Global travel industry gross bookings reached US$1.6 trillion in 2017, making it one of the largest and fastest growing sectors in the world, the 2018 Travel and Hospitality Industry Outlook published by audit firm Deloitte, says.
“Factoring in indirect economic contributions, travel and tourism now accounts for a staggering 10.2 percent of global GDP,” says the report that has the US travel market among the leading beneficiaries of a swelling global traveler pool.
According to the report, a strengthening global economy lies at the heart of industry growth. It says each year, the global traveler pool is flooded with millions of new consumers from both emerging and developed markets, many with rising disposable incomes and a newfound ability to experience the world. “A sleeping giant has truly awakened—the impact of which cannot be underestimated,” it says.
Over the past two decades, the report says, the number of international travel departures across the globe has more than doubled from roughly 600 million to 1.3 billion. The report says many travelers from emerging countries are leaving domestic borders for the very first time, injecting billions of dollars of new growth into the travel economy and helping the industry outpace global GDP. Growth appears poised to continue, lifting the industry to new heights in 2018 and beyond, the report says.
The report urges industry players to unlock the power of adjacent spaces to earn big.
“While hotels and airlines represent the bulk of industry gross bookings, most travelers do not take trips to sit on airplanes and spend time in hotel rooms,” it says.
It urges travel suppliers to think outside the box, and find ways to be more relevant to their customers across their travel journeys. “For many, this means looking outside their core competencies like flights and hotels, and exploring the power of adjacent spaces,” it urges.
According to the report, tours and activities represent another big opportunity for travel brands to leverage adjacent spaces. It says while the travel industry often gets preoccupied with the big sectors (hotel and air), spending on activities is often overlooked even as it’s projected to reach US$183 billion by 2020. It says hotels and online travel players have an enormous opportunity to integrate tours and activities into their digital ecosystems.
According to the report, tours and activities has the potential to give travel brands an entirely new lens on their travelers’ preferences and interests even though the sector has largely been dismissed. The reasons being; the market is incredibly fragmented, lacks standardization, and is digitally inept.
“It’s comprised of a long tail of small suppliers, more than half generate less than $250,000 in annual revenue.
It adds players in the sector still power their businesses with phone calls and paper ticketing.
“In fact, more than 80 percent of gross bookings are made offline,” it says, adding that the sector has yet to undergo the digital transformation needed to centralize inventory and make online distribution possible on a global scale.
But the report allays fears, saying that these market conditions are changing quickly.
“Digital tours and activity aggregators are taking on the problem, with a select few making some very good progress,” it says.
For travel brands, the right partnerships in the tours and activities space could be a key stepping-stone to bigger ecosystems and driving experiences for their guests beyond the walls of their properties and core offerings, it states.