White Paper_Enabling Travel Marketing to Fly High

Enabling Travel Marketing to Fly High How the Travel Industry Is Using Artificial Intelligence to Drive Meaningful Engagement

White paper November 2018

Executive Summary Travel, one of the fastest-growing sectors across the world, is a huge contributor to global revenue. The space saw rapid transformation with the advent of the internet and later, with the spread of mobile technology, which has led to a boom in online travel agency (OTA) growth. Now, it is once again being disrupted with the growth of new-age technologies such as artificial intelligence (AI).

Today’s travel marketers have access to exponential amounts of customer data and yet, the sheer volume poses a challenge – how can travel companies consolidate and manage this data effectively? And how can they use this data to engage with customers in a smarter way?

This is where AI has an increasingly important role to play. AI can be used to analyze vast amounts of customer data – around preferences, interests and digital footprint – to uncover patterns and predict future behavior. It offers deep insights that can help travel companies create more meaningful and personalized experiences for their customers, thus boosting conversion, increasing customer loyalty and improving retention.

This white paper takes a look at how travel marketers can leverage AI solutions to better target consumers through personalized and relevant messaging and offers, creating a longterm engagement strategy.

Enabling Travel Marketing to Fly High: How the Travel Industry Is Using Artificial Intelligence to Drive Meaningful Engagement

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Introduction: The Evolution of the Travel Industry If there is one industry that has been growing consistently over the years (small hiccups notwithstanding), it’s the travel and tourism industry. One of the largest sectors today, in 2017, travel and tourism contributed over US$8.27 trillion1 to the global economy. International tourist arrivals increased from 528 million in 2005 to 1.32 billion in 20172, a number that is expected to exceed 1.8 billion by 2030.

2005

0.53 billion

2017

1.32 billion

2017

US$

8.27trillion 2030

1.8 billion

The emergence of certain global trends is causing the travel industry to evolve dramatically, and presenting both challenges and opportunities for marketers in the space: The proliferation of online travel agencies (OTA) enables consumers to plan, book and schedule their holidays themselves, without depending on traditional travel agents or tour companies.

New-age technologies like AI allow travel companies to harvest consumer data to create customized experiences.

Today’s consumers seek unique and differentiated experiences, and look for more than just a visit to a destination. This offers OTAs the opportunity to provide consumers with more than just a product – flight or hotel booking. They can offer information, recommendations and other value-added services around areas of interest in the chosen destination.

1

https://www.statista.com/statistics/233223/travel-and-tourism--total-economic-contribution-worldwide/ ²https://www.statista.com/statistics/209334/total-number-of-international-tourist-arrivals/

Enabling Travel Marketing to Fly High: How the Travel Industry Is Using Artificial Intelligence to Drive Meaningful Engagement

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With 80% of travelers preferring to self-serve 3 , consumers demand a seamless, one-stop experience. This presents a great opportunity for brands looking to keep visitors on their website and upsell a variety of services. In the long run, not only will this boost conversion and sales, but also increase customer loyalty and retention.

The internet has made booking flights, accommodation, transport and even entrance tickets very easy for travelers who like to take charge of their own travel plans. From a company’s perspective, this DIY approach to travel and consumers’ propensity for online booking has given marketers access to exponential amounts of data.

3

https://www.techradar.com/news/how-ai-is-changing-how-we-travel

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Managing the Data Monster: Challenges That Marketers Face Travel companies and hotels capture and store information at every step of the consumer process. They have access to massive amounts of data on travel destinations, preferences, budgets, family details, and more. Amadeus alone, for example, has one of the largest data centers worldwide fully dedicated to travel, and it processed more than 3.9 million net travel bookings per day (peak) in 20174.

Ironically, the sheer volume of this data poses several challenges, with marketers struggling to derive the right answers from it.

• How can marketers use data to create meaningful and valuable experiences for their consumers?

Challenges That Marketers Face

While businesses are well aware that data-based insights can improve every step of the customer experience, most of them struggle with consolidating, integrating and effectively using data to generate actionable insights.

•

How can marketers use data to create meaningful and valuable experiences for their consumers?

•

How can marketers use both internal and external data to identify what users actually want, and offer them the right product, thus driving higher conversions?

• How can marketers use both internal and external data to identify what users actually want, and offer them the right product, thus driving higher conversions?

• How can marketers target consumers with the right offers at the right time in their buying cycle – and on the right channel?

Travelers today are a demanding bunch, and they seek inspirational and unique travel experiences. They look for a personalized • How can they use existing customer data to build engagement and experience even as they start evaluating travel loyalty? options – they want their search and discovery process to be easy and pleasurable. They want OTAs to offer them what they need even before they think of it themselves.

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https://corporate.amadeus.com/en/about-us/technology-innovation

Enabling Travel Marketing to Fly High: How the Travel Industry Is Using Artificial Intelligence to Drive Meaningful Engagement

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However, marketing teams lack complete information about their customers – especially around what these customers do outside of the company’s app and website. This limited understanding of the audience leads to ineffective personalization and, in turn, loss of revenue.

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How can marketers target consumers with the right offers at the right time in their buying cycle – and on the right channel?

With rapidly proliferating devices, organizations lack the ability to map the same customer across different devices.

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How can they use existing customer data to build engagement and loyalty?

Finally, brands know that engagement and the retention of customers is a much more valuable metric than pure conversion.

It is in addressing these challenges that the power of AI can really be seen.

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Using AI to Create Meaningful Customer Experiences Big data has the power to revolutionize the travel industry – if companies are able to effectively collect and integrate the data, derive useful insights from it to tailor their campaigns, and then engage the right audience at the right time across the right channel. This is where AI can play a role – in transforming unstructured data into actionable and valuable insights.

AI finds numerous applications within this industry – from monitoring and optimizing offers to empowering virtual digital assistants that help people complete their bookings, and forecasting price changes. However, the most effective and widespread application can be seen within the realm of personalization Take A Leaf out of Their Books through accurate recommendaInnovative companies in this space use AI in small tion.

• Personalizing Offers, Messaging and Experiences

and big ways to offer personalized user recommendations for a better consumer experience.

Expedia offers suggestions around accommodations in a location that you are interested in booking flights to.

Amadeus consolidates and analyzes data from customers’ so-

For all online businesscial media activities to generate insights on their travel preferences, personalization es. These insights are based on past travel information, interests, willingness to spend, etc. The company then runs machine learnforms the backbone ing (ML) algorithms to predict which offers have a better chance of user experience and of converting 5; these offers are also shown to new users who revenue growth, and are segmented based on their similarity to existing customers. the travel industry is no Airbnb differentiates itself by offering a user data-driven search6. exception. A recent study Search results are not based on quality of accommodation opshows that 64% of traveltions in the location specified, but rather on stored data around ers7 in Asia Pacific are willuser preferences and search history. The company also uses ing to offer their personal data ML to optimize the host-guest pairing service, by personalizing results based on both host and guest prefin exchange for more relevant erences to ensure a more accurate fit – and and personalized experiences. thus, higher chances of a booking.

5 https://www.analyticsindiamag.com/artificial-intelligence-travel-industry-hospitality/ 6 https://neilpatel.com/blog/how-airbnb-uses-data-science/ 7 http://www.webintravel.com/asia-pacific-traveller-amadeus-journey-of-me/

Enabling Travel Marketing to Fly High: How the Travel Industry Is Using Artificial Intelligence to Drive Meaningful Engagement

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AI-powered recommendations are not based on the pre-defined rules that traditional recommendation engines use, but on insights gained from historical customer data. AI allows companies to look beyond basic consumer demographics to consolidate data on customers’ journeys, online behaviors around recent searches and bookings, preferences, and from past interactions with your brand. AI then analyzes this data to detect patterns and predict future consumer behavior. This can, in turn, help recommend products and offers that the consumer is more likely to buy.

Using AI to draw out patterns and insights from consumer data enables travel companies to serve them faster and better by predicting travel preferences, personalizing services and offers, and helping complete bookings. The resulting audience-driven marketing strategy can make each consumer interaction and message specific and customized, allowing big brands to interact with travelers like smaller businesses do. A better consumer experience translates into enhanced engagement and retention, stronger consumer loyalty and increased revenue.

With each new transaction, AI learns more about your consumers, making recommendations increasingly customized and relevant. By directly addressing consumers’ needs, brands increase the likelihood of conversion and purchase, and also of engaging and retaining the customer.

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Hyper-Personalizing for One-to-One Engagement

Some AI solutions, such as Appier’s AIQUA8, a proactive marketing automation tool, are making personalization even more granular, allowing marketers to consolidate data and insights across platforms to offer consumers a truly customized experience.

Here is how marketers can use AI to hyper-personalize the consumer experience they offer: I. Understand user intent based on behavior outside the brand app / website Consider a customer who frequently purchases air tickets from your website but books hotels on a different one. How can you increase your share of wallet by encouraging the customer to complete all transactions on your website?

Sophisticated tools like AIQUA not only analyze consumer data on brand platforms, but also seek to understand their external interests and behaviors to help marketers create personalized engagement. It helps you gather comprehensive data on consumer behavior outside your own app or website, thus discovering interest areas, preferences and choices across platforms. These insights can be used to offer hyper-personalized recommendations mapped to the consumer interest.

8

https://www.appier.com/en/product_aiqua.html#aiquaPlatform

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In the use case mentioned above, a brand can use AIQUA to understand the customer’s interests outside of its own app and website – such as for a hotel, preferences not directly related to accommodation – and use this data to identify and segment users on the basis of interest, creating targeted and relevant campaigns across devices and channels.

For instance, somebody who is an outdoor person and also likes luxury goods can be a good candidate for glamping. Or, family with kids might be more interested in Disneyland, and surfers might want to check out Bali-related content.

The result: Marketers can leverage such invaluable insights in their messaging on webpages, in app notifications, or through other suitable channels, to drive higher conversions and shorten time to purchase, which increases profitability.

II. Identify the need of first-time visitors before they land Such solutions become integral to customer discovery as well – allowing you to decipher user preferences before they even engage with your site or app, and target first-time users more effectively. Using the data consolidated from various channels, you can personalize content for prospects who have not engaged as yet, making messaging relevant and specific.

For example, you can identify which users are likely to be interested in traveling to France even before they land on the website. You can reach out to these prospects with personalized messaging meant to arouse interest, and also proactively set rules to personalize the content of the website on the prospect’s first visit.

This onsite-offsite user interest mapping allows you to serve new consumers like old friends, effectively boosting their lifetime value (LTV), and eventually turn first-time users into loyal, engaged and retained customers.

III. Identify the right opportunity AI can identify exactly what your consumers are looking for, when, and on which device. This kind of precision enables you to accurately identify opportunities and address them with the right message and offer, increasing chances of conversion.

More importantly, you won’t miss out on opportunities for personalization.

Enabling Travel Marketing to Fly High: How the Travel Industry Is Using Artificial Intelligence to Drive Meaningful Engagement

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For instance, a user evaluates flight options to New York on her PC over the weekend.

Unable to decide, she instead continues her research on her smartphone during lunch break on a weekday, and evaluates offers around specific destinations in New Zealand only.

However, the brand continues to send her push notifications about New York on her PC, rather than information that meets her current and real need.

% New York

Special Offer to New York

New Zealand

Sunday afternoon

Monday noon

Monday night

Evaluates flight options to New York

Evaluates offers in New Zealand

The brand continues to send her push notifications about New York

Understanding what devices are owned by the same user can help companies reach out with the right messages on the right device. AIQUA allows you to automatically link your audience across devices, giving you a consolidated view of each consumer’s activity and letting you engage seamlessly with them across screens.

For example, if data shows you that the last activity by the user is around browsing tickets to New Zealand on a smartphone, a single view into all of that user’s devices will allow you to push out an ad offering promotional fares to New Zealand to the smartphone owned by the same user on a Monday, while also reiterating this offer on her tablet.

% New York

Special Offer to New Zealand

New Zealand Special Offer to New Zealand

Sunday afternoon

Monday noon

Monday night

Evaluates flight options to New York

Evaluates offers in New Zealand

The brand sends her push notifications about New Zealand

By linking user intent and their behavior across devices, you can thus reach consumers in their moment of decision.

Enabling Travel Marketing to Fly High: How the Travel Industry Is Using Artificial Intelligence to Drive Meaningful Engagement

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IV. Improve LTV of existing customers It costs five times more to acquire a new customer than it does to keep existing customers 9, according to Forrester Research. Brands should know that long-term engagement and customer retention are much more valuable metrics than pure conversion. They are already analyzing data to identify their most valuable customers – those with maximum LTV. New users

Existing customers

Here, a tool like AIQUA allows marketers to study user intent outside brand platforms, and micro-segment this audience based on online behavior to hyper-personalize their experience on the website.

Visitors to your website may have one of two objectives: They are just exploring different options, or they are actually looking for offers around a specific destination. Traditionally, all visitors are greeted with the same landing page and the same call to action, with no differentiation.

But marketers can now use AI-powered marketing automation tools to proactively tailor an experience to meet different needs. Data on customers’ external searches combined with existing data on their previous interactions on brand platforms can help marketers uncover insights around their intent, so they can: a) Personalize the landing page and display customized content and offers around their interests. b) Create personalized and relevant push marketing through a variety of channels – in-app notifications, emails or online advertising – and target them at the right moment with timely ads.

This hyper-personalization can boost engagement and conversion, improving the LTV of each customer.

Insight into successful engagement and retention strategies offers marketers immense value when it comes to attracting new audiences as well. By detecting patterns across your most valuable customers, AI can help you create lookalike audiences; and thus, reach out to new audiences using customized messaging that has a higher chance of working.

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https://www.marketingprofs.com/articles/2017/32621/your-customers-second-purchase-is-the-most-important

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V. Effectively scale marketing efforts AI-powered marketing automation tools not only help marketers tailor messages for each individual, but also help them effectively scale marketing efforts by personalizing campaigns for a wider audience based on common interests.

By detecting patterns across your most valuable customers, AI can help you segment your consumers and create lookalike audiences based on similar interests and preferences.

Insight into successful engagement and retention strategies allows you to then push out personalized content based on common user attributes and behavior.

Marketing automation solutions also improve efficiency by automating all processbased tasks and reducing manual effort and error. Using a solution like AIQUA, you can target consumers more accurately by setting the right time and the right way of reaching each individual user, across a database of millions of users. Unique creatives and flexible messaging also enable ease of iteration and versioning for different segments, again helping you dramatically scale your marketing campaigns.

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Beyond Personalization and Consumer Experience Aside from personalized offers and recommendations, AI also finds application in other areas of consumer experience – in dynamic pricing and forecasting, for instance.

OTAs make recommendations based on many factors, an important one being pricing.

Using AI, they can track constantly changing prices and map this against consumer preferences, offering the best deals. Hopper10, for example, has built a mobile application for airfare prediction that uses predictive analysis to help people book the cheapest flights possible.

Another area of rapid growth is in the use of chatbots to provide virtual assistance. Chatbots can respond to customer queries, provide information, and connect with them in an efficient way. Machine learning, by providing context, has helped to ‘humanize’ chatbots. Using natural language processing and combining context with personal information, chatbots can leverage AI to also push relevant offers to customers, such as Hello Hipmunk 11 , by accessing massive datasets of pricing, itineraries and room inventory to offer users information and suggestions around trip planning and scheduling.

What’s more, AI can also be used to gather and analyze data for insights into pricing strategies, business strategy and even product or service development.

Ultimately, the travel industry has always revolved around the customer, and emerging trends and technologies are helping it increasingly move towards customer-centric business models. The best way to connect with customers at a personalized level, and create one-toone engagement, is through the effective use of AI.

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https://www.forbes.com/sites/kathleenchaykowski/2018/04/10/the-vacation-predictor-how-the-fastest-growing-flight-booking-app-is-using-ai-to-transform-travelhopper/#5417021023bd 11 https://www.hipmunk.com/tailwind/how-hello-hipmunk-helped-pave-way-business-travel-bot/

Enabling Travel Marketing to Fly High: How the Travel Industry Is Using Artificial Intelligence to Drive Meaningful Engagement

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About AIQUA AIQUA is designed for marketing teams that aspire for intelligent engagement. By combining proven AI models and the best of marketing automation, AIQUA gives you the ability to identify and engage the right audience in a fast, iterative and scalable way. It enables you to increase conversions and engagement by running effective engagement and personalization campaigns.

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About Appier Appier is a technology company which aims to provide AI platforms to help enterprises solve their most challenging business problems. Appier was established by a passionate team of computer scientists and engineers with expertise in AI, data analysis and distributed systems.

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Making Artificial Intelligence Easy www.appier.com