Doing a report for the second time is, in many ways, more daunting than doing it the first time. I don’t want to feel as though I’m just refreshing old data. We first did a travel report in June 2015, but so much has changed since then, not just in the industry but in our ability to analyze our huge travel data set. I decided to use our larger data pool this year to go deeper and give more insights instead of just the facts.
I had to do so in a much tighter timeframe, because our PR team’s feedback from the first report had been that our findings were too late to market. Advising consumers in June that they should have booked their ticket in May just doesn’t help them plan their summer travel. So we needed to put the report out much earlier to be of real value, not just to end consumers but to digital marketers trying to get compelling travel offers out. That meant moving the report up to April.
Faced with the new deadline, I got worried. Being able to use more and broader data is typically a positive — it means you can be more accurate. But what if the additional data showed results that contradicted last year’s findings? When the final report was pulled together, I was relieved to see that my insights from last year were confirmed — even with the larger data sample.
Comparing Apples to Apples
We wanted to give guidance on both best hotel and best flight destination options. To do so, I had to make sure that the units of analysis I was comparing were always the same. For example, it would be incorrect to compare a roundtrip economy flight from Salt Lake City to San Francisco bought 60 days in advance with a business-flight price, because the latter would be much more expensive. I had to factor out business travel, and focus on being able to give consumers advice that’s applicable to them. This was one of my biggest challenges with this report.
Calculating the Formula
Aiming guidance at consumers means keeping it simple, and clear. I had all sorts of complex data on how consumers could decide what the best flight price was, but knew consumers wouldn’t want to go down into the nerdy weeds with me. As an analyst, I always have to weigh my own love of the details with the need to tell a simple story. To do that I needed a straightforward formula. I was excited to be able to create a formula for consumers to know whether they were getting good deal on a ticket. I calculated the average price paid by everyone in the data sample, based on how many days in advance they purchased their tickets (up to 300 days in advance). Then, I divided the average price for each day by the overall average price and did this across thousands and thousands of flights. I was left with a weighted average of the final curve.
There were easily 10 different ways I could have calculated the formula, but I went this route because it was the most secure methodology. Again, I was constantly torn between wanting to capture the complexity of the flight information and producing something usable for the audience. If I had created a formula that included every variable, then it would have been virtually useless for my audience. The formula I created is not perfect, but I think that the beauty is in its simplicity. Know your customer and give them what they need!
If I hadn’t known how to program, then I couldn’t have automated the tasks and probably would have been unable to create the formula since it would have been almost impossible to do manually. Other analysts often ask me for advice on the field, and I always tell them to learn how to program because this exact situation happens often.
Biggest Surprises While Creating the Report
No matter how long you have been an analyst or how much industry experience you have, you are always surprised by something in the report. This year, my biggest surprises with the travel report were that:
- Advance Purchases Don’t Matter for Hotel Reservations: The data shows that there is little effect when you book your hotel rooms earlier. It doesn’t make a difference if you book 10 days or 100 days in advance; the prices are basically the same. It doesn’t mean you shouldn’t book in advance, just that you should check back later to see if canceling and rebooking makes sense.
- The Lowest-Cost Flight Destinations Have the Highest-Cost Hotels: The destinations with the cheapest flight costs also have the most expensive hotel costs. It makes sense. Hotel companies, flight companies — they’re smart. They know how to extract revenue from consumers, and this is one of the ways in which they do it.
- The Best Time to Buy a Domestic Flight Is 90 Days in Advance: Last year, we concluded that consumers should buy their flights 90 days in advance. I was really nervous that our expanded data this year might not confirm my findings from last year, but I was happily surprised when data showed that 90 days is indeed the best time — cost-wise — to buy a ticket.
Impact on My Own Travel Habits
I fly home to Brazil once or twice a year, and I always think that I need to book my ticket as far in advance as possible to get the best price. But, actually, I learned that the best time to buy an international flight is not as early as possible, but rather 50 days before you travel. I’ve marked my calendar for 50 days from my next trip to buy my upcoming ticket.
In terms of domestic travel I’ve always thought that it was cheaper to make the exhausting six-hour drive to Las Vegas from San Jose than to fly. But, I realized that I need to start paying closer attention to the flight costs. If the flight is 800 miles roundtrip, and I’m traveling with someone, it will be cheaper for me to fly, compared with the AAA estimate of 57 cents per mile. I’ve had to question my own travel pre-conceptions.
Insights About Travel to the Brazil 2016 Summer Olympics
Since I’m from Brazil, we decided to include analysis of travel to the upcoming Brazil Olympics. Right now, Brazil is really struggling, and the ticket sales for the Olympics are suffering — the Olympic Committee hasn’t even sold half of their tickets. I know that a lot of people are concerned because of the economy and the Zika virus, but from an economics point of view, this is a fantastic Olympics to attend because the average flight prices are 25 – 30 percent lower than they were last year. That’s a steal. Brazil is a really great country, and I want to encourage Americans to truly consider heading over this summer for the Olympics.
So now that this year’s report is wrapped up, I’m off deep in the numbers of the next iteration of the Digital Economy Project. An analyst’s work is never done. But regardless of the subject, I keep reminding myself that the same principles apply – think about timing, keep an open mind and know your audience. And I’m hoping that next winter, my manager hands me the travel report a third time so I can see how the travel industry has evolved. And most importantly, of course, see if my theories stand up to the test three years in a row!