US travel firms flex marketing muscle to lure travelers seeking sun and sand By Reuters

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© Reuters. PHOTO FILE: Travelers wearing protective face masks to prevent the spread of the coronavirus disease (COVID-19) reclaim their luggage at the airport in Denver, Colorado, US, November 24, 2020. REUTERS / Kevin Mohatt

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By Nilanjana Basu and Aishwarya Nair

(Reuters) – US travel booking firms are spending heavily on marketing to get flights and accommodation on their apps and websites as they look to make the most of a post-pandemic boom in tourism during the upcoming summer season.

After becoming one of the largest victims of the health crisis, companies including Airbnb Inc, Booking Holdings (NASDAQ 🙂 Inc, Expedia (NASDAQ 🙂 Group Inc and Tripadvisor Inc. have quickly turned a corner due to unprecedented demand for travel from pandemic-weary Americans.

About six in 10 Americans have made plans to do so at least one summer trip this year, according to monthly data from non-profit US Travel Association released in April.

“This could be the greatest summer of travel in our lifetime and the last thing anyone would want to do is miss out,” Bernstein analyst Richard Clarke told Reuters.

The US travel industry is expected to spend 14.2%, or about $ 4 billion, of their marketing budget this year for digital advertising, according to market research firm Insider Intelligence.

Although the demand in the short-term is to be realized, the benefits of the effort may be considerable.

GRAPHIC: Revenue set to jump from travel demand https://graphics.reuters.com/USA-TRAVEL/SUMMER/gkplgkrgavb/chart.png

“Customers are ready to pay premium prices for bookings. There’s been a lot of savings over the last two years … so even with inflation, there are enough customers that will pay higher prices just to get some travel in,” HotelPlanner Chief Executive Tim Hentschel told Reuters.

For example, ticket prices in March for US domestic flights were 15% higher month-on-month, according to Adobe (NASDAQ 🙂 Digital Economy Index, but it hasn’t hit demand for flying, surging inflation at least for now.

RIDING A BOOM

Travel firms are taking all possible steps from offering websites to offering innovative services.

Earlier this month, Airbnb finance chief Dave Stephenson said the company was increasing its “marketing dollars”, though it would remain relatively consistent as a percentage of revenue.

On Wednesday, the San Francisco-based company revamped its app and website to allow travelers to split their holidays between two properties and book homes by browsing through the extensive list of categories without the need to enter a destination.

Meanwhile, Booking said it expects marketing spend in the second quarter to form a slightly larger percentage of its gross bookings versus pre-pandemic levels whereas rival Expedia expects to “spend into the (travel) recovery”.

Marketing and advertising costs

Expedia’s selling and marketing spend was 60% of costs and expenses.

GRAPHIC: Soaring expenses https://graphics.reuters.com/USA-TRAVEL/SUMMER/lbvgnykbjpq/chart.png

“We think that this year, in a recovering travel marketplace, there is a potential once in a generation opportunity to really follow into both marketing and merchandising,” Booking Chief Financial Officer David Goulden said earlier this month.

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