This week Skift published a list of 100 questions related to the future of travel industry at large, in light of the impact of CoronaVirus on the industry. We decided to take on the big questions and provide our views.
This article is TRAVHOTECH’s view on a range of questions posed in the article.
List of Topics
Visit a topic using the links below;
- The Big Picture
- Policy & Seamless Travel
- Airlines & Airports
- Hotel & Accommodations
- Tourism & Destinations
- Merger & Acquisitions
- Travel Agent / Tour Operators / Bookings
- Business Travel
- Meetings & Event Planners
- Travel Startup Questions
- Online Travel / Tech Questions
- Luxury / Wellness
The Big Picture
Q – Travel is the most consequential sector in the world, as we learned by the complete stoppage of travel over the last few months. Does it finally register to the rest of the world after, or does it become more inconsequential because people realize how they can do without it?
A – Travel is consequential to global culture and understanding. However, we have learnt that, while important it is not essential. Essential under our current crisis has shown us that products and services closer to home and low on Maslow’s Hierarchy of Needs still remain true today. Food, Water, Shelter, Health and Sanitation. Travel is well outside this list of priorities.
Q – What shape will the travel economy recovery take? Will it lead or lag the general economy rebound?
A – As we have learnt that travel is not essential it will lag in the recovery. Main stream business and leisure travelers will need to recover income streams. Travel is normally discretionary.
Q – How much of travel demand is permanently lost, versus just delayed?
A – The travel industry at large is perishable inventory. Opportunity lost is opportunity gone. In relation to how the industry was tracking before the virus we will see a delay in returning to pre-virus levels of global travel.
Q – Will the travel industry lose its hubris after a decade-long growth hangover? What does a more humble travel industry look like?
A – The industry has enjoyed a decade of growth and aside of the immediate impact of the CoronaVirus the global indicators on travel continuing to grow in the next decade have not changed. There will be a period of recovery we estimate for two years while business conditions improve and travel regains lost momentum. Humble industry – greater customer engagement and care – in the short term.
Q – Will travel have its “fast fashion” moment — wherein people start to focus on the quality, not quantity, of their trips, and cut down accordingly?
A – Seasoned and regular travelers will continue to travel. In the aspirational market the traveler will more deeply consider trips due to a short term higher cost of travel associated with lower industry demand and failure of industry businesses and capacity in the short term.
Q – In a world that is already seeing an alarming rise of nationalism across the globe, does a sudden suspension of international travel further poison the well? With far fewer people able to directly connect and empathize with foreign cultures does protectionism grow even faster?
A – Those who were curious about the world previously will remain so. Industry indicators suggest that international travel will continue to grow in the coming decade from new markets. This augurs well for the future and people who did not travel in the past will enter the market and gain from their experiences in the world.
Q – If there’s a permanent shift in working from anywhere in a large part of the working world, does the dream of digital nomads finally become a reality, and how will it benefit the business of travel?
A – The digital nomad was already a reality for those in an industry that could sustain the model. With the global workforce forced to experience remote working industry view may shift to increase the breadth of roles working remotely. The challenge remains sovereign immigration and residency status as compared to under the radar travel. Perhaps a new type of residential Visa may come to the market.
Q – Or, does the uncertainty and fear around the virus mean the myth of the “digital nomad” dies? Such nomads found themselves scattered all over the world, without being properly registered residents or paid into a public health system.
A – Almost everywhere on the planet is only 24 hours away. If a traveler needs to return home it is highly accessible to do so. People who embrace the digital nomad philosophy were already travelers and will return to the road quickly. Would a different type of Visa allow countries to provide flexibility for locating in this way while contributing to the the local tax regime?
Q – Will governments reduce dependence on travel? Or will they continue to put quantity over quality as measure of tourism success?
A – Many countries around the world rely on tourism for the main contribution to their GDP and employment. These same nations will be keen to return to normal and have the incentive to do so. These same nations still have the ingredients that made them desirable pre-crisis. Quantity vs. quality is destination driven. The Maldives is small enough to focus on luxury experiences. Larger countries need to diversify across the market for employment and destination growth.
Q – Does the progress in diversity efforts in the executive levels of travel companies and organizations stop as the primary motivation becomes survival?
A – As we have seen non-essential industries slow or stop during the crisis, non-essential corporate programs are also sacrificed in times of financial distress. Survival first. Return to aspirational values and programs second.
Q – Will this bring an era of big reset of labor relations in travel, across sector? Or worsen it?
A – The labor market conditions for the travel industry is situational and nation specific. However, the conditions for volume travel and tourism on an affordable level do not point to an improvement to workers compensation. Some nations have created an environment where travel and hospitality workers are second class citizens from a remuneration and benefits perspective. There does not appear to be too much impetus to change this situation. Probably because tourists don’t vote in the country they visit.
Q – Will this era spur automation in all parts of travel as safety and costs become paramount? Or does the opposite happen where labor is so cheap after this that it won’t make much of a sense for the companies to make investments in automation?
A – Automation is being fueled by pressures beyond the industry and largely driven by consumer level technology and customer expectations. This will continue. Leaders and laggards in adoption will continue and short term investment will decline for non-cash rich businesses. Opportunists will use the opportunity to step away from the market through smart technology adoption.
Q – Will there be a long-term labor shortage in travel, as the millions of individuals working in travel were laid off and might not come back due to the concern about volatility?
A – No. If anything the industry will not re-employ the volume of workforce that existed pre-crisis. It will also take some time to return to full staff capacity, albeit reduced from pre-crisis levels.
Q – Will the travel sector lose a couple of years’ worth of the best technical engineers graduating from schools as those young professionals prefer the perceived safety, stability, and quick rebound growth of companies in other sectors?
A – No. It’s arguable whether the truly brightest minds in technology development were in the industry previously or whether it matters.
Q – Will consumer segmentation become ever more important, because the crisis heightens the differences among different types of travelers?
A – Yes. Post crisis, those travelers that did so with trepidation will be influenced and impacted by the CoronaVirus crisis experience. They will think harder about their desire and need to travel. Particularly internationally. Some of this segment might be lost to the market permanently.
Q – Now that everyone is learning to bring travel to people’s homes, will they learn to monetize it?
A – The general trend for all things digital seems to be low cost toward free content. VR, AR and content for travel is rapidly improving and providing a pervasive view into travel experiences. Does it replace being there? No. Although if you ask some people Las Vegas replaces the need to visit Paris because they have an ‘Eiffel Tower’. Can you convince someone that online is like being there? If they’ve never been anywhere, perhaps there is a place for revenue. Not for us!
Q – How will the dreaming and planning phase of travel buying cycle change? Will inspirational content play a bigger part?
A – Yes, although this was already happening through the momentum to deliver richer interactive content in the shopping phase. Due to other factors research may have a heightened focus in the short term while the traveler mentally moves past crisis-mode.
Q – What does customer service in travel, finally improve?
A – The customer in combination with products and services on offer has shown that they will accept far less leaning to non-existent levels of service in return for low cost. This has been a major driver of tourism growth in the last decade. Service delivery is unlikely to change remarkably in the future.
Q – Will this phase accelerate digital transformation at large travel companies?
A – Some levels of regulation and broader market requirements will have an impact on immediate investments in technology. Improving margins and productivity will continue to be the driver for industry leaders.
Q – What happens to the behavior of travel loyalty program members from here, and how do the loyalty program change to cater to the changed behavior?
A – We do not anticipate any great changes in the short term beyond shoring up member status. Depending on the pace of market return there may be incentives for membership based upon the 80-20 rule. Top tier members will have been largely unaffected by the crisis and will return to travel sooner.
Q – What happens to travel magazines and guidebooks, already on the decline curve? Does it accelerate the inevitable for them?
A – The shift to digital will continue although the crisis may kill some publications.
Q – In the short term how will the outbreak impact the accessibility of international travel? Will it move away from being a product attainable to the masses, and become more of a premium luxury good only for the elite few?
A – In the short term. The failure of low cost carriers and reduction in capacity will have a short term impact. Destinations heavily reliant on a tourism economy may offset some of this lost demand with attractive destination packaging for the leisure market.
Q – How does this change the travelers/citizens’ willingness to give up more personal privacy (contract tracing, immunity checks at borders) in exchange for more freedoms/assurances that their health is being protected?
A – Nation states and destinations will be regulated at a governmental level to track and record this type of information. Those people wishing to travel will be obliged to provide this information or stay at home.
Q – Will the dramatic declines in carbon emissions and urban smog witnessed during the COVID-19 economic disruption lead to any meaningful changes in politicians’ and consumers’ attitudes towards the climate crisis? Or will all habits return to normal post-pandemic?
A – It’s been an extraordinary example of the impact we have on the planet and how swiftly the planet responds when the negative impacts are removed. As a result of the speed of change climate deniers will be emboldened by environment recovery examples and timelines. Big business will return to their focus on profits and shareholder value. It was nice to see how things could be. No real changes in approach.
Policy & Seamless Travel
Q – Will the countries of the world get together and come up with a global passport of sorts to make sure that travel with the people who pose little health danger can travel seamlessly?
A – Global cooperation does not exist on a passport level data sharing arrangement. Travel and nations will desire a global visibility of certification of Covid19 based testing but a global program will be beyond nations in the short term.
Q – Do the visa regimes that have been dismantled over the last decade, through E-visa and visaless travel, get reenacted because of security and safety concerns?
A – Visa based relaxations are designed to increase ease of travel into developing destinations and remove a barrier for entry or remove the travelers reason to consider another destination. These are long term considerations. A short term solution for registration and identification of CV testing will be required by most developed nations.
Q – Will industry associations see a resurgence in membership and fees because companies that are members of it see the value on lobbying with government and policymakers?
A – In the short term membership is likely to decline due to constrained revenue streams.
Q – Will travel and tourism finally make it as policy issue and agendas of political candidates during elections around the world?
A – Travel and tourism are already on the agenda in locations around the world where employment and GDP or reliance on tourism is important. The major reason why the industry is not a consistent agenda option across politics is because tourists don’t vote in the destination they visit.
Airlines & Airports
Q – How does the check-in process at airports, hotels, cruises, theme parks or any other attractions in travel change? Will it change for the worse or for better?
A – Additional steps and tracking will be required until such time as the threat of the CoronaVirus is considered passed. Identification and in more advanced locations, digital registration of Covid19 status will be a factor in registration and entrance procedures across the industry.
Q – How do airlines that have restricted and constricted space for economy travelers over the years change as the need for social distancing continues for a while to come?
A – For the duration of the CoronaVirus transmission period passengers will be required to wear masks. It’s unlikely that airlines will be able to operate aircraft on an extended basis at 2/3 capacity. In some countries governments have offered to offset middle seat bookings for the duration of restrictions.
Q – Does the era of extra fees that airlines have pioneered over the last decade go away, as people just want to focus on basic low fares for a while to come?
A – No. Customers have demonstrated that this is a pricing model that they want from airlines over an extended period of time.
Q – Is this finally the death of the dreaded middle seats on planes?
A – No. It is not economical to operate aircraft without the middle seats. People still won’t want to sit there!
Q – Will the cancellation policies of airlines hotels and cruises continue to be flexible forever from here on, and how long?
A – Yes. The industry has long practiced cancellations models and data to show the impact of these policies. As industry looks to encourage the market back to travel, the customers will be seeking greater levels of flexibility, until such time as the threat of the CoronaVirus has passed.
Q – How will it affect ultra long-haul air flights, will they continue on the path as they were starting to or will that dream be put to rest?
A – Long haul fights and extension of routes is related to shortening the travel time and improving operational efficiency of aircraft and airlines. Aircraft technology will continue to improve and flights will get longer.
Q – Will Europe’s fragmented market of airlines consolidate in a way similar to the consolidated airline market in the U.S., as weaker carriers fail, merge, or sell themselves?
A – The CoronaVirus has already brought some airlines to their knees. It has also demonstrated the importance of a national carrier. A combination of government level backing will sustain some of the carriers. Low cost carriers operating on lower margins are less likely to survive. Less airlines increases the cost of travel through lack of competition. That is not conducive to travel increasing to pre-crisis volumes.
Q – Does the travel retail at airports benefit even more as people spend more time at airports because of the increasing checks?
A – Time is money. More time to burn. More money to be spent.
Q – How many air routes will get shut down forever?
A – How long is a piece of string? Greater scrutiny will be applied to unprofitable routes in the short term while airlines shore up financial performance.
Q – How will airport lounges reconfigure themselves for “social distancing” and “sanitation”/cleanness? No more buffet bars? More touch-less check-in technology to replace handing over IDs or other physical items?
A – In the initial term while travel volumes recover this will potentially be a manageable situation. Once volume recovers travelers will be subject to proof of Covid19 testing or antibodies and will be provided access to the lounge based upon status.
Q – Will there be a massive competition on benefits among large-fee ($450 a year) co-branded travel loyalty credit cards as long-grounded travelers reconsider their options and what they’ll pay for once travel rebounds?
A – No. People who can afford to pay $450 per annum for membership probably have more than one card.
Hotels / Accommodations
Q – Will there be a resurgence in service at hotels, something that has been on the decline for over a decade?
A – Product and service is market dependent and not all hotel product even under the same brand are equal. In the USA and North America generally service will decline further for those not differentiating on service levels. There are already examples of using CoronaVirus as an opportunity to further reduce service and product even in luxury brands.
Q – How will hotel companies that have built an expectation for direct bookings and up-front non-refundable rates adjust to a world where many travelers want flexibility until the last-minute?
A – Hotels and direct bookings are usually the most flexible in terms unless the guest is booking an advanced purchase non-refundable rate. Payment in advance is associated with the third party and OTA booking processes. Not hotels. Book direct. It’s usually the best price and also the most flexible.
Q – Will a certification for the cleanliness of a hotel catch on?
A – In any reasonable standard of hotel the quality of cleaning regimes and chemicals is a thorough and supervised operational process. It’s not something a guest normally recognizes and under heightened attention toward hygiene, naturally the industry highlights practices. Hotels have always been working with industrial grade chemicals and cleaning products. Will municipalities regulate this process? Perhaps. Singapore is an example that will establish a national standard and audit against it.
Q – Do mobile keys finally become a reality at hotels?
A – Mobile keys are already a reality. The speed of adoption is related to the cost of infrastructure to provide the technology. It is a significant investment and that is what impacts the industry adoption. Hospitality grade door locks are designed to last for 25 years. When was the last time you changed your door locks at home?
Q – Does hotel F&B make a comeback as people want to stay on premises?
A – This is a market specific questions. North America has lead the way with low service and non-Food & Beverage operations on property. However any property of a reasonable standard has a food and beverage offering. If the guest is allowed to dine at their hotel they will also be able to go out for a meal locally as well.
Q – What happens to all the sub-brands that hotel chains have launched, do we finally see a shake out there?
A – No. The advent of multiple brands is driven by market share and growth. The more brands that do not directly compete with each other, the more flags a company can have in any given location. If I offer one brand only, it’s likely I can only operate one property in a location based upon non-compete in contracts. Of greater issue is the relative difference between each brand. I’m not sure anyone could really explain the nuances. It has little to do with product.
Q – What will happen to brands such as CitizenM, Jo&Joe, poshtels, etc, that encourage social interaction and co-living?
A – It gives rise to the larger question of the co-working model in a post CoronaVirus world. The secret to this style of hotel is smaller rooms, and more rooms in a building. The intent for all other services being to consolidate the guest in locations and increase ancillary revenue, while optimizing staff utilization. It’s a great model. Although if the guest prefers or is forced to work in their room that may be a challenge. They were not designed for that style of stay.
Q – Will hostels prove surprisingly resilient as young people feel fearless about the pandemic and return to travel quickly?
A – Yes. Hostels were some of the more resilient accommodation types leading in to the pandemic. Provided that the flight uplift exists into a destination this sector will recover quickly. Young, mobile and wanting to see the world. The travelers traveler. They won’t need convincing.
Q – Will there be a renewed interest in short term rentals because people want control over their own space? Or do they want the reliability of a hotel with enough services and hygiene?
A – Hotels benefit from standards based industrial cleaning processes and supervision. This will provide the guest with a level of comfort regarding hygiene. Homestay relies on the owner of the property and their cleaning processes and standards. Loose by comparison. Smart hosts will probably engage commercial cleaners in the short term to overcome concerns. This will increase the costs of stay, although this is generally passed directly to the guest in the homestay model. Re-cleaning the property is an option for the guest, but do you want to clean the place and pay for cleaning as well?
Q – Is the masterlease model dead? Alternative accommodation providers like Sonder, Lyric, and others are laying off people while struggling under the pressures of 10-year leases. Was this ever a sustainable business model, and will it survive?
A – The leasing model for a property is not a new phenomena for the industry. It will remain. The business model or approach of the lessee may be more traditional in approach.
Q – How do the travel and hospitality and tourism programs and universities and colleges change? Will we see more students going into the programs because of a recession coming, as happens in every recession, or do less young people go into travel as a career because of the prognostications of a bleak future?
A – The industry has a mid and long term positive outlook and all of the global tourism indicators point to significant growth over the next decade. New travelers are entering the market that have never traveled before. The demand will return after a hiatus due to the pandemic. Four years from now the industry will be operating normally. There are still 10.000+ hotels currently being built around the world.
Q – Will virtual education and MooC courses for hospitality have a boom as the hospitality sector worldwide needs to quickly train staff in new procedures or, post-recession, train up new workers?
A – Staff volume and turnover is a constant challenge for the hospitality industry and it is this scenario that is driving the need for online and CBT based education. Hopefully most operators will look to restore their workforce through furloughed staff, reducing some of the immediate training impact.
Q – Will more hotel owners decide to affiliate with a franchise to get under the safer umbrella of a larger brand / loyalty program?
A – Brand affiliation or management has been an ongoing trend as a result of the mega-brands and competition with the OTA marketplace, However, the significant entry of Google in the hotel booking space has changed the landscape. If a hotel has nothing special to offer from a product and service standing it may be opportune to throw a brand on the roof. There is still a large market for independent and small scale operators who leverage unique product and services and experience lead hospitality. These are the most popular reviewed hotels for the traveler. Technology has become a leveler.
Q – Will large financial investors continue to buy hotel real estate? Does this accelerate the trend towards institutional investors (i.e. bargain-hunters swoop in) or reverse it back towards more mom-and-pop ownership (i.e. large investors burned by the asset class)?
A – Both. Good real estate is good real estate. It doesn’t matter who the owner is. The differentiator is the hotel operator (branded or independent) and the quality of product and service that they deliver to the guest.
Tourism & Destinations
Q – Does domestic travel really have a big surge as everybody’s predicting?
A – This is market dependent. It is likely that in North America travel will revert to local destinations. Partly to do with the skittish view of international travel and the relative volume this represents in tourism statistics. In smaller countries with multiple borders like Europe and Asia, crossing the border is a part of daily life and citizens will return to such behavior quickly. Structured travel will follow.
Q – Could an increase in local tourism help residents connect with their local history and culture, leading to a resurgence in civic pride?
A – In our view this is more directly related to local culture than travel. Perhaps they might learn something they didn’t know or choose to visit a new destination. However, those countries that tend to have large domestic tourism markets will continue to do so.
Q – Does even domestic travel within countries get more limited as states or provinces put up more barriers to those outside its jurisdictions?
A – The current trend appears to be for opening up markets and shifting business back to normal routines. International travel will return after domestic travel. The process of tracking the vehicle based traveler may be too onerous for various jurisdictions to attempt where no border monitoring has been previously in place.
Q – Do remote and rural locations get overwhelmed as that’s the only place people want to travel from here on for a while to come?
A – People are creatures of habit and will return to their normal routines as soon as they are allowed to do so. There will be an element that are spooked by the CoronaVirus pandemic. Although this type of traveler existed previously. Considering destinations outside their comfort zone will be beyond them.
Q – What does happen to overtourism in cities? Will cities be the last tourism destinations to come back, if ever?
A – No. Cities still provide most of the destination marketing content and the main allure for business, convention and leisure travel. Also the uplift and travel infrastructure and capacity. Over tourism resulted from the general level of access to travel based upon cost and availability. Entrance of homestay increased inventory and affordability of travel, opening up a new sector of the market that did not previously exist. Reduced demand for travel in the short term may bring about some changes in challenged cities. Although once demand returns the opportunity for revenues will drive a shift back to pre-crisis models unless regulation is applied.
Q – Will the crisis accelerate the fightback against over tourism as residents increasingly see foreigners as a health threat?
A – The reduction of the demand into destinations and a return to pre-overtoursim environments will provide a greater driver. Once regulations and checks are in place for Covid19 testing this will alleviate concerns about traveler health. It will not address the factors that apply to over tourism concerns.
Q – Will Saudi Arabia that was about to make a giant push in the global tourism scene will have any chance of opening up and people going there?
A – Yes. Saudi Arabia has the benefit of being a Muslim country and offering fellow Muslims travel to a destination with a familiar culture. There will be an immediate impact on all international destinations. However, this will not impact the mid and long term growth of tourism.
Q – Will Chinese travelers remain the global force that they had become? Or do they become even more important?
A – Yes. The Chinese travel market represents the most significant factor on the growth of tourism for the 2020-2030 decade.
Q – Will trains travel (aka Amtrak) make a comeback as people develop fear of airports, flying etc?
A – Train travel in America is on the rise as provision of rail travel becomes an increasingly attractive alternative to driving. If speed of travel and ease of process can offset the time factor and inconvenience of road and air travel respectively, rail has the opportunity to grow into a new market much like European rail travel.
Q – Will the Great American Roadtrip make a comeback?
A – Americans still travel extensively by road in the absence of a genuine rail alternative and the scale of the country. The challenge to extended road travel is the problem of the US workforce annual leave vs. travelling the distances in question. With most workers only having a weeks annual leave road travel becomes disadvantageous from a time perspective.
Q – Will natural parks and destinations with grandeur see a boom in visits as housebound, anxious travelers seek a spiritual re-connection with nature and things bigger than themselves?
A – No. The State and National Park systems in the USA and access to camping sites and accommodation seems to be a challenged model which restricts capacity.
Q – Will the travel influencers have any influence left after this? Or did they become even more important because destinations and brands need to spur demand?
A – Yes. The question is whether there will be enough demand from the company’s who pay for the content to keep them in business.
Q – Could virtual reality start to replace real-life visits to famous landmarks? Will it get a second chance?
A – Virtual Reality will never replace the real life visit to any location. However, if the person did not have the wherewithal to visit in the first place, then it’s a poor second. The content will only continue to improve in quality and some level of ‘realistic experience’. but it will not equate to ‘being there’. I guess you had to be there!
Q – Will there be a new shuffle of popular tourism destination countries/regions? What would be the next wave?
A – One of the great things about the tourism industry is that there is always somewhere new on the horizon. Yesterday’s ‘unvisited’ location eventually becomes today’s mainstream through discovery and growth in visibility and tourism capacity. Intrepid travelers move on opening up new destinations for the masses. Africa and South America show the greatest promise as the next generation of undiscovered destinations.
Q – Will leisure travelers require quadruple checking from multiple sources of information online before choosing places to stay? If so, will that mean that travel suppliers need to watch their social reputation more than ever? Will “social reputation monitoring” become essential rather than a “nice to have” for hotel companies and destination management organizations? Will hotels and destination managers need to over-communicate online even more vigilantly than before?
A – Reputation management, the internet and the democratization of technology have become travels best friend. It has made the world far more reachable and appealing to the traveler. It has a large part to play in the continued increase in demand for global tourism. Content is king, but reputation and word of mouth trumps advertising. The research will continue because the information is available. It’s getting better all the time.
Merger & Acquisitions
Q – What will be the wave of M&A happening in the travel sector, which sectors in travel will be most active?
A – Businesses that have been challenged by the CoronaVirus and are tenuous in terms of survival. Across the entire industry.
Q – Will private equity’s role and sovereign wealth fund’s role in travel become even more significant?
A – Depending on the sector, private equity has had a large part to play in industry investments. The more prominent sovereign wealth funds and governments have demonstrated an approach toward growth based investments and technology platforms and products. However, due to marketplace challenges of some sectors we may see a shift toward supporting these troubled sectors. Airlines look to be a likely candidate.
Q – If the most profitable companies are ones with scale, and the giant conglomerates emerge the strongest from the crisis, how will antitrust regulators react, especially if M&A happens?
A – Antitrust based approach to investment review is focused on the type of consumer environment that the acquisition could bring about. The basis of the review process will not change.
Q – Will cash-strapped destinations seek to monetize access to some of their premier attractions and cultural treasures through privatization? Think of the example of how private equity firm Carlyle Group invested in 2016 in the Inca Rail line that is a crucial access point for travelers to Machu Picchu?
A – In general it would be anticipated that any destination would actively explore revenue making opportunities from their assets, provided that it did not restrict or limit broader access to the destination.
Q – Travel will now be a debt-laden sector. Public companies have raised tens of billions of new bond issuances and large chunks of those SBA small business loans will not be forgiven. How will travel businesses manage to pay down these large burdens (if ever)?
A – Depending on the sector some of these will never be returned. In general some of the valuations of company’s in the travel sector is questionable in relation to the product or service that they actually provide. However, the travel sector is a victim or a benefactor of the current approach to market valuation across industry.
Q – Does the U.S. government’s refusal to bailout cruise portend a (much needed) overhaul of how that industry is regulated in the US, where half of the industry’s market lives? Will the cruise companies’ business models survive this?
A – Yes. The demand for cruising has been on a growth cycle for some time. Cruise Lines have had great success expanding their markets into new locations around the world and new customers have experienced cruising for the first time and liked it. They will be back.
Q – Will the diehard cruisers return back to cruises faster than we all would rationally expect?
A – It’s natural to expect that they will lose some customers, but generally people who like cruising are diehards. They’ll be back.
Q – Will river cruises (smaller, more spaced-out ships) rebound faster than ocean cruises if they can reconfigure themselves more quickly for new public health concerns?
A – No. Smaller cruises and River cruises are a specialty market, often with a price premium that will not necessarily deliver the price points for scaled return to business for the industry.
Q – Will the cruise industry ever be able to attract new cruisers after this?
A – Yes. Forever is a long time and memories are short.
Travel Agent / Tour Operators / Bookings
Q – Do the travel agents that survive this have a resurgence because people have realized the value of having a human to deal with all the uncertainties of travel?
A – Over the past twelve months there has been a resurgence in general in relation to curated travel. Travel bookings and research takes a very long time and travelers are realizing the efficiency of experienced people shopping on their behalf. The model is changing but curated travel still has demand.
Q – Or does technology finally leap forward such that the DIY really becomes possible in travel, as companies realize that tech investment is needed to deal with a huge customer service surge like happened here?
A – The challenges that make do it yourself hard across the industry is that information and systems are so disparate. Google recently gave up on their latest round of tours and attractions bookings as an example. They will return but there are greater infrastructure challenges that need to be solved within sectors of he industry. The digitally connected trip is still in the future. Google has the best opportunity in the future.
Q – Does this change travel insurance forever, with clarity instead of lots of terms and conditions? Will travel insurance (and travel booking financial protection services) flourish?
A – The main driver behind travel insurance has been transaction revenue with limited payouts. That model will continue. Although the consumers confidence in travel insurance products has been severely reduced because they fell short in the one instance that the traveler really required the product.
Q – Will the travel booking windows shrink, as we have seen early evidence in China and will this be a long term shift in behavior?
A – As travel demand returns booking behavior will be influenced by pricing policies and demand. Long term booking windows are base business and price driven. In a recovering market where demand is down and disposable income is reduced the traveler will be looking for value for money. At the moment any business is valuable and the circumstance will be keeping prices low closer to the date of consumption. That will shift as demand returns.
Q – Will packaged travel make a come back as people want more self-contained holidays? Will all-in inclusive resorts see a resurgence for the same reason?
A – We do not foresee any specific reason for demand to be lesser or greater for packaged bookings. Although in an effort to drive travel demand we anticipate destination based packaging for markets where tourism is a driver of the economy.
Q – Are group tours over forever and will they give way to more solitary/DIY travel?
A – No. Group tours are experience driven. Some travelers enjoy the combination of a managed itinerary and transport along with a group of travelers to interact with. Demand for this type of product is not going away. There may be regulation or restriction imposed in the interim on group numbers.
Q – Will tour operators (and smaller airlines and online travel agencies) radically change their businesses? Will they stop using cash deposits for advance reservations to fund their daily operations? Will they instead stash deposits into a reserve account?
A – No. Advanced payment is the core of the business model.
Q – Are we at peak business travel? Will the numbers never come back?
A – Definitely not. Travel demand is forecast to grow in double digits this decade on the back of travelers that are yet to enter the market.
Q – Will premium air travel be the first segment to rebound because executives and investors will be the most heavily incentivized to get back in the air to pursue their business objectives?
A – No. Product sales and business opportunities will be the driver of the return of business travel. Executive travel will also return but not at the levels that would drive the recovery of the air travel in general.
Q – Will ‘duty of care’, which business travel management companies (TMCs) have long touted as an added perk they provide to corporations, prove its value during the crisis and help TMCs grow market share?
A – Perhaps. Demonstrating value may be tied to the experience through the CoronaVirus pandemic if the TMC was able to show how duty of care positively impacted the company travelers.
Q – Does this permanently reduce or rewrite the role of the global distribution system as corporate travel may never fully recover and the airlines might be more willing to fight for newer systems as the need for better retailing strategies will only become more urgent?
A – We are still a long way from the retirement of the GDS.
Meetings & Event Planners
Q – Is the era of giant conventions with acres and acres of land over forever? What will virtual look like for these conventions and trade shows?
A – No. Doing business at scale will continue to be in demand and effective. The industry will go through a phase of small events while the virus is still in effect Post vaccine the industry will return to normal. Major venues in Las Vegas have lost major events in 2020, but the same customers have booked and confirmed their same events out until 2028.
Q – What does a hybrid physical and digital conference or event look like and how do you make it interesting for everyone involved?
A – Digital events are on the rise, but the challenge that will remain is audience capture. If a delegate was not approved to attend an event it’s unlikely they will be able to spend eight hours a day watching remotely. Education and curriculum based content is well placed for digital delivery. Keynote and executive session will continue to be sought after in person events, with online content being provided FOC or at a small transaction cost by session. Networking and in person contact will remain the driver for events.
Q – What will be the role of Convention and Visitor Bureaus going ahead in a virtual or hybrid events world?
A – Unchanged. They will continue to work on behalf of the destination to drive event traffic.
Q – What will be the role of event venues going forward? How will they adjust to the virtual or hybrid events world?
A – Event venues have become adept at delivering a multichannel experience for delegates in attendance and offsite. Broadcasting is not a new technology, but the delivery mechanism of broadcast content has become democratized. In person event will continue to use traditional venues. Over time purpose built event spaces may come to market targeted at digital events coupled with in person event spaces.
Q – Will meeting planners insist contracts must include clauses on cleaning/hygiene standards?
A – Perhaps. Cleaning services make up part of the venue booking process and services today. More attention may be applied to the standard of cleaning or the cleaning regime itself, above and beyond the core service.
Travel Startup Questions
Q – Will venture investors turn away from funding travel startups, generally not a big area of focus anyway for VCs historically?
A – The priority shift from start up to scale up appeared to take place some time ago for our industry.
Q – Airbnb was founded in the depths of the 2008/9 recession and tapped into a zeitgeist by offering cheap accommodations local connections. What startup will be the ‘next Airbnb’ to emerge from this crisis and what sector will it be in?
A – The capability to track vaccines history and records for the traveler. Driven by the CoronaVirus requirements, but leveraging the capability across the breadth of travel vaccines required around the globe,
Q – Will there be one or a few strong disruptors from outside travel emerging post crisis? Who would they be? What would they bring to travel?
A – We are questioning the potential for health data intersecting with the travel industry.
Q – Does the surge in venture investment in tours and activities and the sector itself that was going online so rapidly completely stop, and will it be reversible?
A – The tour space is still a sector that is ripe for a level of consolidation. Although in our view it needs to move past the search and book process to the structural operations of the industry and the ability to consolidate pricing and inventory across tour types. Until then a full electronic distribution model is still a long way in the future. There is opportunity here.
Q – Will venture debt gain share on venture equity as a preferred investment mechanism in the next two years, as VC cash dries up? Debt may work well for startups that offer subscription software and marketplace models, where they acquire some customers, and those customers start yielding fairly consistent revenue.
A – Uncertain. Tech is still central to the current economy and remains the boom opportunity for investors. We suspect that there will still be available capital for ideas and products with both merit and a level of traction.
Online Travel / Tech Questions
Q – Do the online travel agencies get their mojo back because of abundance of inventory from suppliers?
A – Channel management will continue to be a key factor for the industry. The OTA’s will continue to receive inventory, but the new role of google and providers striving for market share in direct business will shift the nature of the industry. The OTA’s will need to deliver more vertical based capacity.
Q – Or will people want to go direct to brands because they know that’s the easiest in terms of cancellations and refunds?
A – That has always been the case. The combination of lowest price and most flexible terms has not changed throughout the advent of the OTA model. The industry is getting better at educating the customer and the customer is seeing the value. There will always be customer for every channel based largely upon confidence and education.
Q – Will this phase also accelerate the consumer move to online travel/digital commerce in countries and geographies that were still skeptical?
A – There are still many developed markets that like the travel agent, curator, wholesale and tour operator model. Possibly because this model delivers a level of service and takes the lead on the research process. Some travelers will always value their time over the process. Over time shifts will continue. I can do my own housekeeping, but I also have the option to have someone do it for me.
Q – What happens to Expedia and TripAdvisor from here, two of the most troubled online travel players going into this?
A – Both have developed a market position and a level of brand equity that will survive moving forwards. In our view Google’s approach has demonstrated to everyone that if you are not the producer of the product it is just information. And this information is free. The OTA’s built a business from aggregating information on the internet. Google showed them how to do it properly. They will now need to demonstrate how they deliver additional value to the providers as the model shifts moving forwards. The consumer will stay with the OTA platforms for a time until they also understand the Google experience. It’s a balancing of the overall distribution model.
Q – When, if ever, will Expedia and Booking return to bidding on metasearch at the same scale they were before this crisis?
A – With the shift in the Google Travel capabilities they will need to continue campaigns to attract traffic to their platforms. Both company’s recognize that they need to grow brand recognition and direct business. Booking seems to be in a stronger position by comparison to Expedia. Their broader competition is now much larger as a result of a more open playing field and access to information.
Q – Will Ctrip/Trip.com Group turn out to be the relatively best-capitalized conglomerate to rebound most quickly, and will it go on an investment spree? Will it take near-majority stakes in geographic markets they have yet to penetrate, copying what Ctrip/Trip.com Group has already done in India with MakeMyTrip.
A – There are plenty of markets yet to be penetrated. However, on the back of language advantages and strategically choosing two of the largest growth outbound traveler markets, they will be well placed for the future. Their China experience is also largely uncontested by Google’s recent changes based upon market share.
Q – Will Google Travel be transformed because of a falloff in advertising? Or will it gain even more importance as a semi-direct channel for brands?
A – Our view is that Google and their efforts in travel are democratizing the travel booking process. It represents a major opportunity for product providers to increase market share and grow direct business, where Google’s business model is not based upon the need for commission streams from bookings.
You can read a detailed overview of TRAVHOTECH’s views on Google in Travel here.
Q – How do travel booking intermediaries whose core product is the distribution of non-refundable rates endure in a near-term environment where travelers seek flexibility in bookings?
A – There is always a section of the market that is price driven and does not require flexibility. Whether the volumes are enough to survive is the question.
Q – Is this the end of travel metasearch as a meaningful business model except for Google and Qunar/Skyscanner? Or will metasearch make a comeback as travelers become more price sensitive?
A – The lines are blurred between what had traditionally been meta vs. OTA. With meta platforms also providing booking capability and other traditional OTA likes services meta feels more like just another OTA, but perhaps with broader aggregation and comparison. Shoppers love options and as long as you can be relevant there’s an opportunity. Over the longer term perhaps the viability diminishes.
Q – Companies are examining budgets line-by-line and cutting the fat. What travel tech platforms are actually essential, and which were just nice to have?
A – A big question depending on perspective and sector. For hotels an excellent channel management platform with broad connectivity, a reputation management platform and a forecasting and pricing optimization solution. These are the bare minimum.
Luxury / Wellness Travel
Q – Will luxury travel be the last to come back and what shape would it take?
A – No. Perhaps the first. The well heeled are still the well heeled and they will be travelling sooner than most.
Q – Will “hygiene” become the new “wellness”? Will we see luxury hotels and resorts and first-class airline cabins invest heavily in touchless technology, voice-activated services, and more automation?
A – These type of investments have been ongoing in travel and hospitality for premium customers. Given the level of exclusivity and limited access afforded to the luxury traveler they are likely to be more comfortable with hygiene and cleaning standards based upon the quality of their personal travel experience.
Q – Will wellness sector thrive even more? Will there be closer collaborations between hospitality and hospitals?
A – Medical tourism has been a growing market for a decade now with certain destinations focusing on the marriage of high end hospitality and medical procedures. Bangkok, Singapore and Mexico are examples of this. There is a level of natural commonality between the hospitality and medical industries for elective procedures. Hospitals are actively engaging hoteliers to improve the customer experience in their operation. How close this relationship becomes may be dictated by information sharing and data standards between the industries. Healthcare is subject to stringent compliance that does not (yet) apply to hospitality.
Q – Will health or medical brands invest in travel, the way luxury watch and clothing brands have had brand extensions? Johnson & Johnson Resort Maui?
A – The question of core competencies come to mind. There are examples of lifestyle and wellness brands stepping into hospitality in the delivery or extension of product and service. Healthcare on a formal level may be a step too far. Although we can envisage co-branded medical facilities for elective procedures between prominent brands.
Q – Does private travel for the affluent now mean private limo, to private jet to villa – a la travel in a private bubble? Will the “haves vs the have nots” take on a new meaning in travel?
A – At this level of the travel experience it has been alive and well for a long time and will continue to be. They have been the ‘haves’ for a while.
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