation on consumer spending Expansion into new revenue streams Rising expectations for digital user experiences 52% Rising expectations for digital user experiences 52% Increased demand for personalized experiences 56% Changing travelers’ behavior due to blending of business and leisure travel or flexible work environment 44% 5 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 4 Base: 228 airline and hotel leaders at organizations in North America, Europe, LATAM, and APAC involved with their organization’s customer marketing, engagement, loyalty, pricing, or experience strategy Note: Showing top six responses per region. Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, April 2024
Challenging/very challenging* Important/critical Improve customer experience 59% 83% Improve customer acquisition 69% 82% Improve customer relationship management/retention 53% 75% Improve personalization 67% 71% Identify new revenue streams 67% 63% Optimize revenue management and pricing strategies 59% 67% Improve loyalty program 65% 76% Adopt/improve AI capabilities 69% 61% Airlines And Hotels Are Struggling To Meet Their Most Important Priorities Importance Of Objectives Vs. Difficulty In Achieving Them Airline and hotel executives prioritize improving customer experiences and attracting new customers but find accomplishing these goals difficult. The gap between goals and capabilities emphasizes the need to uplevel skills, data, and technology. 7 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 6 Base: 228 airline and hotel leaders at organizations in North America, Europe, LATAM, and APAC involved with their organization’s customer marketing, engagement, loyalty, pricing, or experience strategy *Base: Variable airline and hotel leaders at organizations in North America, Europe, LATAM, and APAC involved with their organizations’ customer marketing, engagement, loyalty, pricing, or experience strategy who said an objective is “Important” or “Critical” Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, April 2024
Travel Organizations Must Deepen Their Understanding Of Customer Behavior To anticipate customer behavior and expectations, companies focus on travel patterns and not customer preferences. Without listening to customers, companies will struggle to adapt to changing preferences. NORTH AMERICA (N=67) LATIN AMERICA (N=52) EUROPE (N=54) APAC (N=55) Methods Used To Manage And Anticipate Customer Behavior/Expectations Forecasting data or systems 44% Forecasting data or systems 44% Booking and reservation systems 47% External data sources 38% External data sources 41% Industry trend analysis 36% Historical data analysis 37% CRM offer management and campaigns systems 33% External data sources 33% Industry trend analysis 35% Voice-of-the-customer (VOC) data 31% Revenue management systems 31% Econometric models 33% External competitive data platforms/sources 28% Econometric models 29% 49% Forecasting data or systems 34% Revenue management systems 25% External data sources 25% Industry trend analysis 24% Historical data analysis Booking and reservation systems 46% Booking and reservation systems 40% Booking and reservation systems 43% Forecasting data or systems 45% 9 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 8 Base: 228 airline and hotel leaders at organizations in North America, Europe, LATAM, and APAC involved with their organization’s customer marketing, engagement, loyalty, pricing, or experience strategy Note: Showing top six responses per region. Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, April 2024
Limitations Of Current Solutions Used To Personalize Digital Interactions With Customers Lack Of Internal Skills And Automation Undermine Personalization Efforts HOTELS AIRLINES We lack internal skills. 58% 45% We lack automation capabilities. We don’t have the technology we need. 44% We lack internal skills. 58% Our technology integrations are ineffective. 43% We lack automation capabilities. 57% Costs are too high. 35% We don’t have the data we need. 34% 45% Our technology integrations are ineffective. We don’t have the data we need. 26% We don’t have the technology we need. 41% Costs are too high. 38% © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. Tech alone without human skill and expertise is not enough to make the most of digital personalization solutions. A data and analytics platform with the proper technology that is easy to use could fill gaps and unlock new business opportunity in the short term. 10 11 Base: 228 airline and hotel leaders at organizations in North America, Europe, LATAM, and APAC involved with their organization’s customer marketing, engagement, loyalty, pricing, or experience strategy Note: Showing top six responses per region. Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, April 2024
Difficulty Personalizing Digital Interactions Leads To Challenges With Loyalty, Growth, And Innovation Impact From Limitations To Current Personalization Approach HOTELS AIRLINE Diminished marketing ROI Decreased customer loyalty 50% 62% Inability to scale Increased indirect-channel booking mix 47% 50% Increased indirect-channel booking mix Inability to scale 46% 45% Decreased customer loyalty Diminished marketing ROI 43% 37% Inability to accurately measure new business ideas/initiatives Inability to test new business ideas 40% 35% Inability to test new business ideas Inability to accurately measure new business ideas/initiatives 35% 34% 13 12 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. Base: 113 airline and 115 hotel leaders at organizations in North America, Europe, LATAM, and APAC involved with setting and/or executing their organization’s customer marketing, engagement, loyalty, pricing, or experience strategy Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, March 2024
Third-Party Solutions Can Fill Critical Gaps In Analytics Capabilities Airlines and hotels need partners with robust, fast, and accurate analytics to power cross-channel personalization and seamless experiences that drive customer loyalty. Additionally, finding a provider that can meet multiple needs and rapidly test new business ideas is ideal. NORTH AMERICA (N=67) LATIN AMERICA (N=52) EUROPE (N=54) APAC (N=55) Third-Party Solutions Provider Evaluation Criteria 90% Speed and accuracy of analytics 82% Loyalty expertise in the travel/hospitality industry 79% Single vendor that can support multiple solutions 78% Prescriptive analytics 75% Forecasting/predictive analytics 75% Access to additional data sources 67% Ability to manage CRM offers and messaging Cross-channel digital personalization for customers, identified and nonidentified 87% 92% Cross-channel digital personalization for customers, identified and nonidentified 83% Speed and accuracy of analytics 77% Loyalty expertise in the travel/hospitality industry 75% Support for offering ancillary products or services 71% Single vendor that can support multiple solutions 73% Access to additional data sources 69% Data expertise Prescriptive analytics 85% 91% Speed and accuracy of analytics 81% Loyalty expertise in the travel/hospitality industry 78% Support for offering ancillary products or services 72% Cross-channel digital personalization for customers, identified and nonidentified 67% Prescriptive analytics 69% Single vendor that can support multiple solutions 65% Access to additional data sources Data expertise 85% 89% Cross-channel digital personalization for customers, identified and nonidentified 84% Loyalty expertise in the travel/hospitality industry 80% Data expertise 78% Support for offering ancillary products or services 73% Prescriptive analytics 76% Ability to rapidly test new business ideas 71% Forecasting/predictive analytics Speed and accuracy of analytics 85% 15 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 14 Base: 228 airline and hotel leaders at organizations in North America, Europe, LATAM, and APAC involved with their organization’s customer marketing, engagement, loyalty, pricing, or experience strategy Note: Showing top eight responses per region; Showing “Important” and “Critical” responses. Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, April 2024
The Right Solution Can Yield Transformational Benefits Creating positive experiences and turning travelers into loyal advocates drive revenue. Key ingredients of success are personalization, analytics, and testing new ideas. Tapping a partner with data expertise and flexible solutions can help travel companies overcome challenges and drive growth. NORTH AMERICA (N=59 TO 66) LATIN AMERICA (N=47 TO 51) EUROPE (N=46 TO 52) APAC (N=49 TO 52) Expected Improvement From Partnering With A ThirdParty Solutions Provider 67% Improve customer acquisition 63% Improve personalization 58% Improve loyalty program 56% Adopt/improve AI capabilities 53% Optimize revenue management and pricing strategies 55% Improve customer experience 53% Improve customer relationship management/retention Identify new revenue streams 65% 74% Identify new revenue streams 59% Improve customer acquisition 57% Adopt/improve AI capabilities 57% Optimize revenue management and pricing strategies 53% Improve loyalty program 55% Improve customer experience 45% Expand into new markets Improve personalization 71% 75% Identify new revenue streams 69% Improve loyalty program 63% Improve personalization 61% Adopt/improve AI capabilities 54% Improve customer experience 56% Optimize revenue management and pricing strategies 52% Expand into new markets Improve customer acquisition 73% 74% Adopt/improve AI capabilities 65% Identify new revenue streams 63% Improve customer acquisition 60% Improve customer relationship management/retention 57% Expand into new markets 57% Improve customer experience 56% Improve loyalty program Improve personalization 67% 17 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 16 Base: 228 airline and hotel leaders at organizations in North America, Europe, LATAM, and APAC involved with their organization’s customer marketing, engagement, loyalty, pricing, or experience strategy Note: Showing top eight responses per region; Showing “Large improvement” and “Transformational improvement” responses. Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, April 2024
Conclusion Third-party solution providers can play a crucial role helping airlines and hotels address revenue management and customer experience challenges. This study found that: Meeting customer expectations is crucial. Changing customer preferences mean airlines and hotels must adapt their approach to personalization. Eight out of 10 respondents consider personalization to be critical — but 69% struggle to adapt to customer expectations. This is even more important considering challenges with personalizing experiences have led to decreased loyalty (52%) and an inability to scale (46%). Data insights are potent tools for customer engagement and revenue management, but travel companies struggle with lack of skills and analytics. A combination of insufficient internal skills (58%) and the lack of data and technology (64%) are inhibiting effective digital interactions with customers. Companies should use advanced methods to meet customer expectations and the right third-party provider can yield transformational benefits. The most effective third-party solutions diversify revenue and optimize prices by improving personalization and testing capabilities, but only 18% of respondents’ companies use business experimentation systems — one of the most powerful tools available. This indicates a significant untapped opportunity for most travel companies that are looking to drive growth. Industry leaders expect the biggest benefits from third-party solutions to come from new revenue streams (69%), personalization (66%), and customer acquisition efforts (66%). 19 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 18
Methodology This Opportunity Snapshot was commissioned by Mastercard. To create this profile, Forrester Consulting supplemented this research with custom survey questions asked of 228 airline and hotel leaders at organizations in North America, Europe, LATAM, and APAC involved with their organization’s customer marketing, engagement, loyalty, pricing, or experience strategy. The custom survey began and was completed in April 2024. Note: Percentages may not total 100 due to rounding. ROLE C-level executive 14% Vice president 38% Director 48% ANNUAL REVENUE (USD) >$5B 12% $1B to $5B 37% $750M to $999M 26% $500M to $749M 25% REGION North America 29% Asia Pacific 24% Europe 24% Latin America 23% Demographics TRAVEL CATEGORY Airlines 50% Hotels 50% Explore More Read now Going The Distance To Improve Customer Experience In The Travel Industry Top Trends, Challenges, And Strategies For Travel Companies Get started FORRESTER OPPORTUNITY SNAPSHOT: A CUSTOM STUDY COMMISSIONED BY MASTERCARD | JUNE 2024 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 20 Download the full study: Going The Distance To Improve Customer Experience In The Travel Industry
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