Travel and Tourism Key Findings – Scaling New Heights
2013 was the year that the sharing economy hit the mainstream, mobile travel made major inroads and wearable technology was not just something out of a 1970’s sci-fi movie. The travel industry had much to celebrate as 2013 was a bumper year, with arrivals reaching a record high of 1.1 billion and travel spending crossing the US$3 trillion mark. Airbnb repeatedly hit the headlines with a mouth-watering valuation of US$10 billion, sending global hotel chains back to the drawing board.
Long-terms shifts continued apace with the new world order and Asia was responsible for over a third of new tourism expenditure. Capturing the high-spending Chinese outbound traveller remained a top priority. Online travel continued to dictate the pace of innovation and change, outpacing the offline channel by a factor of 2:1 and accounting for a quarter of global travel sales.
Threats to future performance include the flaring up of geopolitical tensions, as seen in Ukraine and island disputes in Asia Pacific. With great expectations, all eyes are on China as it enters its golden age of travel while attempting to curb its decelerating economy and defuse the shadow banking crisis.
The global hotel industry grew by 4% in 2013 to reach room revenues of US$481 billion, this being the industry’s fourth year of consecutive growth. The boom in budget hotels in China continued while the brightening outlook in Europe resulted in a recovery in luxury hotel development in France and Germany.
It was a memorable year in terms of company activity – Hilton’s IPO, Marriott’s brand launch of Moxy and the acquisition of Protea, Hyatt’s move into the all-inclusive space and everybody’s pursuit of millennials. The year also marked the turning point when the debate surrounding Airbnb went mainstream.
The importance of mobile technology also came to the forefront. Marriott led mobile hotel bookings in 2013 with sales of US$1.3 billion, breaking the US$1 billion mark for the first time. However, it is not just sales that are important for the mobile channel. Companies experimented with how mobile technology can improve the guest experience through mobile check-ins, concierge services and destination information.
Low-cost airlines continue to gain in popularity and share and are pushing traditional airlines hard for business. Latin America is expected to be the key driver of low-cost growth to 2018, particularly in underserved markets outside the three main destinations of Brazil, Colombia and Mexico.
Global economic growth and stability have helped create a vibrant middle-class and strong consumer confidence which is expected to drive the need for more low-cost travel opportunities as people look for cheaper alternatives to regional destinations. Increased urbanisation, rising literacy and improved education levels will also improve the attractiveness of the budget spender.
Peru, Argentina and Chile as well as Indonesia, Vietnam, the Philippines, India and Israel are countries where low-cost players can increasingly make their mark over the next five years.
Online travel recorded another strong performance in 2013 and is expected to continue to register double-digit growth rates over the next five years. Growth is being driven by Asia Pacific, which is rapidly embracing the online channel, with independent travel becoming increasingly popular.
North America and Western Europe also continue to record healthy performances. In online travel bookings, mobile devices are achieving the sharpest growth and are expected to account for over 30% of global online travel sales by 2018.
The OTA sector is witnessing increased levels of consolidation as Expedia and Priceline continue to dominate, while traditional tour operators are changing their business models, giving online travel a more important role, not just in terms of sales but also customer service.
The power of technology players such as Google and Facebook is constantly growing in the travel industry and they are expected to lead the rise of personalised marketing, which will be at the centre of future online travel competition powered by big data analytics.
Huge opportunities for tourism development exist in sub-Saharan Africa, with international arrivals having doubled over 1999-2013 to exceed 36 million visitors. Improved infrastructure, increased flight capacity and trade have all aided this growth.
Sub-Saharan Africa continues to rely heavily on intra-regional travellers, which accounted for over a 50% share of arrivals in 2013. However, emerging markets are assuming ever greater importance. South Africa, China and India are expected to experience the strongest growth in arrivals over the forecast period.
Outside South Africa, domestic tourism remains underdeveloped but new opportunities will arise, driven by rapid urbanisation and increased disposable incomes.
Hotel development in sub-Saharan Africa has become the focal point for many international hotel groups’ strategies, such as Marriott and Carlson Rezidor, as regional economic growth boosts business and leisure travel in an undersupplied market.
Despite being one of the most inequitable countries in the world, a growing black middle-class is emerging in South Africa, with the most affluent “Black Diamonds” driving consumption growth.