Will Rising Oil Prices Impact Travel This Summer?

Over the last two months, a great deal has changed in the world — and these changes have had a major impact on the global economy.

According to a recent article from Commodity Markets Outlook, the war in Ukraine has “caused major supply disruptions and led to historically higher prices for a number of commodities.” From wheat to nickel to oil, resources that traditionally come from Eastern Europe have lessened considerably — which has led to worldwide shortages.

Perhaps most significantly, in early March, oil prices reached their highest rates since 2014 — coming in at $104.97 a barrel. This represented a 7.1% increase, signaling trouble for countries around the world that rely heavily on oil in daily life.

And over the past two months, disruptions have grown. In late April, Reuters reported that “energy markets worldwide are dealing with massive disruptions to supply” — which will impact many different brands and industries.

However, the travel sector will likely be hit particularly hard — as consumers may have to bear the brunt of the rising oil prices in the form of higher airfares, more expensive rental cars, and more. And seeing as the travel sector is just starting to bounce back post-Covid, many brands are understandably worried.

So, how will rising oil prices impact travel this summer? And what can travel brands do to keep their customers happy? Let’s take a look.

How Will Brands in the Travel Sector Feel The Impact?

When most people go on vacation, their trip involves a clear budget — which has to cover their transportation, accommodation, food, and activities. According to data gathered by our own brand tracking software, before the pandemic, 49% of UK consumers took 1–2 trips per year. This means they likely budgeted enough to holiday no more than twice in a calendar year.

We also found that 28% reported that they’re likely to travel again within the next year, which means they’re already saving up.

However, with the recent world events, one particular area of travel has become far more expensive: transportation.

Unfortunately, transportation has been — and will continue to be — heavily impacted by rising oil prices. This means it will be more expensive to book a flight, rent a car, and purchase gas.

And consumers will factor all of these increased costs into their decision of whether or not to book a vacation this summer — as they have to ensure their budget can cover all aspects of their travel plans.

For example, according to our own research, 34% of UK consumers are willing to pay $51–100 per night for accommodation — followed by 19% who are only willing to pay under $50 per night.

Based on this data, 53% of the general population has a fairly set ceiling when it comes to what they’re willing to shell out on travel accommodation — which indicates that, overall, consumers are looking to stick to their budgets.

Therefore, it’s fairly unlikely that they’ll start spending a great deal more for transportation, either. Perhaps “ revenge travel “ will have to wait for 2023?

3 Tips To Keep Travelers Happy This Summer

Encouraging consumers to book services or buy products from your travel brand might be a tall order this summer. While some consumers are still hesitant to travel due to the pandemic, others may not be willing to go over budget to meet increased costs.

However, there are still a few things your brand can do to try and keep travelers happy this summer — and, hopefully, bring in business.

1. Be Transparent To Retain Trust

Look, if you have to raise your prices just to stay afloat, consumers will understand. That’s not to say you’ll win their business, necessarily — but, if you’re open and transparent about why you need to raise your prices, they’re more likely to be more forgiving.

According to Sprout Social, 86% “of Americans believe transparency from businesses is more important than ever before.” At the heart of it, consumers are looking for brands that aren’t afraid to be honest — plus, it’s one of the best ways to foster emotional connections.

Furthermore, Sprout Social found that:

“When brands are transparent and develop a history of transparency, nearly nine in 10 people are more likely to give them second chances after bad experiences and 85% are more likely to stick with them during crises.”

Now, increased costs due to rising oil prices might not count as a “crisis” per se — but it does put many travel brands in a tough position, as brands need to find selling points other than low prices to attract customers.

But perhaps more importantly, being honest with consumers fosters trust. So, even if a customer isn’t thrilled by increased prices, if they understand the reason behind it because your company chose to be transparent with its reasoning — your brand is far more likely to retain consumers’ trust.

2. Consider Brand Partnerships With Public Transport & Bikes

If you’ve ever booked a flight or a hotel, you’ll be familiar with the deluge of discounted offers for rental cars which you’re typically presented with.

This is due to the fact that many airlines have long-term brand partnerships set up — where they are rewarded to promote certain rental car companies’ services to their customer base.

Although this has been a lucrative setup for many years, it may not be the ticket for summer 2022. While the discounted partnership rates were definitely a draw before, they might actually serve as a barrier to booking, thanks to the current uber-high prices.

Instead, airline and hotel brands should consider setting up additional partnerships with local public transport companies or bike brands. First, both of these options are far less expensive than rental cars — and by showing consumers how they can save money, they might be more willing to book a trip.

Second, they also represent more eco-friendly options. This is a huge draw for modern, sustainably-minded consumers — which is a fast-a growing cohort. According to data from Booking.com, in 2021, 83% of travelers “believe sustainable travel is important worldwide.”

And this number will only continue to grow as younger generations become more financially independent. So, if you want to attract travelers this summer, consider setting up brand partnerships with less expensive, more eco-friendly transportation options to show your support for sustainable travel.

3. Focus on Fostering Strong Brand Relationships

The last two years have been extremely tough on all sorts of brands — but the travel industry was hit particularly hard. From stay-at-home requirements to travel bans, not many people were jet-setting around the world between 2020 and 2021.

As an industry, travel brands have historically put a great deal of stock in offering “the best deal” — luring consumers in with low prices and all-inclusive deals. But no matter how highly-discounted flights were or how many crazy deals hotels offered — it wasn’t enough to make a real difference during the pandemic.

So, how were travel brands able to maintain a connection with consumers? Through fostering strong consumer-brand relationships.

And, once again, travel brands have been met with a challenge — how to convince hesitant consumers to use their services in spite of rising costs. While a good deal might help, it will take more than saving money to win over travelers this summer.

This is where fostering a strong brand relationship will come back into play. Instead of sending a barrage of emails with “one-time special deals”, consider how your company can improve its brand experience.

Take a deep dive into what your target audience is looking for — what their likes, dislike, painpoints, and needs are. From this information, you can tailor your brand experience to meet — if not exceed — their expectations.

And the brand experience starts from the moment they discover your company. From their first time on your website to their fourth visit to your hotel, you need to use consumer data and insights to provide them with the best experience possible.

Only when consumers feel as though your brand understands their needs and delivers on their expectations can a truly strong brand-consumer relationship emerge.

So, this summer, instead of trying to lure consumers in with low fares, consider how you can improve your brand-consumer relationship.

Final Thoughts

We’re not going to lie — this isn’t going to be a fun summer to be a travel brand. On top of recovering from the major hit dealt by Covid-19, the travel industry is also contending with record-high oil prices.

So while this summer may not be the comeback many travel brands were hoping for, there are still ways to appeal to travelers and improve your brand experience. And if you want to know exactly what it is your target audience wants from your brand, then we’d suggest setting up brand monitoring software.

Offering access to accurate, reliable consumer data, brand tracking software makes it possible for companies to tailor their offerings and brand experiences to what consumers actually want. Now that’s a game-changer.

Originally published at https://latana.com.

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Latana

Latana

Latana. AI-powered brand tracking helping brands make better marketing decisions via world-class, scalable insights. https://latana.com/