The Future of the Travel Industry? (Hospitality Marketing Link Digest)
For a long time, the hard-working staff here at Thinks Global HQ produced a regular Hospitality Marketing Link Digest, featuring top stories along with some analysis on what those might mean for your business. Then, for a shorter, but long enough period, we didn’t. Given all the change all of us in the hospitality industry are living through, it seems past time to bring it back. Without further ado, let’s dive into what’s worth knowing. The focus this time: Predictions around the future of the travel industry.
What’s going to happen to corporate travel?
Simple Flying rounded up a series of stats from Delta and why the airline is not worried about the future of corporate travel. Those stats include:
- “40% of the airline’s large corporate customers expect to be fully back to 2019 travel levels by 2022
- 11% expect to be fully back by 2023
- 42% were unsure and needed time to make those decisions
- Only 7% of customers said they were never coming back to 2019 levels
- 51% of its corporate customers should be back by the end of 2023– with the bulk of those customers coming back in 2022”
Those number represent a mixed bag. On the plus side, that fact that Delta expects most business travel to resume is a good thing. Let’s hope they’re right.
The downsides of those stats of course are that:
- The single largest share in Delta’s numbers aren’t sure when they’ll start traveling again
- And Delta isn’t expecting to see that recovery until 2022… or 2023
Another troubling number? The 7% who “said they were never coming back to 2019 levels.” 7% of business travel represents hundreds of millions of dollars of contribution to not just travel, but the broader economy as well — and a huge share of business for many city center and conference hotels. Hotel sales, marketing, and revenue managers are probably thinking about this already, but it means we’ll need to find new sources of business if those numbers hold up over time.
The future of events?
If you’re interested in the events industry and not reading Monique van Dusseldorp’s Future of Events newsletter, you owe it to yourself to give it a look. Van Dusseldorp’s deep experience and research provides incredibly useful insights into where events might be headed. And listening to those insights may provide a better understanding of when conference and event business may return. Well worth your time.
The future demands a "backyard and bundle" or "local, loyal, leisure" strategy
Numbers like Delta’s and insights like van Dusseldorp’s demonstrate that business travel isn’t likely to rebound soon. And that’s why a "backyard and bundle" strategy — or what we sometimes call a “local, loyal, leisure” strategy — must play a key role in driving hotel demand for the next handful of months… if not years.
- Local. Of course, the decline in air traffic means focusing more on drive market for your revenue. As Delta’s numbers indicate, we may not reach traditional levels of business travelers flying for the next year or two. That doesn’t mean that no business travelers are coming. It just means that they’re more likely to be from nearby. And ongoing low daily TSA throughput numbers suggests the decline in flight demand is true for leisure travelers too.
- Loyal. When talking about “loyal,” I don’t just mean those market segments that have been traditionally loyal to your property, but those that you can expect to contribute meaningfully to your business for the next two to three years. Note, those may represent very different groups of travelers. That’s OK. But that means how you attract those guests may need to change.
- Leisure. Leisure, of course, is exactly what it says on the tin. Many hotels are going to need to base their revenue on a higher percentage of leisure travel than they’ve traditionally relied upon, compete more effectively for your share of the lower volumes of business travel, or, most likely, both.
Brian Solis on the future of travel
If we’re talking about the future, it seems worthwhile to listen to a futurist, no? The amazing Brian Solis offers up an outstanding presentation, appropriately enough, about the future of travel and tourism in a post-COVID world that’s well worth watching. As Solis points out, we’re not returning to what we knew. Instead, as hotel marketers we must think about where we want to be once we get on the other side of the pandemic. Solis’ key quote:
“This isn’t a race toward normalcy. It’s a moment of transition and reflection to build the future we really want.”
This very much aligns with our point of view. Our founder and president Tim Peter wrote a piece for Hotel Recovery 2020 called "What goes back to normal? Nothing" that noted,
"Digital leaders are responding to the world as it is, not as it was. How guests will browse and book travel post-pandemic — which behaviors will last — is outside your control. What you can control, though, is how you adapt, how you react, and how you transform your business. Remember, your mantra for 2021 is that there’s no going back; you can only go forward."
What will the future look like?
We’re in a new era for travel. A recent "2021 State of the Industry" report from AHLA [PDF link] suggests that hotel revenue will reach only $110B in 2021, just 65% of 2019’s level. And occupancy is forecast at just 52%, down from 66% in 2019.
Those aren’t great numbers. But, they shouldn’t discourage you. The current data is changing every day. Early booking patterns suggest that we’ll see increasing periods of optimism, demand, and growth throughout the year as vaccination efforts progress. The most optimistic forecasts even think summer 2021 travel between the US and Europe may be an option.
Yes, there will undoubtedly be setbacks. But the worst of the pandemic is likely behind us. We’re (slowly) working through this. Recovery is on the horizon. Focus on being ready for guests when they’re ready for you. Lean into your digital assets. Stay positive. Stay safe. Stay sane. While the future of the travel industry contains some ongoing challenges, better days are ahead. And that’s a future we’re all looking forward to.
Past Insights from Tim Peter Thinks
You might also want to check out these slides Tim presented early last year about the key trends shaping marketing today. You can check out the slides here:
(And, yes… you can hire Tim to speak at your next event, too).
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