New Travel 2016 Edition – Key Insights
Euromonitor International is pleased to announce that the Travel 2016 edition is now live and available to access on Passport. The new research provides the latest data and insights into how the travel industry and its key categories – flows, travel modes, lodging, activities and booking – performed over 2015, with future expectations through to 2020.
Travel flies in the face of fear
Travel is highly susceptible to external shocks and sensitive to geopolitical events. Nevertheless, global travel and tourism demand has grown consistently over the past two decades and shows very little signs of reaching a peak, having doubled in size, and by 2020, it is expected that 1.5 billion international trips will be taken.
On average the world has seen an additional 39 million trips a year, which is equivalent to the population of Poland going abroad every year. What is interesting is that while Western Europe continues to be the most popular regional destination, it has fallen 10% in terms of volume share, whilst Asia Pacific has increased by the same rate.
Source: Euromonitor International from UNWTO
Destinations on a geopolitical rollercoaster
A multitude of factors from terrorism, migration to political uncertainty, have led to a veritable rollercoaster ride for traditional sun and sea destinations, scattered around the Mediterranean Sea, with safer destinations winning out. The substitution effect, where tour operators shift capacity away from troubled hotspots to more stable countries, is visible, with sharp declines in Egypt, Tunisia and most recently Turkey, as the travel industry and consumers shun trouble for the safer shores of Spain, Portugal and Croatia.
Thriving on reinvention
Travel product sales amounted to US$2.1 trillion in 2015 and are expected to reach an enormous US$2.5 trillion by 2020. This puts the travel industry just behind consumer spending on packaged food at US$2.2 trillion and ahead of apparel and footwear on US$1.7 trillion in 2015, although it is still dwarfed by consumer spending on retailing at a whopping US$14 trillion. With leading categories forecast to grow at CAGRs of between 3% and 4% over 2015/2020, the travel industry is poised for robust growth, thanks to its constant reinvention and adoption of new technology and business models.
Global Travel Categories in US$ billion 2015/2020
Zombie offline vs mega mobile
Mobile is a true success story and after having burst onto the scene is stealing share, although mainly from more traditional online devices, such as PCs. By 2016, sales via a mobile will exceed one in five online travel booking sales and one in 11 of all travel bookings, including offline. By 2020, online travel sales will have surpassed 45% of total travel sales, soon to hit the 50% mark.
Yet, mobile has not yet reached critical mass as witnessed by the very low 5% share of online and mobile sales for in-trip activities, such as purchasing tickets for attractions, whilst there is also a huge opportunity in destination. Hotels and attractions are clearly lagging behind, but resistance to online and over-dependency on offline is a major risk, as offline appears more like a zombie legacy.
Short-term rentals give hotels a run for their money
Euromonitor International’s new short-term rentals encompassing peer-to-peer and self-catering reveals the changing dynamics in the lodging market, where hotels – especially budget – are feeling ever-greater competition from alternative formats, such as the sharing economy brands.
Airbnb launched into travel space in 2008 and has trail-blazed a path of consolidation in a previously highly unorganised and fragmented category, aided by its online business model, in which it has rapidly gained global scale. Online penetration for short-term rentals is already over 50%, with hotels lagging behind at 36% in 2015, with much ground to make up.
Hotels vs Short-term Rentals Round Two
The future is data
Technology drives growth for travel brands that invest in their online platforms, and was instrumental in the success of LCCs, OTAs and most recently peer-to-peer.The volume and velocity of data available to companies will speed up exponentially with advances in smart technology on smartphones, wearables and the Internet of Things. Combined with artificial intelligence, travel brands will deliver greater personalisation to consumers in real-time micro moments.