Travel and Hospitality Industry Outlook 2017 has been saved
Travel and Hospitality Industry Outlook 2017
An analysis of travel disruptors
Explore the latest travel and hospitality industry trends and find out how four catalysts of change could impact travel in 2017.
Travel and hospitality industry analysis
Will 2017 be a growth year for the travel and hospitality industry? Deloitte’s recent industry analysis reports that forward thinking companies with an eye towards innovation could turn some of the challenges into opportunities in the coming year. Looking back to our 2016 travel and hospitality industry trends report, shifts in the global economy, game-changing innovation, geopolitical turmoil, natural disasters, pandemics, and rising consumer demands reshaped the travel landscape. Our 2017 travel and hospitality industry outlook points to more of the same.
To hone in on the causes of some of these industry shifts, Deloitte leadership analyzed what we refer to as "patterns of disruption." In this outlook, dig into how four specific catalysts of change are disrupting the travel and hospitality industry—the economy, consumer mindsets, enabling technology, and platforms—and find out what companies can do to remain competitive.
When we think about disruption, many think solely about technology and innovation, but travel and hospitality companies must also keep a close eye on economic trends. Hotels, airlines, and other travel segments are particularly vulnerable to the ebbs and flows of economic conditions.
The recent recession was a harsh reminder that consumers will be quick to cut travel from their budgets at the mere hint of a financial downturn. With solid discretionary income numbers, housing on an upward trend, and a strong labor market, what can we expect for the travel and hospitality market?
- Economic fundamentals for consumer spending are solid going into 2017, which gives travel companies a good reason to remain optimistic about demand for all types of trips.
- Hoteliers must sustain growth as online private accommodation aggregators flood the marketplace with new inventory.
- Legacy airlines may face headwinds in 2017 as new labor deals and rising oil prices put pressure on operating costs.
- Travel and hospitality companies will remain vulnerable to the risk of external events, such as cyber-attacks and food safety.
Businesses are driven by customer demand. But customers’ values, preferences, and expectations are not fixed, nor are they universal. Consumers have begun to expect a personalized experience tailored to meet their needs. This has travel brands aspiring to meet the high expectations set by non-travel companies.
Changing consumer expectations will continue to force travel businesses to adapt in 2017. What can we learn about the impact of consumer mindsets on the travel and hospitality industry?
- Consumers want authenticity, personalization, removal of friction, and on-demand functionality in their travel experiences.
- The rapid growth of industry disruptors is encouraging companies to capitalize on products outside of their traditional offerings such as reimagined public spaces for hotels and customized, organic meals for restaurants.
- Personalization can go a long way, but getting it right can be difficult for brands since customers’ needs and preferences frequently change.
2017 should be the year travel companies think beyond the “what” of technology innovation and proliferation—the shiny devices, applications, and capabilities—and understand what technologies consumers are ready to adopt, and what experiences will drive real value.
Travel companies must envision the customer experience they want to deliver. Then, they can explore the technology options best suited to support their goals. Should companies resist the urge to invest in new technology simply because it seems innovative?
- Technologies including artificial intelligence, mobile applications, and the Internet of Things (IoT) should enhance the customer’s experience to remove pain points from travel.
- In the future, IoT sensors will allow travel and hospitality companies to integrate advanced analytics and machine learning to adapt to customer behavior in real time.
- Transportation incumbents will continue to implement technology in 2017 in an attempt to win back customers who have new expectations of what ground travel feels like.
Travel companies have an opportunity to conceptualize their brands as platforms for growth. Most of them operate in just one (or maybe a few) of these verticals. For years, travel suppliers have been trying to crack consumer loyalty by offering intricate programs and schemes. 2017 calls for a shift in thinking to make customer experience paramount.
Over the next 12 months, travel companies should leverage an increased awareness of customer expectations, re-imagined technology strategy, and differentiated offerings to provide unmatched travel experiences. Will loyalty follow?
- With organic growth hard to come by in a consolidated and mature domestic market, travel brands must realize the benefits of scaling across the travel experience—rather than only trying to grow within their vertical.
- The travel industry along with retail, restaurants, and local experiences should expect healthy M&A activity and strategic partnerships to occur in 2017.
In today’s rapidly evolving marketplace environment, key business issues are converging with impacts felt across multiple industry sectors. What are the key trends, challenges, and opportunities that may affect your business and influence your strategy? Look for more perspectives and insights from some of Deloitte’s forward thinkers.