Together with Jörg Kablitz (Managing Director, PayPal DACH), Dr. Markus Heller presented the Travel Compass 2022 from PayPal and Dr. Fried & Partner at the ITB on 9 March, the day it was published. While Dr Markus Heller reflected on the pandemic-related market changes in terms of booking, demand and payment behaviour from the publication, Jörg Kablitz added exciting insights from PayPal industry comparisons. In particular, it became clear what opportunities the current situation offers for the tourism industry.
Booking status, trends and online shift
Due to the pandemic, the tourism industry has faced major challenges in recent years, with booking volumes subject to strong fluctuations and the volume of holiday travel falling by almost two-thirds during the crisis. Fortunately, at the beginning of the new tourism year, there are signs of recovery. As of the end of January 2022, the booking volume has almost reached four times the level of the previous year in terms of revenue, and incoming bookings in recent weeks have almost returned to pre-crisis levels.
The travel restrictions, some of which were announced or lifted at very short notice, have reinforced the trend towards short-term bookings in recent years. Flexible fares, accommodating cancellation policies and a wide range of rebooking options have also led to booking and travel behaviour among consumers that demands significantly more dynamism and flexibility from the travel industry than before the pandemic.
Payment processes are also directly affected by this. According to the study results, the means of payment is an important factor in the booking process, starting with the customer’s desire to be able to make a payment that is as simple and seamless as possible, to the security of the payment processing, and to support a quick booking decision.
Payment processing and the resulting opportunities for the industry
The study shows that payment also plays an important role in ensuring a positive customer experience. It thus has an influence on the conversion rate, which can be used to measure and control purchasing decisions. The high level of customer satisfaction determined for online payment services has a positive effect on booking behaviour, supports the absorption of price sensitivities and thus makes a relevant contribution to sales success.
In addition, the integration of modern online payment services offers the opportunity to tap into new target groups. In particular, younger target groups are attracted by the high level of convenience offered by modern payment methods, and offer growth potential in these segments.
From a company perspective, the high degree of automation involved in integrating online payment services plays a relevant role in reducing process costs, not least because of the possible elimination of the dunning process on the merchant side. The positive overall picture is rounded off by the often lower risk of payment defaults and fraud attempts.
Status quo and reasons for the choice of payment method
Although bank transfer and credit card are still the most frequently used means of payment when booking holidays, PayPal, in third place, is already used more frequently than average.
A look at the reasons for choosing a means of payment shows that, from the customer’s point of view, security, simplicity and trust are crucial. These attributes are particularly attributed to payment methods such as credit cards or PayPal as online payment methods. A fast and convenient payment process also plays an important role in the choice of payment method and compensates for the financial costs for the merchant for the payment methods mentioned. According to customers, trust in established and reputable payment service provider brands even outweighs the price of the trip and indicates price willingness that sales should take advantage of.
Conclusion
The Travel Compass 2022 by PayPal and Dr. Fried & Partner shows how the coronavirus pandemic has changed demand, booking, and payment behaviour in the German holiday travel market. In view of these developments, online payment services offer new opportunities for a variety of tourism distribution approaches: from tapping into new target groups and increasing the automation rate to higher conversion and sales opportunities through a lower risk of fraud and payment default.
You can download the Travel Compass 2022 here.