How Global Tourism Will Bounce Back After The Pandemic

 

By Craig O

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From opportunities in the spotlight to the rise of digitisation in the hospitality industry, the future once again feels bright for global tourism.

Sponsored by Les Roches Global Hospitality Education

Even for an industry used to sudden shocks, the period since the outbreak of COVID-19 has been seismic for the tourism industry. As is the case with any major market disruption, however, there are green shoots of opportunity for those with the ingenuity and daring to take advantage.

Since the start of the pandemic, consultancy firm Oliver Wyman has tried to cut through the noise to take a research-driven approach to plotting the prospects for travel, tourism and hospitality.

The headline findings make for encouraging reading. The firm forecasts global spending on travel and tourism will rebound strongly in the coming years, to the point that it will have exceeded pre-COVID levels by the end of 2023.

Why so optimistic? It’s all in the numbers, as Bruno Despujol from Oliver Wyman explains. “Our models are driven by three data sources. First, we look at the impact of vaccines and the progress towards ‘herd immunity’ from COVID-19. This is a key measure for forecasting any rebound in business and leisure travel, and those numbers are getting better by the day.

“Second, we’ve been running an exclusive survey since the start of the pandemic, called the Travel Sentiment Survey. This gives us oversight of travel intentions in nine key markets, including the United States, China and major markets in Europe.

“Lastly, the team goes through countless other studies and statistics, which we triangulate with our own findings in order to understand what’s happening at a deeper level.”

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The rise of ‘revenge tourism’

Leisure travel expenditure is set to skyrocket, the upward trajectory given added impetus by the basic human need to reconnect after months of lockdowns. Households will also have more money available to spend on travel, thanks to the billions in household savings which have accrued in the leading economies, during the period in which there was precious little else to spend money on, outside of grocery home deliveries.

“What we call ‘revenge tourism’ is going to become a very strong factor in the coming months, especially if the vaccine rollout continues to accelerate in Europe and the United States,” says Bruno.

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Opportunities in the spotlight

Within this overall market pick-up, Oliver Wyman has identified a series of specific opportunities which are seriously exciting for anyone with an innovative and entrepreneurial mindset, as well as a firm eye on the future.

Among these is the convergence of hospitality and lifestyle – a trend which has already spawned a host of disruptive brands and non-traditional concepts.

“We were seeing the number of brands in hospitality multiplying before the pandemic; now I think people’s hunger for culture, for experience, will play into the hands of lifestyle brands,” says Bruno.

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Digital drives development

Another major opportunity comes from hospitality’s position at the vanguard of digital transformation.

“What I love about the leisure and hospitality market is that – along with retail – it was the first digital market. So digital is crucial to this business, and will remain so,” says Bruno.

“The next development is that we’re going to witness a ‘mega convergence’ of travel, mobility and leisure. The old segments of business and leisure will also converge, driving the growth of the so-called ‘bleisure’ experience, where business travellers take extended trips incorporating leisure. When surveyed, 75 percent of them said they were intending to do this.

“We’re also going to see digital technology transforming the customer experience. There will be more personalisation, as well as more sophistication to create a seamless end-to-end travel and leisure experience. Consumers are very demanding and every time you introduce friction to your service, you will pay the price.

“Artificial intelligence will also come into its own for the way it can power efficient personalisation.”

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Are you experienced?

Bruno sees the next major frontier in the industry’s digital transformation as being the consolidation of experiences within a seamless, end-to-end hospitality model.

“These ‘downstream activities’ – museums, excursions, theme parks… it’s a huge market, and largely unconsolidated. We’ve seen some destination management companies (DMCs), such as GetYourGuide, start to stake a claim, while Airbnb are also doing good things. However, this is still quite limited compared with the size of the overall market.

“We are going to see specialists emerging to take on this challenge and enrich the market in the process.

“Every time you attach an experience to your trip, it creates something different and adds purpose. And the major ‘win’ for hospitality businesses comes with conversion. For example, I’ve been doing some work recently in the home rentals segment and we found that adding a theme park offer to a rental package multiplied the conversion rate by a factor of four. Here, also, digital can really help, by adding a layer of personalisation in terms of the experiences you offer.”

So there is much for the industry to be optimistic – and forward-looking – about. And Bruno had some parting advice to current and prospective hospitality business students who will take their places among the next generation of market players.

“Build your understanding of the new concepts. Even if hospitality is not a high-tech market, it is still a very innovative one in terms of its business models, development of people skills and use of digital.”

“The innovation in people skills is perhaps the toughest to get to grips with; but it’s fundamental to the lifestyle segment, where the human interactions and shared interests are so crucial to the offering. One of the big tricks of tourism has always been to surprise and delight the customer – and so much of what I’ve spoken about is ultimately geared towards that core principle.”

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