Étiquette : customer segmentation

The private accommodation rental market has not escaped the tidal wave of online information that brings us to today’s diversified offer on a number of specialized sites. The PhoCusWright study states that, in the United States, the penetration rate of these online reservations has gone from 12% in 2008 to 24% in 2012. The arrival of start-ups in the collaborative economy, such as Airbnb, and the improvement of already well-established sites in this market, such as HomeAway, have helped accelerate this trend.

This trend gave rise to a new generation of renters, or “New Gen Renters,” whose travel behaviour differs from that of travellers who use other types of accommodation. This distinction was made following an analysis of these travellers, that was based on a PhoCusWright study of their online planning and booking habits. The results of that study are described below.

New Gen Renters very active online

When planning their leisure trips, New Gen Renters are more likely to search the Web on a mobile device (32%) or a tablet (29%) than other renters (see Graph No. 1). They also more frequently use other sources of information, such as recommendations from relatives and friends, online advertising and promotional emails. The behaviour of other renters more closely resembles that of other travellers who do not rent private accommodation.

New Gen Renters browse more sites to compare and choose the various components of their trip

All three categories of traveller primarily access the same sources for their online trip planning (see Graph No. 2). Online travel agencies such as Expedia or Priceline came first, followed by search engines and comment sites such as TripAdvisor. However, New Gen Renters browse more sites to compare and choose the various components of their trip. Almost 40% of these new renters use social media, compared to 11% of other renters and 12% of non-renters. This gap also holds true for travel guide sites and online magazines, news websites and private accommodation rental websites – although the latter category is also accessed by a significant proportion (20%) of other renters.

What online content are they looking for?

New Gen Renters have a strong appetite for online travel content (se       e Graph No. 3). They access comments and opinions, professional and amateur photos and videos, and supplier posts to plan at least half of their stays. They are far more likely than other renters and non-renters to view this information on social media.

Inspiration and personalization

The inspirational aspect of the site is very important for this new generation. Indeed, 41% of them look for new trip ideas online, whereas this objective is only shared by 28% of other renters and 29% of non-renters. This group is also looking for a more personalized web browsing experience than the other traveller groups, with 27% preferring a site that saves their personal information in order to recognize them on subsequent visits, compared with 12% of other renters and 9% of non-renters.

New Gen Renters are spontaneous

The “other renters” category books its stays further in advance than other segments: 57% do so at least one month before departure, whereas only 41% of New Gen Renters and half of non-renters adopt similar behaviour (see Graph No. 4). In fact, there are proportionally more last-minute New Gen travellers, as 43% of them book less than three weeks before their trip is due to start, compared to 33% of other renters and 31% of non-renters.

Keen collaborative consumers

According to PhoCusWright, New Gen Renters tend to use collaborative sites such as Airbnb to book their accommodation. This segment is also attracted by a similar approach to getting around: 21% of these avid users of new technology used a car-sharing app during their stay, compared to a fairly low percentage (6%) of other renters, and only 2% of non-renters. They are also more likely (25% compared to 11% and 6%, respectively) to have used app-based rideshare services such as Uber and Sidecar.

Should the traditional hotel market be concerned?

According to PhoCusWright’s probability calculations based on the frequency of travellers’ leisure trips, it seems that each time a traveller rents private accommodation, the chances he or she will book a hotel room within the same year drop by 24%. Similarly, if a traveller stays in two rentals over the course of the year, the chances he or she will stay in a hotel drop by 50%. In other words, the more often travellers stay in private accommodation, the less likely they are to book a hotel room. While this statement may alarm hotel owners, they should remember that, in 2013, only 14% of U.S. travellers rented a private house or apartment, and only 3% booked a room or a bed in a private home. In fact, it was the least popular type of accommodation.

Fundamental shift or passing trend?

Will the advocates of collaborative consumption – largely members of Generation Y – continue to travel this way as they grow older? It is difficult to predict the future, but one thing is certain: their use of the Internet and an array of technological tools is permanently rooted in their travel behaviour. Accommodation providers therefore have no choice but to react – and adapt to! – this enduring trend!

Image à la une: © istockphoto

Renting short-term lodging has become an increasingly common accommodation choice for travellers, made popular by the advent of websites such as Airbnb. A survey conducted in the U.S. by PhoCusWright profiles these users and defines their behaviour as it compares to that of other traveller groups.

Methodology

The web survey was conducted in February and March 2014 among 1,880 American respondents who had made at least one leisure trip during the previous 12 months. To be eligible for the survey, they had to have reserved commercial accommodation and planned the trip themselves. The company identified two categories of traveller: those who rented private accommodation (room, house or apartment), i.e., the renters (17%), and those who booked other types of accommodation for their stay (non-renters; 83%).

Young travellers with a good income

A number of factors separate the renters from the non-renters: over half (51%) of U.S. travellers who rented private accommodation during the previous year were under 35, compared to 38% of travellers who booked another type of accommodation (see Graph 1).

There was also a definite difference in earnings between the two traveller groups: 33% of non-renters had an annual household income of less than US$50,000, compared to 24% of renters. Also, the proportion of the latter group with incomes between $50,000 and $125,000 is higher than it is among non-renters, indicating that, generally speaking, renters are more prosperous than other traveller group.

Renters travel for longer and are more active

Almost two out of three renters (63%) travelled for one or two weeks during the previous year, while only 43% of non-renters were away for the same period of time. Furthermore, the first group made more trips abroad (42%, compared to 31%).

Aside from flights, renters are proportionally more likely than the other group to book several components of their trip (car rental, package, cruise, train, visit). This fact makes them more active travellers, who tend to do more (see Graph 2).

The “New Generation of Renters” – a distinct category

Among the travellers who rented a private room, house or apartment during the past year, PhoCusWright has defined a new category of traveller that it calls “New Gen Renters.” Between 18 and 34, these travellers represent 31% of all renters and see themselves as avid users of new technology.

This group spends more on vacations and travels more frequently. In fact, a typical household in this category allocates an average of US$4,338 per year to travel, compared to US$3,743 for the other renters and US$3,153 for non-renters. Furthermore, 27% of these travellers have made at least six trips during the previous year, compared to 15% of the other renters and 9% of non-renters.

New Gen travel behaviour

Several aspects of New Gen travel behaviour distinguish this group from other travellers, such as:

• They want to explore the destination as much as possible: meet new people and share their experiences with them;
• They are spontaneous, travelling as soon as they have the means to do so;
• When staying in commercial accommodation, they seek out stylish, smaller hotels;
• They like to travel alone or with friends.

Preferred types of accommodation

New Gen Renters tend to spend less on accommodation than other renters, since they are more likely to stay in budget hotels, bed and breakfasts or rooms, or else rent a bed in a private home (see Graph 3).

Note that PhoCusWright distinguishes between two types of rental accommodation: the one where the customer rents the entire residence from which the owner is usually absent (see “private house or apartment rental,” below); and the one where the renter only has access to part of the residence, and where the owner is usually present during the rental period (see “room or bed in a private house or apartment,” below). The latter type can be found on websites such as Airbnb, but is completely absent from websites such as HomeAway, that specialize in the first type of rental accommodation.

Why choose a rental over hotel accommodation?

The three main deciding factors for all renters are that they can find similar facilities and equipment to those at home, that they have more space, and that the rental can accommodate more people (see Graph 4). However, New Gen Renters particularly like the fact that rentals provide more freedom and privacy than a hotel room, that they offer a more relaxed ambiance, and that they are generally less expensive.

How will hotel owners react?

Should hotel owners be alarmed at the prospect of losing part of their clientele to private accommodation? According to PhoCusWright, 82% of non-renters did not even consider the rental option for their trips during the previous 12 months. However, hotel operators would do well to adapt to these New Gen Renters because, although rentals may better meet their needs, they nevertheless use different types of accommodation when travelling.

A second analysis examines the online planning and booking habits of this New Generation, and looks at possible ways of resolving the concerns of the hotel industry.

Image à la une: © BY NC Melies The Bunny