Trends that have shaped the past decade, and those that will transform in the next
Expedia Group and HomeAway jointly identified 10 trends that have shaped travel in the last decade and six emerging patterns that will change the industry in 2020 and beyond.
Gabriel Garcia, Global Head Mobile Marketing & App Ecosystems, Brand Expedia, tapped on the rise of mobile, the growth of online travel and the emergence of AI as the top three factors that have evolved to become key drivers of change in the industry.
Here is a summary of the top 10 trends that have shaped this past decade:
- Rise of mobile – The shift from ‘mobile first’ to ‘mobile only’ has fundamentally changed the way consumers interact with travel brands online. There are approximately 5.11b mobile users globally, with over half being smartphones. Expedia Group declared over 50% of site visits are via mobile. As the mobile experience becomes ever more native, there is greater demand for a “seamless optimised experience”, which travel brands must deliver if they are to compete for customer attention.
- The rise of online travel – Expedia Group gives itself credit for having invented online travel, and with the growth of mobile and rising internet penetration worldwide, the industry will only get bigger. South-east Asia was earmarked as the fastest growing region for e-commerce (27% CAGR) with online travel accounting for US$34b. This is projected to more than double to US$78b by 2025.
- The emergence of artificial intelligence – AI has evolved greatly over the past few years. On the consumer side, it has facilitated the delivery of more personalised services that have helped to cultivate consumer loyalty. On the supply side, the development and deployment of dynamic pricing has helped airlines and hotels optimise their inventory. Expedia Group also released an AI-powered bot last year to help partner properties forecast and fulfil demand more effectively.
- The rise of low-cost carriers – Garcia argued that few could imagine regional travel in South-east Asia without the option of LCCs. According to CAPA, the number of seats on international LCCs rose 900% and in APAC, LCCs account for 30% of all airline seats. Between 2008 and 2018, the number of airline seats flown rose from 130m to 600m. The rise of this sector has also facilitated the expansion of travel to second-tier cities, helping to distribute tourism beyond key destinations.
- APAC tapped as most dynamic travel region – In 2017, 323m tourist arrivals made up a quarter of the world’s total. Eight in 10 of the top world’s busiest flight routes are intra-Asian, with travel and tourism contributing about 10% of the region’s total GDP – making it the fifth largest sector. International tourist arrivals are growing at an annual rate of 6%, as compared to the global average of 4%. Whichever way you spin it, APAC’s growth is outpacing other markets and this is largely down to its rapid economic growth, rise of connectivity and infrastructure investments in the region.
- Alternative accommodation and the rise of the holiday home – Garcia made the case that the home rental industry has undergone major development over the past eight years, as the sector came online. Technavio predicts the market will be worth US$193b globally by 2021. In APAC, Euromonitor reported that short-term rentals have led growth in the lodging sector over the last five years and attitudes towards alternative accommodation are changing.
- Staycations and domestic travel on the rise – People don’t stray too far from home to get that holiday feeling they desire. According to WTTC, domestic tourism represented 73% of global tourism spend in 2017. In APAC, domestic travel grew 18% in 2018 outpacing intra-Asia travel, which rose by 9.6%. Intercontinental departures, on the other hand, rose 4.5%.
- Muslim and Chinese travel markets still booming – In the last 10 years, the Muslim travel sector has seen rapid growth – rising 43% since 2010 with 140m international Muslim travellers in 2018 alone (Mastercard-Crescent Rating Global Muslim Travel Index 2019). By 2026, it is predicted that the Muslim travel sector will grow a further 35% (US$300b), making it a significant contributor to the global economy. Of course, China outbound is another major factor in tourism growth, particularly in APAC. Chinese travellers made up 149.7m trips overseas in 2018 and are projected to reach 178.4m in 2022.
- Millennial coming of age – Asia is home to the largest millennial market globally, with 60% of the world’s millennials residing in the region. They also make up a major part of travel spend in Asia (35%), taking an average of three trips per year. Naturally, their spending power makes catering to their tastes and preferences a key priority for travel players. For example, in Expedia’s 2017 Millennial Traveller Report, two thirds of Singapore millennials said cultural authenticity is most important to them, and that 44% of them are heavily influenced by photos posted on social media when choosing a destination.
- The business of bleisure is rising – One third of the US$1t business travel market was contributed by Asia, making it the world’s biggest market. 56% of Asian business travellers view travel as a perk of their job and 48% expressed interest in extending their trips to add a leisure component to it. Expedia Media Solutions’ The Bleisure Travel Trends report also showed that over 60% of business trips are extended for leisure, with millennials making up a significant proportion. And, 1 in 2 travellers spend the same amount of money or more on a bleisure than leisure trip.
HomeAway’s regional director for Asia, Jude Davidson then identified how these have fed into the six further trends that will define travel in the years to come.
Here are the six key trends that will define travel in 2020 and beyond:
- Digital transformation of travel – Davidson argued that in the future, there is greater pressure for collaboration between governments, tourism boards and travel providers to unlock and share data insights. An industry-wide collaborative effort can help to optimise inbound travel flows and expand tourism to second-tier cities. Furthermore, as travel goes digital, there is a change in demand for jobs and skillsets required for the industry to go forward. One in 10 jobs support the travel sector and there is an onus on the industry to upskill the current workforce and create jobs for the future.
- AI & predictive analytics – In the push to provide greater personalization, the industry will see deeper investment into AI and predictive analytics. Davidson predicted that as AI becomes more sophisticated, platforms like Expedia could remove the ‘search’ step in the travel planning process as it leverages past data on what customers tend to look. This in turn will help providers make better growth and revenue forecasts. On the customer-facing end, travellers will get better access to information that make the search and booking process more seamless.
- Rise of Gen-Z – While millennials are still a dominant spending force, industry eyes are locked on the next generation of travellers coming of age. Born between 1995 and 2015, Gen-Z will “change the rules of engagement for travel marketers”. Currently, Gen-Z taking 2.8 trips per year on average (slightly behind millennials) and are considered extremely influential in the family travel planning process. They are regarded as deal-driven travellers that seek out bucket list experiences.
- Personalisation is key – According to Travelport’s Global Digital Traveller Research 2019, 42% of travellers want to personalise their booking through add-ons like legroom, baggage allowance and meal upgrades. Expedia’s 2017 Millennial Travel Report also identified that 77% are interested in a service that could provide surprise holiday recommendations based on their budget, and 68% are interested in a service that could provide surprise holiday recommendations based on their personalities. Services that facilitate travellers’ abilities to customize the travel planning process and do detailed research based on specific needs will be best placed to address the rising demand for personalised travel.
- Sustainable travel is evergreen – There is an industry-wide call to ramp up efforts to reform travel to become more sustainable, while consumers are also seeking ways to lighten their carbon footprint. According to Visa, 94 of the top 100 most internationally visited destinations in 2018 also ranked in the top 100 in each of the past four years. These top 100 destinations consistently account for two-thirds of all international travel, which has proven unsustainable. Expedia Group and UNESCO recently launched the UNESCO Sustainable Tourism Pledge, to develop stronger means of supporting local communities and environmental protection whilst still bolstering the travel industry’s growth.
- Making more of ‘micro-cations’ – Shorter but more frequent trips are becoming an increasingly popular choice in APAC. Regarded as a trip that lasts five nights or less, Asian families take an average of five micro-cations per year to achieve a greater variety of holiday experiences. The accessibility of a diverse range of destinations and the abundance of deals and availability of LCCs make Asia a ripe spot for consumers to take advantage of the flexibility and affordability of travel within the region.
