Always orbiting: How consumers plan travel experiences now

0:00If I were a CEO today in the travel industry, I would start to think about if you want to keep the bookings that you have, building that emotionality, the story, the feeling around it, I think will become increasingly important. Because I think you're seeing more and more and the tools have empowered people to revisit on a continual basis and people are taking that opportunity to change.

0:20Roberta Fusaro: That's McKinsey partner Alex Gersovitz. He's talking about how the sheer number of travel influences and options have changed the way people plan and book their trips. So instead of committing to a choice, travelers are changing their minds if something better comes along. Alex joins me and McKinsey partner Margot Constantine to talk about what that means for hotels, airlines, and travel platforms. Okay, Roberta, be honest. when you're making your travel plans do you look and then book and then look again so i do i i i book the hotel and then i second guess myself and i spend two more weeks checking whether there was a better option and yeah it's a it's a constant um it's a constant push-pull in my brain yes so So I thought this was so interesting in the research.

1:17You are, as you may know, in the majority. Eighty percent of travelers continue their research after they book. It's called orbiting.

1:28Roberta Fusaro: Yeah. No, I was really, I was fascinated by that point too. We were speaking with Alex and Margot. So you're not alone. This is the McKinsey Podcast, where we help you make sense out of the world's toughest business challenges. I'm Roberta Fasaro, your host for today. Alex, Margot, thanks so much for joining the podcast today. Thanks for having us. Pleasure to be here. We're talking about some research today about the kind of the infinite travel choices that consumers have today. You've done a deep dive into how people plan and book travel. What surprised you most about how different that process looks today?

2:07This whole sort of traveling thing used to start with, at least there was an intent to start with. That's not the case anymore because just intent is always on. It's become such a big part of people's lives. We see survey after survey. People just want to travel more and more. Younger generations want to travel more and more. It's becoming a higher and higher share of disposable income. That's an absolute secular trend. And as a result, it means intent is just always on. And so what we're seeing is rather than having some sort of funnel and journey from I want to book something to then I research to then I make a decision.

2:47There is more of this notion of always orbiting, always exploring multiple destinations, multiple inspirations at the same time. The second one is 60 % of travelers say it's much easier than before to research and find good options. they're also spending more time researching it's easier to find information and i'm spending more time on it which is quite a paradox and that's partially because they they just enjoy it 80 % of travelers just enjoy the researching as part of the experience itself you want to enjoy the trip before you go just as much as when you go there you feel a greater burden on choosing well and we found that this gives anxiety to about 50 % of travelers, we definitely feel a burden of choosing rides.

3:37Yeah, I was surprised by that too. We asked a question of travelers. If you could be presented with three different things. One is a somewhat limitless list of 500 options for your trip, a curated set of 10 options, or just one single option and a recommendation saying you should do this, which would you prefer? And I was surprised it was about 60 % of people picked that middle option of say, I don't really want the limitless 500 list. I also don't want you to tell me what I should do, whatever sort of recommendation, inspiration, LLM you're using or AI based tool you're using. I want 10 curated to me, tailored to me ideas that then I can sort through, sift through.

4:19I think so much of AI has been about efficiency and doing things as quickly as possible. And clearly for travel, there will always be this more emotional exploration element that I think is really important. And you can see clearly as a trend throughout the work. Right.

4:35Roberta Fusaro: One point that I wanted to get back to, Margo, you talk about the always on source of inspiration for travel. I was just reading something this morning about a trend called set jetting not jet setting but set jetting that has to do with people being inspired by their favorite TV shows to go to a different location. I'm curious about the role of social media media in general. How has that changed the way that you know people are thinking about trips and and and where a trip actually begins. It goes back to this notion of it used to be that inspiration followed intent. You wanted to go on a trip and then you searched.

5:20Now ideas precede intent, which is what makes it really hard for travel companies. How can you capture a customer that has not even decided they want to do anything yet, right? And so what happens is definitely social media is the number one spark. it's cited by 60 % of travelers as one of the top sources even 70 % of travelers say it made them consider a destination they would not have considered before so it's big on intention but I think that the more interesting part of this is they were not even researching this is not research when they really switch gear to researching comparison they go to AI they go to OTAs they go to, they were just being entertained.

6:04And so it's not just social media, it's TVs, it's movies, and it's not your own channels as any travel player in that ecosystem. A quarter of the people we surveyed go to OTAs or supplier site for inspiration. So how do you really find a way to be in that right place in this entertainment almost journey, which much precedes intention is the name of the game. To the set jetting point, I think it was about 25 % of people listed seeing a destination in a TV or movie as a top three source of inspiration. Margot said, and it's true, social media is number one. And but that a quarter of all people said, I saw a place in a TV or movie and that served as a top three source of inspiration is pretty powerful.

6:59How you sort of build more excitement, build a brand, build content around your destination is a tool that's clearly inspiring people to take the trip and go to the place. And I think that's if you were asking me to forecast the future, probably going to become more and more of a trend going forward. And you've seen it in content that gets produced over the last couple of years has sort of featured these destinations. that then become themselves hotspots.

7:23Roberta Fusaro: It's amazing. And actually not surprising, given some of my conversations with friends about their travel choices. With so many sources of inspiration, information available, how are consumers thinking about trust? How are travelers deciding who and what to trust as they're making their travel decisions? I think it is really the question to solve as you think about adoption of AI, not just as a source of inspiration in the travel industry, but as a source of conversion and then loyalty ultimately in the travel industry. Today, the number one trusted source is a family member. I think over time, as we've done this work, you start to see AI and LLM tools rise in trust as a source of inspiration.

8:12I think people are slowly understanding One, how to use the tools and sort of incorporate it into a stack of different inspiration tools, along with more traditional search, along with their friends and families, along with social media. Where I think trust is not yet built and I think is going to take some time to build is on the conversion of would I let an AI tool book something for me. We're still seeing, at least with a pretty strong majority of people, a hesitation there. There's a premium for authenticity and people are just worried they're getting cheated, lied to. Maybe the LLMs are hallucinating.

8:49Maybe the brands are lying. So that coming to your guests in a very authentic way has a huge premium in this environment of constant inspiration.

9:01Roberta Fusaro: So let's get into that a little bit. If I am a hotel CEO or an airline executive or a leader at a travel platform, how do I address the traveler in this sort of new milieu of, you know, lots of information, lots of inspiration and AI, you know, on top of all that? What are some things that leaders in the travel industry could be doing differently to reach these folks and catch them at the right moments in the travel journey? One of the things we haven't hit on is there's a really a new behavior I think we're seeing or a increasingly prominent behavior from AI, which is, as Margot said, people are orbiting around many trips and they sort of go up and down that orbit.

9:49They go from, oh, I'm about to book to, wait a minute, should I switch my destination? I thought what was so interesting is you go two steps forward and one step back, people then book. And now AI has enabled a way to both monitor and continually reassess whether the decision you made was the optimal decision. And I feel this way often of I'll book a vacation or I'll make a more major emotional purchase. And then I'll think, was that the right choice? And I think you're seeing with AI, and it's in the research and report, a much higher rate of saying I booked. I'm going, but now I want to reassess and rebook or I found a lower rate or a different option for travel to get there.

10:30And so if I were a CEO today in the travel industry, I would start to think about to build out the moment from booking to the moment you arrive, either on the plane to take your trip or at the property itself or in the destination, whatever that may be, of really building excitement, building the story, helping them understand what their experience might be, look and feel like, lean into the emotion of it. Because I think you're seeing more and more and the tools have empowered people to revisit on a continual basis. And people are taking that opportunity to change. If you want to keep the bookings that you have, building that emotionality, the story, the feeling around it, I think will become increasingly important.

11:09We find almost 80 % of travelers after booking are still researching the trip. And so not all of this is rebooking and price control, although a big chunk are still checking prices and second guessing. But a big part of it is starting to think about, okay, now that I'm clear on the core of my trip, I have my flight, I have my hotel, which restaurants, which activities, where do I want to go? There's a unique moment to capitalize on what you now own and really engage with the traveler on that exploration. Whether you own some of those restaurants or whether, frankly, you don't, right? But it helps you really lock in that final conversion.

11:50the point I think is not we're trying to say you now need to invest you know hundreds of millions being on every single touch point of every single channel and start your own movie shows and have you cannot you cannot you have to accept you will not be everywhere but do you even know where you are and do you know how you show up in where you are machine readability is a thing and getting into the details of being hyperfactual about what you're offering, whether you're a hotel provider, and then it's about the details of the property, the details of every room, the details of each offering, because LLMs pull on facts.

12:31Roberta Fusaro: As we're thinking about the implications for CEOs, AI is both a source of feedback, and it's also a tool to use to generate feedback. How do they need to manage AI differently? I think it's still really early stages for many of the operators. And so as much as they've all learned the hard ways of how to maximize search engine optimization, the whole geo optimization is still early stage. and really being on top of it and making clear how you show up, against which prompt, with which keywords, and how do your competitors come up, and do you really have a machine to keep learning about this? You need to be open-minded to be on a learning journey on this.

13:18And so one thing we've done, which was quite entertaining, is we've used the same prompt in three LLMs and two AIs of two OTAs. And that prompt was something like, I want to come on Labor Day with my family. I want a room with a view on the river. And it has to accommodate my family. Give me five recommendations. Now, the single hotel came up five times. Actually, at most, they came up twice, the best ones. And it was a complete mix and match across the five, right? which clearly shows you that all of these LLMs are pulling different types of attributes. And so are you really monitoring that, checking, and learning?

14:05It's a learning journey, and these tools keep evolving, and do you keep learning with them?

14:10Roberta Fusaro: Right, right. Are there examples of companies that are getting it right? One of the interesting experiments is if you look at Four Seasons and what they've done with White Lotus, what it has achieved is their brand awareness and consideration in every luxury brand survey you can get your hands on has completely gone through the roof and so there is something about even in the luxury segment how tv has played to awareness and consideration As a big fan of the White Lotus, you watch the show, not a single time do they say four seasons in the show. That much is, to me, evidence of people Googling it saying, where is this place?

14:56I want to go there. I think the theme of that is something that the travel operators can extrapolate from and can build on. I think the interesting part of it is, are you experimenting enough without putting in millions? I think that the whole creative content generation is a completely underrated role in hospitality. Are you being hyper-creative in how you show up in different places, running experiments, and of course, then tracking impact of those experiments? One thing pretty universally no one has made progress on yet, and it's an emerging trend. One of the pain points we saw in the research was this concept of having to start over after research.

15:41And if you're moving up and down this orbit of travel, it's really frustrating as a traveler to be like, oh, I built so much context with whatever tool I was using to research trips. I went away for a few weeks. Now I want to come back to it. But I'm now at the operator's platform versus a third party LLM tool. Or I'm in an OTA's tool versus some other tool I was using. And you have to kind of refresh its context. I think if someone can solve, and this will be very challenging to do for many of the operators, the context problem. If people are going to orbit around trips for a long period of time, keeping that context of what trips they were thinking about, what decisions they've already made, refreshing why they made those decisions, I think is going to be increasingly important.

16:26And a big challenge is AI gets more and more used. I mean, today it's okay, but five years down the line, you cannot imagine any traveler having the patience of entering every single person's passport details and date of birth in the booking of every single step of the journey. At some point, this will become something that travelers expect that they just don't do anymore.

16:51Roberta Fusaro: The research also points to this kind of hesitancy to use AI as an agent to go ahead and book for me. Do you think that will, I mean, what will need to change in order for that to improve or to be used more often? So interestingly, as much as very few travelers were using it, a lot of travelers used it to research, compare options, get smarter, and so on, very few, less than 20%, were using it to actually book today. But most people were open-minded to doing it going forward. But also more importantly, that there are some sort of recourse in human being on the other side. So there was some sense of if I book with AI, maybe I can cancel or change.

17:36or what if I have a problem? Who do I call if I have a problem? I wonder if, you know, if I give it all over to AI, where's the enjoyment for me?

17:46Roberta Fusaro: Sort of like, how will I then kind of revisit that experience in Istanbul or that dinner reservation? I couldn't agree more. I was reflecting back. I knew sometime this past summer, I was going to have a week in between project work that I could take off sometime in the spring. And so I started a chat and one of the tools that I used in my personal life of just, Hey, here's what I, about the time I think I'm going to have time to go on about a week of vacation. Here's the things I think I want, help me come up with options. Um, and it gave me a pretty curated list. I started circling on Iceland as the, the, the destination.

18:23And I was, this trip was originally for June. Um, and it would have been beautiful. One thing led to another and work got in the way. So that trip ended up getting delayed until, um, mid September. And I still have that same chat where I said, Hey, Iceland's probably We're not going to work anymore. Parameters are still true. I really want to make sure there's a walkable destination. I want to make sure I can see something I haven't seen before, great food, a couple other parameters. Help me figure out another destination and ended up sort of curating a new list that I ended up going to the big island of Hawaii.

18:53Met all the criteria and it was really interesting to scroll back up through that chat, which kind of lasted over the course of maybe five or six months. And it built me an itinerary when I was there and it said, you should really go check out this thing. And I reported back to it and I started treating it like a friend. I was like, that was a great recommendation. So it learns me a little bit more. But that was to me one of those orbits of where I was like, sure, I was going to go to Iceland and then wait a minute, let's take a step back. And now let's move forward again. I think it was interesting to see that play out as we were doing this research in my own personal life and in the real world.

19:22But look, I think you're asking the right question of we do see people want to spend time indulging in the research. That is absolutely a trend that is year and year increasing. and it's part of the journey and it's part of the trip. And so it's interesting because you're almost sort of stuck between two types of tools, right? You have the Instagrams and TikToks of this world, which are hyper-visual, hyper-inspirational. And then you have your LLM types of tools that are hyper-text-based, very informative, very low visual. I'm clearly a millennial, so I'm referencing Instagram, But there's many other inspiration platforms out there.

20:03Roberta Fusaro: Margot, you mentioned being a millennial. Do the findings in this research, do they span generations? Were there any generational differences in what you saw? We've seen in the research very big difference, for example, with families. And that de facto would be a little bit more on the millennial side of the equation. being much more worried about booking wrong. I definitely fall in that category of being sort of hyper researching of, but is it really the right room? Is this really going to work? And how, you know, will this work with the kids and with my husband and this and this and that. And so just because it's a bigger group and there's more consensus and compromises.

20:50And also frankly, because the data is a lot less machine readable. It's very, very difficult even today to understand whether you're booking a room that actually fits one kid or two kids, or do you need interconnecting, or da-da-da-da-da, right? It varies a lot depending on the generations, the group, the type of vacation. By the way, also if it's business travel or leisure travel. So there's a big segmentation to this that is worth, of course, giving the nuances up.

21:16Roberta Fusaro: After spending all this time studying how people plan vacations, have either of you changed the way that you go about planning a trip? I don't know that I've changed, but I think it's been heartening to hear is that, and where I started, I suppose, is that I'm normal and that I really enjoy the planning process. It's a big part of what I love about travel. If you don't go in our lifetimes on as many vacations as I think we all wish we did, and I think finding those moments of emotion and inspiration is common and I think really important, and I don't think we'll lose that in an AI world. So I'm leaning into that, I suppose.

21:55Roberta Fusaro: Alex, Margo, this has been a great conversation. I feel very seen. I feel like you have put into words the kind of the habits that I have been expressing low these many years. So appreciate you taking the time. Appreciate the research. Thanks so much for joining the podcast today. Thank you. It was a pleasure. Thanks for having us. We got to go plan a trip now. Definitely. Definitely.

22:22Thank you.