The most popular Phocuswright Research Insights articles of 2023: Phocuswright

Each week, Phocuswright publishes a Research Insights article highlighting the latest Phocuswright research reports and analyses. Each article features a summary of key findings, figures, trends and/or analysis, giving readers insights into the most pertinent research topics and studies.

In a year filled with rapid tech advancements and adoption, surging demand and recovery across major markets, it's no surprise that the most popular Research Insights articles featured topics like generative AI, the U.S. OTA market, APAC's recovery and loyalty programs.

Here's the top 10 from 2023:

10. Travel rewards vs. loyalty – what’s the difference?

Loyalty represents a holy grail to travel sellers. Merchants tirelessly track engagement, evangelism and profitability, attempting to grow share of mind and share of wallet. According to Phocuswright's research report Travel Rewards vs. Loyalty - What's the Difference, key performance indicators like customer acquisition and conversion stats, order frequency and average basket values, satisfaction and Net Promoter Scores (NPS) all serve as signposts on the road to retaining customers and instilling loyalty.

9. 7 key takeaways from the latest U.S. travel market research

Remarkably, in 2022, U.S. travelers continued to assign greater value to travel when compared to other discretionary expenditures like home improvements, dining/nightlife and electronics.

According to Phocuswright’s latest travel research report U.S. Travel Market Report 2022-2026, the U.S. travel market grew by 51% to $422 billion in 2022, becoming the first major travel market globally to surpass its 2019 size.

8. Web3 is proving itself in travel

After years of hype, 2023 is proving to be a pivotal year for Web3 as this set of decentralized technologies is now delivering concrete, measurable value to the travel industry. Many Web3 companies have only emerged within the last several years but are already driving changes in the way travel is booked, paid for, exchanged and settled.

Critics who characterize Web3 as a technology looking for a solution may be surprised to learn that some Web3 startups are actively generating revenue and decreasing costs throughout the travel industry. Clearly, Web3 has moved from concept to practical use cases, and is poised to grow rapidly in the value it provides to the industry.

7. Mobile remains one of the biggest strategic focus areas for OTAs

The U.S. travel market continued its stellar recovery in 2022, with a total gross bookings increase of 51% over the prior year. OTAs comprised just over a fifth of the total U.S. market during this period.

While OTAs like Hopper and HotelTonight have always been app-first or app-only, mobile was just one part of the puzzle for the larger OTAs. But several factors, among them reducing their marketing spend and their reliance on Google, along with their need to acquire first-party data, have made direct customer interaction via their own sites and apps increasingly important.

The larger OTAs like Expedia and Booking have also emphasized the importance of their apps as a channel to win and retain customers for the long term. Further underlining the importance of apps, according to Expedia its app users drive 2.5 times the gross profit and repeat business over an 18-month period compared to a non-app user. At the end of 2022, Expedia had 60% more active app users than any prior year. Booking saw about 45% of its room nights booked through its app in 2022, a 13-percentage point increase over 2019.

6. APAC expected to regain top spot as the world's largest regional travel market by 2025

Asia Pacific, the world's largest regional travel market pre-pandemic, slipped to second position in 2021 following the devastating effects of the pandemic, with the U.S. rising to the top spot. The APAC travel market is expected to make a slower comeback compared to other major regions around the world. In 2021, health-related caution among travelers, as well as government restrictions on mobility, especially international, led to APAC travel market growth of a mere 4% to US$231.6 billion.

5. Preview: Travel Innovation and Technology Trends 2023

Each year, Phocuswright's expert analysts identify the technology and innovation trends that will influence travel significantly in the coming year and beyond. In 2023, we’re exploring the growing roles of social media and Web3 in travel, addressing the realities of sustainability and our fragmented technology landscape, and pondering the impact of the next game-changing technologies like generative AI and eVTOLs.

4. 4 things to know about the future of the U.S. OTA market

The U.S. travel market continued its stellar recovery in 2022, with total gross bookings of $422.2 billion, an increase of 51% over the prior year. According to Phocuswright's research report U.S. Online Travel Agency Market Report 2022-2026, online and offline travel both showed robust growth, but the channel share shifts seen during the pandemic are slowly changing course. Online channel share, which grew to 65% in 2021, moderated slightly to 63% in 2022 as offline channels showed signs of recovery. Online travel agencies (OTAs) comprised just over a fifth of the total U.S. market while the online supplier-direct channel accounted for 41% of the market.

3. Generative AI in every stage of consumer travel

The launches of ChatGPT, Bard and similar generative AI solutions mark a substantial step forward in travel planning and business process optimization. And in the long term, generative AI is likely to have broad-reaching impacts across all areas of travel. How quickly will the technology advance from here? How will potential pitfalls be addressed? What will the travel industry look like in five years, or even in one year, given the rapid impact and pace of change we’re already seeing with generative AI? It’s impossible to say for sure, but we know a few good chatbots you can ask.

2. Under the influence: Social media's role in trip planning

Travel is alive and buzzing in the ecosystem of social media. Users, brands and influencers alike are piping in across platforms to share, guide and inspire across all touchpoints of the trip experience. But while the conversation is vibrant, the social media sphere is continuously transforming, and travelers on social platforms often diverge from some of the patterns observed when people engage with content associated with other industries, such as fashion or retail.

This preview of Phocuswright's latest travel research report Under the Influence: Social Media's Role in Trip Planning and Inspiration, which is derived from the findings of Phocuswright’s U.S. Consumer Travel 2022 survey, explores the demographics of who is using social for travel, what platforms they’re on, and the role of social in their travel practices. With a plethora of travel users, providers, distributors and influencers at the table, Phocuswright’s primary travel research highlights opportunities to optimize social strategy to better speak to the needs, habits and budgets of travelers on social.

1. More outsiders enter the OTA market

Non-travel brands, such as financial institutions, retailers and loyalty clubs, must really want to get into the travel business. Over the past two years, several have launched travel booking platforms or announced ambitious plans to do so, even though the online travel agency market is already near saturation and uber competitive. Will they succeed? If so, what are their advantages and what will be the impact on the marketplace?

Any new OTA is often met with skepticism, but that hasn’t stopped a slew of new hopefuls from other sectors such as banking, retail and membership organizations from taking a shot. Can they compete with the big brands? Do they even need to?

Ironically, it’s the existing players – Expedia, Booking and Hopper – that have the most to gain from this trend. Plug-and-play options offered by Expedia for Business, Rocket Travel (Booking.com) and Hopper Cloud make it easy for institutions and organizations to provide private-label travel offerings with little or no expertise.

Most OTAs’ private-label partners are travel suppliers such as airlines and agencies looking to supplement inventory and revenue. But the others represent the long tail, including non-travel brands such as banks, retailers, rewards programs and membership-based organizations seeking to add value to their current offerings and further monetize their existing audiences. Most of these non-travel companies don’t expect to compete with the giants, or even to make a lot of money. Rather, their goal is to provide a convenient service to customers, so they keep coming back.

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