The travel category is betting on experience and technology to capture growing demand in 2024.
According to the latest dentsu Global Ad Spend Forecasts, ad investments in travel and transportation are expected to grow by 7.5% in 2024 – making it the fastest-growing category. As consumer and business demand for travel is back, advertisers can leverage fandoms and technology to gain a competitive edge.
Growth in the travel industry
It is clear that travel demand is back. The revenge travel trend we have seen following the COVID-19 pandemic is not over yet, and the category is taking a cautiously optimistic approach to growth to 2024.
This is true for both the consumer segment and the business segment. Although the latter is not back to where it was in 2019 due to the rise of hybrid and remote work, we expect small and medium businesses to be particularly active after lagging in return to travel over the last few years.
Of course, there are global forces at work that could change this growth projection. Looking at the airline industry, ongoing conflicts could affect energy prices, which could ultimately impact flight prices and decrease demand and profitability. Looking at the hotel category, investment in infrastructure is plateauing despite the demand growth because of the increasing cost of borrowing money and building.
In the longer term, increased focus on sustainability could also influence consumer demand, although we don’t see greener attitudes materialising into substantial change in volume at the moment: people still travel at will.
What’s the future of tourism?
2024 is going to be a year of big media moments.
Key elections will happen in major markets across the world, from the US to India. While elections typically do not affect demand for travel, they will impact the ad investments of travel brands. With political ads on the rise and taking over almost every form of communication, the cost of doing business may increase and brands will have to be particularly vigilant guardians of brand safety and suitability if they want to stay clear from confrontational content.
2024 will also be a great year for sports, with the Paris Olympics and Paralympics and the CONMEBOL Copa América on the horizon and travelers from all over the world will be eager to attend.
We see the travel category increasingly embracing these moments less as individual events and more as end-to-end experiences. Consider the economic impact concerts by Beyoncé and Taylor Swift have on cities.
There is a huge potential for travel companies to tap into the passions of communities and fandoms to curate and tailor entire travel experiences that include sports, music, and food. How brands cater to fans’ full experience within a travel environment, and how they leverage these opportunities in media, will be a key talking point in 2024.
Influencers will play an increasingly important part in attracting these communities as well. We know the impact influencers can have on travel destinations: see how the Amalfi Coast has turned into a tourist hot spot in recent years after popping up all over online channels.
Even so, many within the travel category think influencer marketing has still not reached its full potential and that all the major travel brands will be looking to develop closer relationships with influencers who align well with them (vs. have the biggest following) in 2024.
Media success is about delivering upon the right need state
To make the most of media opportunities in 2024, it is important for travel advertisers to continue to modernise their investment strategy moving forward, to become less reliant on traditional channels and more focused on channels where they can target in a more efficient way, such as connected TV. Addressable channels will be key as they enable travel brands to better adapt to the user’s need state (e.g., business travel vs. a family trip) to deliver the best experience and message in the right space.
This focus on need state requires travel organisations to become more agile in how they operate their media to have the ability to pivot on a dime. It also requires working closely with partners such as data providers and tech platforms to keep the pulse on the most relevant consumer insights, for example, through spikes in search terms, and on the latest technology developments that could improve the traveler experience.
A few years ago, augmented reality and virtual reality were all the rage, but, except for a few experiments, they have not really taken off in the category as there was not really any consumer demand for them. This doesn’t mean these technologies will never work, especially if innovations like Apple Vision Pro disrupt the segment in 2024, but travel companies are being cautious in how much they invest in that space based on consumer needs. At this point travelers want to experience “the real thing,” but AR will continue to give them a “taste” of what their next trip could be.
Conversely, generative AI is gathering a lot of interest from the category because it responds to the imperative of serving the audience's need states in two ways.
First, it can help travel advertisers to be more agile with their media through better optimisations, use of available data and adaptation of messages (e.g., to generate imagery for an ad through a simple prompt – an interesting efficiency prospect for travel companies with large destination portfolios).
Second, it presents benefits in terms of user experience, and simplifying travel planning, and we expect to see more generative AI-powered concierges such as KAYAK’s virtual travel assistant in 2024.
Click here to download the latest dentsu Global Ad Spend Forecasts report.
