Behavioural Economics and your travel programme – predicting behaviours in 2019

Simplicity, fewer and better choices, and a reduction of traveller friction will be significant focus areas for the corporate travel market in South Africa in 2019.

The travel industry will increasingly seek to understand why travellers make specific travel decisions by applying the basics of Behavioural Economics.

A hot topic coming into the New Year, Behavioural Economics is a relatively new field combining insights from psychology, judgment, decision making and economics to generate a more accurate understanding of human behaviour (Harvard Business Review 2017).

Put simply, Behavioural Economics considers how individuals make purchasing decisions, what they will buy and how much they are willing to spend, as well as factors that drive these decisions.

“In a corporate travel programme scenario, the decisions travellers make daily can have a significant impact, not only on an organisation’s bottom line but also on traveller wellbeing, productivity and morale,” says Nicole Adonis, FCM Travel Solutions South Africa General Manager.

The good news is, a well-planned travel programme, with clear policies, compliance and strategies in place, can positively influence travellers to make better choices about their trips and increase the effectiveness of the travel programme.

By understanding Behavioural Economics, subtle changes to travel policies can be implemented to ‘nudge’ employees to behave and choose in certain ways, Adonis explains.

DECISIONS, DECISIONS

According to Richard Thaler, Professor of Economics and Behavioural Science at the University of Chicago, one of the ways to encourage people to make better purchasing decisions is merely to make the good decision easier (ABC, 2015).

Thaler argues that this can be achieved by using default settings. In the case of a travel programme, one example might mean configuring a default setting that drives people to make the most cost-effective or time-effective choice.

“Giving a traveller more options might sound like a positive way to give them more control; however, sometimes, this can become a negative. In business, time is money and the more options a traveller has can lead to time-consuming indecision or decision paralysis. By designing booking tools to offer a limited number of options you can use Behavioural Economics to steer travellers towards your preferred choice,” says Adonis.

One theory is that you can persuade travellers by giving them a choice of three hotels, at three different price points, instead of only two. In this scenario, most people would choose the middle-range priced option, rather than pick the most expensive or the cheapest. The theory is dubbed ‘the decoy effect’: when introducing a third decoy option influences a person’s behaviour to choose the option you want.

“We are recognising that people are lazy and that they take the easy way. So we make the easy way better,” says Thaler.

LESS IS MORE

For most of us, 2019 will bring complicated, demanding and time-poor lifestyles. In this environment, simplicity will be increasingly important for travellers. Adonis says: “This is especially true of business travellers with hectic schedules who want to see travel streamlined.”

Airline passengers now want the ability to use facial or fingerprint technology, to ease the process from booking flights to passing border control, she says.

A survey by the global airline's lobby found two-thirds of passengers preferred a single biometric identity token for all their travel transactions. The study also found 82 percent of travellers want to be able to use a digital passport on their smartphones for as many travel activities as possible. Seventy-two percent wanted to self-board an aircraft; and 68 percent wanted to self-tag their luggage, with electronic tags being the preferred option.

The industry is listening and has started to apply biometric technology to simplify the traveller experience.

British Airways has already boarded flights of nearly 240 passengers in around 15 minutes during a biometric technology trial in Orlando. Passengers merely looked at the camera, and were ready to go; no passports; no boarding passes.

The technology will be introduced in London from mid-2019, with a biometrics trial to streamline the passenger journey through Heathrow from check-in to take-off that the airport claims could reduce the average passenger’s journey time by up to a third. That process involves facial recognition at check-in, bag drops, security lanes and boarding gates, creating a seamless experience.

Furthermore, a survey by SITA, a technology company that serves the aviation industry, found 77 percent of airports and 71 percent of airlines were either researching biometrics or planning to implement programmes to identify travellers using facial recognition or other biometric means.

WHAT CAN TRAVELLERS EXPECT IN 2019?

MORE PERSONALISATION

1. Choice, flexibility remains key for passengers;
2. Technology enhances personal control;
3. Increased automation of airport processes;
4. Real-time travel updates direct to personal devices; and
5. More Wi-Fi connectivity on international flights.

SMARTER HOTEL TECHNOLOGY

1. Investment in ‘smart’ hotel rooms that allow guests to customise features to suit personal preferences;
2. Mobile, voice-activated technology to operate entertainment systems, control temperatures and lighting;
3. Expansion of robot delivery systems such as room service; and
4. Keyless check-in and wireless charging.

STREAMLINED PAYMENT OPTIONS

1. Cardless, mobile and online payment solutions are on the rise.

DISRUPTION IS A GIVEN

1. Travel programmes evolve and embrace disruption to meet traveller expectations.
2. Artificial intelligence automates and enhances the booking process;
3. Tens of thousands of niche travel Apps improve the experience;
4. Big data analytics is enabling further customisation and personalisation;
5. Biometrics and facial recognition technology is speeding up immigration and security processes; and
6. Blockchain database technology is set to revolutionise procurement.