Will virtual reality save or shrink the travel industry?

15 Aug 2016

  • Marketing Technology

The brightest minds focus on travel as we explore how VR going will change the travel industry.

Virtual reality (VR) and the travel industry are a match made in heaven. What better way could there be to experience far flung destinations, luxury hotels and even meeting spaces than VR? Apart from, well, actually going there which raises a pertinent point. Does VR have the power to replace the physical act of travel thus shrinking the very business it’s currently being used to promote?

John Mackenney, General Manager of digital transformation for Tourism Australia, says no. “When consumers plan holidays these days, they have access to so much information. There is such a proliferation of content. The ability of VR and 360 video to be able to give people a true experience of what it might be like is more of a determining factor. It’s more likely to inspire them than have them sit on their couch and say, ‘Yeah I’ve done that now’,” says Mackenney.

Ryan Bousfield, Director of Wolf and Wood, a VR studio in the UK agrees. He says: “Virtual reality can only fool so many senses. You might want to go to Miami, but you're not going to get the overall feel of the place without the smells. Obviously you can recreate the sounds to an extent, but then the difference in weather is important, certainly for British people going on holiday.” Instead Bousfield sees it as value-adding to a vacation experience. He says: “Rather than simply going to Pompeii, you could use virtual reality or augment over the top of the ruins to see what Pompeii was like 2,000 years ago.”

But before we get to that point, there are already plenty of examples in-market where VR and 360 video are helping consumers hone in on a destination or experience. Since launching 360 video on the Tourism Australia website, there has been a 67% lift in engagement across the site. Further afield, the Thomas Cook virtual holiday experience created by London production studio Visualise VR, is allowing prospective customers to visit the sights of New York, Singapore and Egypt in full 360 video. Available at Thomas Cook Concept Stores in Germany, Belgium and the UK, the 'Try Before You Fly' scheme generated flights and hotel bookings of more than $17,000 and 40% return on investment in its first three months alone. The service was also responsible for 190% uplift in New York excursions.

Based on these examples, VR doesn’t look to be killing the travel business anytime soon which must come as a relief to many in an industry that’s already facing large scale disruption as tech-based players such as AirBnb, a business valued at $US25 billion, start to dominate the space.

Daniel Kerzner, Vice President of Marketing at Starwood Hotels, EAME, says the use of 360 video is helping to deliver serious conversions for the bookings of event and meeting spaces. “We've definitely seen good results for meeting planners converting inquiries into bookings based on the meeting space being appropriate for their needs,” he says. From Kerzner’s perspective, it’s also useful for hotels undergoing renovation or new properties allowing prospective visitors to get an experience of what their stay will feel like before handing over their hard-earned cash. In that sense, though, Kerzner is referring to renderings of properties as opposed to actual virtual experiences. As such, it’s worth defining VR.

“At the lowest level, VR uses an array of sensors to precisely track the movement of your head,” writes tech journalist Will Smith in Wired. According to Smith, it’s impossible to avoid breaking this rule with 360 video which means it’s not exactly VR. In fact, he calls it the amuse-bouche of VR, a sampler of what VR can offer, at best. He groups Google Cardboard into this category.

VR, in the way Smith defines it, is certainly less accessible for the everyday consumer with headsets costing hundreds of dollars and requiring specialised computer systems for their usage. Those in the know say this sort of VR is unlikely to achieve mass market penetration with research firm Tractica predicting around 200 million consumer virtual reality head-mounted displays (HMDs) will be sold worldwide by 2020. While it sounds like a decent number, by comparison, Pokémon Go’s potential market is two billion devices.

It’s no surprise that presently travel marketers are focusing on 360 video and more accessible VR variations, particularly on mobile. “The mobile device has become such a great platform to experience different forms of virtual reality and it's on the consumer's device on the consumer's terms,” says Kerzner.

Wolf and Wood’s Bousfield says the infancy of the technology leaves it open to confusion. He says: “You get people saying they’re doing virtual reality when realistically they're just doing 360 video, which is quite a different thing from a design point of view. There's a few similar points about it where you've got to draw the user to look at specific things, but some of the things are quite passive. With VR, there's a bit more depth to it.”

From a marketer's perspective, the use of 360 video works well in conjunction with other marketing activities, particularly in relation to the rich data sets sites such as Expedia have at their disposal. Tourism Australia’s Mackenney says VR can be inserted at different points within the purchase path allowing a more one-to-one communication with those intent on travelling.

Starwood’s Kerzner sees it building on the greatest content pillar for hospitality; photography. He says: “I believe photography is still the foundation of any content strategy. If a picture is worth 1,000 words, perhaps virtual reality is worth 500, but the first one should always be WOW!”

Whether VR is going to play a role in the travel sector long term is hard to predict. More broadly, the trend is certainly getting its fair share of attention. Wolf and Wood’s Bousfield says: “There's a lot of talk about whether people are jumping on the hype wagon and if it's going to hit a trough anytime soon, but we'll see what happens.”


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