As the U.S. creeps toward recovery from the worst recession since the Great Depression, there are some positive signs that Americans are beginning to loosen the stranglehold on their wallets and spend on "nice to haves" not just "must haves."
TripAdvisor's 2011 Travel Trends Forecast brings this good news into more specific relief for the leisure travel category, saying that 90% of consumers plan to take two or more leisure trips next year, and over one-third say they plan to spend more on travel more than they did in 2010.
But for those of you hoping this means an end to discounting and a return to higher rates, don't let that last bit fool you or give you false hope. Because while Americans may be willing to spend again, the "new normal" American spender (yes, I had to slip that phrase into one last article before 2010 ended) is playing by an entirely new set of self-imposed rules.
As travel marketers, our understanding of those rules will make or break whether we successfully convert these prospects to customers. Simply said, while 2011 will be a time where people will spend more to get what they want, they will demand a significant purpose to any premium they pay.
Why? Because the scars that people have from the past few years of economic challenge are deep and permanent. Even those who weren't as hard hit have emerged shaken and with a new view on spending. That exuberant "I'm going to spend more because I can again" mentality has evaporated. People see that devil-may-care spending as the reason for this economic crisis in the first place.
The consumer emerging from the ashes of the economic meltdown has a new sense of pride in taking economic responsibility. Making smart financial decisions is being worn like a badge, at all income levels and for all investments and purchases, big or small. People are taking control back, setting their own example in the face of perceived failures by government and corporate institutions and, in doing so, are creating a fundamental shift in how we need to market to them.
No longer is luxury for luxury's sake going to be acceptable. The 2011 travelers are going to be looking to justify why they should spend more, especially when there will likely still be many discount deals in the market. But they are willing to spend and it's entirely possible to capture those dollars. You just have the embrace the reality that if you are charging more, you have to actually deliver more.
So what does purposeful premium look like in the travel space? It's taking the concept of value and redefining it beyond just dollars and cents. It's about value defined by experience, an experience that is so good that it justifies the money spent to access it. The question we need to ask ourselves is, what about our brand is meaningful and exciting to our prospects, and how do we amplify and add access to these elements to create added value to our proposition?
In actuality, this should be incredibly simple. Southwest Airlines nailed it with "Bags fly free." Air travel has become fraught with angst for many people with the addition of so many restrictions and fees. Southwest quickly recognized the opportunity to alleviate one major stress point and did so. This promotion not only relieves a consumer pressure point but in a way that is perfectly aligned to its brand positioning and, most importantly, in a way that allows it to move away from price-point advertising.
My best advice? Don't overcomplicate. Look at your brand, look at what differentiates you from your competition and what has made your brand loyalists return time and again. Or look at your category and see where the biggest perceived under-deliveries are and find a way to deliver on them. Focus your prospects on what they will be getting, not what they will be paying. Price yourself competitively but shift the attention to the value add, not the price deduction.
Just remember this: No one goes home at the end of the trip looking to talk about what they paid. They simply want a great story to tell and an experience that they'll remember for a lifetime. You give them that, at a price you feel good about, and you've found the sweet spot that is "purposeful premium."