In the past, travelers sought the services of travel agents for all their travel needs, from airline tickets, hotel reservations and local transportation to tour itineraries and travel insurance. Today, travelers are more independent and can generally make all their travel arrangements on their own.
Almost 42% of consumers are traveling more in recent years, and as a result, more than 80% of travel agencies claim to be selling more international travel deals this 2017. In addition, travelers are buying more travel insurance and travel agencies are selling more of it.
The travel industry is not the same as it was just a couple decades ago. The advent of online travel platforms, emergence of low cost carriers, and budget hotels has completely changed the way travelers purchase their tickets, make their reservations, and develop their travel itinerary.
The Travel Revolution
Traveling has become a huge part of the human experience that people (especially experience-hungry millennials) include traveling in their bucket lists. Five years ago, over 1 billion people crossed international borders for the first time ever, and it’s not because of war or a humanitarian crisis – it was to experience something new and satisfy their curiosities.
What’s plain to see, is that people are traveling more. Deloitte predicts that by the end of 2017, the U.S. leisure travel market will hit $381 billion, up from $341 billion in 2015. These figures indicate an increasingly strong demand for travel and tourism. Growth could possibly be attributed to technology that enables travelers to be more in-control of their travel experience.
Travelers nowadays have hundreds of options online when it comes to planning, booking, and managing their travel itineraries. There are multiple consumer touchpoints that travel and hospitality businesses, as well as travel insurance companies can leverage. These include airfare or transportation, accommodations, cultural activities and local excursions, dining, social activities, and the list goes on.
Travel and tourism businesses and travel insurance companies need to become visible online, especially on online booking platforms, where consumers are searching. A recent study from Barkley revealed that 75% of millennials currently have travel apps on their smartphones, so businesses would do well to invest in mobile platforms as well.
Issues with Travel Insurance
There are a range of options when it comes to travel insurance, from a simple policy to cover incidences such as lost baggage, itinerary changes, to more comprehensive plans that include medical and accident coverage. Airlines usually offer travel insurance on their websites when you book a ticket, or you can choose to purchase via a third-party travel insurance provider.
However, most travelers opt out of getting travel insurance, especially for short trips. It’s an added cost that consumers don’t see the need for. Plus, while travelers are going on business trips or vacations, why should they want to think something bad is going to happen to them?
Another reason why consumers choose not to get travel insurance, is that they already have existing health or life insurance plans. Purchasing separate travel insurance packages would only make their current policies redundant as chances are, benefits would overlap.
While there are consumer issues in travel insurance, a report indicates that sales increased by 12.7% in 2016, far more than the projected 7.8%. To keep this steady growth, travel insurance companies, travel agencies, and other travel-related businesses need to be aware of the current travel market trends, so they can innovate and stay relevant in this highly competitive industry.
The following infographic illustrates the top travel trends that insurance companies should innovate for in 2018:
Millennials in the Travel Market
As the largest generation today, millennials make up a large portion of the travel market. According to the MMGY Global 2017–2018 Portrait of American Travelers study, 9.5 million American Millennial families plan to travel more by 36% and intend to increase their vacation budget by 19% in the next 12 months.
Millennials have plenty of disposable income and they prioritize travel and experiences over material luxuries. When it comes to making travel arrangements, millennials are used to having a wide variety of options easily available to them. They will gladly do their own research to help them book their own trips and tours over the internet.
As such, travel agencies and travel insurance companies need to be able to reach these millennials where they are. Travel deals need to be easily available to them. Transparency is very important to millennials (and other age groups as well). Millennials need to know what they’re buying, with all the details included.
Being the social generation, millennials readily write about their travel experiences and post opinions on their social media accounts. They also have a tendency post reviews as well to help other buyers in making the right decision, so they’re great brand ambassadors!
Social media has been an integral part of the travel experience as of late. People like to share (or perhaps even flaunt) their vacations to their friends on social media, that they are actively on their mobile even while they’re on vacation. 97% of millennials post on social networks to share their travel experiences. Another recent report indicated that 56% of millennials have posted a photo or video of their vacation, while they are away, while 32% of non-millennial travelers claimed to have done the same.
It’s so important for millennials to be visible to their connections that 31% of them claim that experiencing the authentic culture of a travel destination and getting comments on the holiday photos they posted on social media holds equal importance. Peer response is indeed, highly important for travelers nowadays. After all, social acknowledgement and integration are universal human needs.
In addition, travel photos on social media inspire and influence the travel destinations of vacationers, with more than 42% of millennials acknowledging that their travel decisions are influenced by what they see on their newsfeed. 29% of Gen-Xers and 16% of baby boomers claim the same.
Female Solo Travel
Gone are the days when women were expected to stay home. Modern women, especially millennials, are traveling more, whether it’s with their families, friends, or alone. In fact, 80% of travel decisions are made by women. They choose where to go, how to get there, where to stay, and what to do. According to a Forbes report, women are expected to spend more than US $125 billion in 2017 on travel.
The rise in female solo travel is what most likely led to the 230% increase in the number of women-only travel companies. Travel insurance agencies need to adapt to this trend and create innovative ways to market their offerings that are specifically targeted to women, particularly those traveling alone.
Emphasis needs to be placed on safety and security, as well as maternal and reproductive health concerns commonly not covered in other health and life insurance policies. Provide them a hotline they can call from anywhere they are in case of an emergency, so they can be provided the specific information they need, such as which hospital to go to should they need medical assistance. This will be invaluable to solo travelers and would act to make insurance packages more attractive to women travelers.
Action and Adventure Travel
People are now creating bucket lists of the things they want to experience. It’s not about the destination, it’s the experience. Whether that’s bungee jumping in Macau, deep sea diving in the Philippines, a safari in South Africa, swimming with sharks in Mexico or Australia, or hiking the Swiss alps, it’s adventure that travelers are seeking.
According to the 2016 global adventure tourism market research, the adventure tourism market will grow at a CAGR of 45.99% from 2016-2020. In 2015, the adventure tourism industry generated revenue of US $7.88 trillion, and this is forecasted to increase approximately 46% by 2020 as trends lean more towards adventurous, experience-based activities.
Terrorism Protection Policies
There have been numerous acts of terror around the world in recent years, such as the November Paris attacks, the Russian plane bombing in Egypt, the Manchester Arena bombing, the Brussels train station bombing, and more. These incidents left travelers on high alert as they plan their future trips.
However, instead of canceling their trips completely, travelers are seeking for travel insurance that covers acts of terrorism. A recent study revealed that interest for travel insurance with terrorism coverage has doubled in the past year.
Travelers haven’t exactly been discouraged from travelling altogether, they just want to have the option to cancel their trip and be reimbursed in case a terrorist attack were to happen. In fact, according to travel insurance provider Allianz Global Assistance, they received more than 100 claims after the Louvre knife attack on February 3 and the Paris shootings on April 20 early this year.
Low-cost airlines are steadily gaining a share of the travel market, and are carry more passengers around the world. In fact, low cost carriers have a compounded annual growth rate (CAGR) of 7.1% in the last decade, vs. premium airlines, at just 3.5% CAGR.
Consumers want to travel more, and are turning to low-cost airlines to give them the opportunity to reach both domestic and international destinations they might otherwise not be able to afford with premium airlines.
Growth in this sector is lowering the market cost of traveling, making travel insurance relatively more expensive to the average traveler. To address this, travel insurance providers need to restructure their packages to accommodate the more thrifty market, keeping the relative price of insurance “affordable”.
Booking Based on Reviews
A recent study revealed that 95% of respondents read reviews before booking. Another study reveals that 70% of travelers look at up to 20 reviews when planning their itinerary. In today’s digital landscape, there’s a wealth of information available to travelers, from which airline they should take to the most ideal accommodations based on their budget. Websites such as TripAdvisor and other booking platforms also make reviews available to users, so they can find out the actual experience of other travelers.
Travel insurance companies need to use this as an opportunity to reach more travelers, and encourage customers to tell other people how they used the benefits included in their travel insurance policies. Frequent travelers, for instance, can also benefit from a rewards or loyalty program, so that they can be encouraged to purchase another travel insurance policy for their next trip. They can also earn points from posting positive reviews on websites, travel advisory boards, and social networks to encourage the production of user-generated content, which is highly effective as content marketing.
People Want to Travel More
As travel is made more affordable by low-fare airlines, budget hotels, and home-stay accommodations, consumers have the intention to travel more in the coming years. In fact, a survey shows that 15% of travelers plan to travel more frequently for business in 2017, while 21 percent expect to travel more for leisure.
To make travel insurance more attractive for frequent travelers, insurance companies can create a rewards and loyalty program that can get them more coverage as they travel. They can also encourage travelers to earn more rewards points by sharing their experience about how they benefit from having travel insurance on their social media accounts and even on travel websites and advisory boards.
Combining business and leisure travel is one of 2017’s biggest travel trends that travel insurance companies would be wise to adopt. With the line between work and personal life becoming increasingly blurred, travelers are extending their business trips to include personal experiences in that location. In the U.S. alone, 43% of trips are combined business and leisure, or what’s now known as “bleisure”.
Travel insurance companies can consider dynamically targeting these travelers based on both sets of interests. They can also create corporate travel insurance plans that allows travelers the option to extend their coverage to their leisure activities.
Health and Wellness Travel
There’s a growing health and wellness trend that insurance companies can cater for. A study discovered that approximately 17 million travelers consider themselves as being ‘health and wellbeing’ focused, and that 40% of them travel frequently. Furthermore, these health and wellness conscious travelers reportedly spend 130% more on their trips than the average tourist.
This means that insurance companies need to innovate their insurance packages to cater to a new clientele. It’s an opportunity for travel insurance providers to partner up with global brands in the health and wellness niche, to offer a variety of benefits that this health-conscious clientele is looking for.
For as long as travel insurance is structured much like life insurance, it may not be attractive to travelers, especially insurance-averse millennials. Insurance companies need to structure their offerings to meet new consumer demands, and offer more coverage and protection, as well as additional benefits.
Recent global events such as terrorism, natural disasters, and aircraft accidents has been prompting travelers to consider purchasing travel insurance. Travel insurance companies need to proliferate information both online and offline to educate consumers about the importance of travel insurance.
Travelers feel safer with the assurance that comes with risk management. The Keynectup solution addresses the need for effective risk management by improving communications between travel insurance providers and their clients. Find out more about our travel insurance solutions today!