We’re creating a more connected travel industry, underpinned by sustainability and long-term investor relations.
Director, Corporate Strategy, Amadeus IT Group
The strong economic growth in Asia, gives rise to a large middle class with more disposable income for travel. Local and regional tourism grows rapidly, and demand for air travel explodes, resulting in a proliferation of new local and regional airlines. But this new Asian middle class will have less spending power than those in the US or Europe. As a result, few families will be willing to pay more for personalised travel offers. Sluggish growth in the West will also diminish demand for personalised travel, but it may boost the sharing economy.
In this price-sensitive world, profit margins across the entire industry will come under pressure. This will produce an environment that encourages consolidation. Diversified global travel groups with hotels, airlines, airports and destination service may emerge to capture a bigger share of the value chain. And this will be particularly so if governments become less protectionist and allow deregulation to happen.
Tech giants will be less interested in this travel world. The lack of opportunity to extract value from Big Data and personalisation will discourage their involvement in the travel industry. It will not make sense for tech giants to forego advertising revenues by becoming the direct competition of traditional travel providers. This will offer some protection to traditional and online travel agencies. But their world will also change.
A consequence of a more standardised world is that travel services become more of a commodity. If travellers don’t want to pay for tailored plans, there will be more standard offers. For travel agencies, it will be more difficult to compete with the tour operators and their offer of standardised packaged tours.
The rise of travel in Asia will create the need for greater collaboration between East and West. But how deep will this partnership be, and what forms will it take?
Check out What if? Imagining the future of the travel industryto find out more about this scenario and all of the ones formulated for the report.