The travel industry is enjoying a robust recovery from the pandemic, but major issues, such as inflation, have begun to threaten that recovery. To address these issues, travel companies have remodelled loyalty programmes and are promoting budget-friendly brands to entice cost-conscious consumers. Travel companies are expanding heavily in Asia, which hit a milestone in January 2023 with China’s removal of inbound travel restrictions.
This report comes in PPT.
Inflation has been a major theme throughout the travel industry’s recovery from the pandemic. High jet fuel prices, coupled with staffing challenges, have driven inflation across the industry. These rises in prices have led global travel sales to recover at a faster pace than trips.
Increasing direct sales is the aim for most leading players in the airlines and lodging industries in order to save on commission payments. However, intermediaries, such as Expedia and Booking.com, will remain resilient. Intermediaries will also benefit from the recovery in packaged holidays and short-term rentals, which are dominated by intermediaries.
The main tool for airlines and lodging providers to drive sales to their direct booking platforms is loyalty programmes. Marriott and IHG report that around 50% of room nights are sold via their respective loyalty schemes. Loyalty will also be key to offer efficiencies such as automation, which will become more important in the current inflationary environment.
Many countries did not re-open their borders to international travel until 2022. These re-openings have led to strong growth in long-haul travel. China’s removal of most travel restrictions in January 2023 was a pivotal moment for the industry’s recovery, leading airlines to rush to rebuild services to the market.
The challenging global economic outlook for 2023 could slow the travel industry’s recovery. Inflation has been very high in many key travel markets for over a year. While consumers proved willing to pay high prices in 2022 after staying home for two years, high prices are likely to become a bigger deterrent in 2023.
Travel encompasses several categories including tourism flows, lodging, travel modes, in-destination spending and booking.
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