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New kinds of journeys (IRUK 2016)

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The travel industry performs strongly in mobile, evidence in part of the growing importance of location-based offerings.

Even in the age of airbnb, which enables people to rent out their homes, and budget airlines such as easyJet , there’s still a place for more traditional travel agents in the UK. Every year, if only to avoid the hassle of collating travel and accommodation bookings, millions of us book package holidays. Even when we do travel independently, many of us use companies such as Expedia and Opodo to research the best deals.

In this context, it may seem a strange decision not to include travel companies this time around. After all, we included them in the IRUK 500 2015 and, by footprint, Thomas Cook , Thomson , Expedia and lastminute.com would all be in the Top150. So why haven’t we included them?

Principally, it’s because travel companies are service providers. A package holiday, for example, typically involves a travel agent assembling the individual parts of a holiday on behalf of a client rather than owning the ‘stock’ being sold. Should something go wrong, it’s the airline or the hotel that’s responsible for customer service. In this, travel companies are analogous to discount portals such as Groupon , which we’ve also not defined as retailers.

Nevertheless, we’re still planning to conduct original research into the travel sector, to build on what we’ve already learnt. In this context, we’ve found it instructive to analyse the sector because, as with the music industry, the travel sector was one of the first to face the challenge of trading on the internet; and where established companies faced challenges from start-ups that saw the potential of ecommerce – lastminute.com, remember, was a product of the dotcom boom, co-founded by Brent Hoberman and the future Baroness Lane-Fox of Soho in 1998.

So what legacy has this history given the travel sector? According to our research, Expedia achieved the best performance in any Dimension among travel companies. Thanks to its excellent mobile app and its strong mobile web performance, the company would have ranked just outside the Top50 for the Mobile and Cross-channel Dimension. Similarly, Thomas Cook was a strong performer in mobile, while lastminute.com’s app performed strongly.

Having expected to find evidence of legacy strengths, we instead found travel companies performing strongest in mobile. Why? One major reason is simply the overall growth in mobile internet usage. Euromonitor has estimated that, by 2017, 30% of online travel bookings by value will be made on mobile devices. At least a part of this figure will be made up of those using location-specific mobile apps to find rooms and restaurants in the local vicinity. Retailers may want to take note of which travel companies do this best and learn from the techniques employed.

For retailers, the travel industry is also an intriguing laboratory for the effects of the so-called ‘sharing economy’ as, for example, we watch the hotel industry compete against disruptive interlopers such as airbnb.
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