Get ready for the “neo-frugal” traveler

Consumer confidence is as unstable as actress Lindsay Lohan and travel providers should be prepared to meet the new needs of the “neo-frugal” traveler, travel experts say.
 

“We are dealing with a very scared consumer and that uncertainty will continue because the economic environment is not stable,” said Henry Harteveldt, a long-time correct predictor of trends at Forrester Research who is usually credited with the “neo” term.
 

The signs are everywhere: The tendency these days even for luxury travelers is to brag about how much they are saving, not spending.
 

The media has also caught the trend: One example: The New York Times starts a popular column called “The Frugal Traveler.”
 

So what do travel providers do to meet the new demands?
 

"We’re in a period of neo-frugal chic," said Harteveldt, vice president and principal travel analyst at Forrester Research. He added:
 

"The traveler who for years has been going to the same five-star resort and paying US$2,000 a night for a private villa will now ask the resort’s manager, ‘What do I get with that? Breakfast? Wi-Fi? A car to pick my family up at the airport?’ Everybody wants something extra."
 

That’s the case because in the past few years, savvy travelers in a buyer’s market have become accustomed to flexing their new muscles.
 

Companies coping with the new type of traveler will have to spend more time on mobile marketing.

Some experts predict it will become the most important tool for travel marketers within just three years. It currently represents just five percent of online travel marketing budgets.
 

Mindsets will also be forced to change. Smart resorts and hotels are abandoning the idea of having every luxury imaginable — from 24-hour concierge desks to lavish breakfasts — in favor of specific needs catering to specific travelers. A la carte pricing or paying only for what guests use is getting to be the “norm.”
 

One outcome of the new frugality: the rise of private-sale sites that often offer discounts of up to 70 percent at high-end hotels and resorts. Sites such as Jetsetter don’t require membership dues and often limited the sales to a time frame such as two days.
 

Travelers of all types (not limited to leisure) tend these days to look for the best deal but at the same time: “Leisure travelers say value, reliability and past experience are equally important to price,” said Hardeveldt.
 

Price by itself has largely been abandoned as the only consideration in travel buying, experts say.
Hardeveldt and other experts say travel buyers are also willing to pay more for products that they see as saving them time and booking hassles.
 

Because of their perceived value, vacation rentals will be a very popular lodging choice in 2011, with 47 percent considering a stay in a vacation rental home, according to a TripAdvisor study.

Consumers are hedging their bets against events or circumstances that might blow their budgets, said Alexandra Smith, global trends analyst for Mintel International Group in Chicago. “It’s this defensive mindset around spending.” What that translate into practical terms is increased sales of divorce and wedding insurance, which covers the cost of splitting up or the chances of rain, say, during that “special day.”
 

In business travel, budgets may not return to pre-2009 levels but MICE participants will welcome companies that offer value propositions such as reduced food costs and free add-ons of services that were previously paid for.
 

All signs are that the incentive meeting market is coming back but studies show many companies are cutting back on the number of participants and looking for creative ways to continue such meetings at reduced costs.
 

By David Wilkening
 

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