Travel in the US

Traditional travel industry still being moved by consumer demand

Travel and tourism in the US is undergoing numerous short- and long-term changes. These changes are the result of political turmoil, acquisition activity, changes in travel modes, competitive activity and innovation.

Hotels and airlines look to bring more sales in-house

Rising commission costs and greater internal resources are pushing major hotel chains and airlines to look inwards in an effort to boost sales. Commission costs are of particular concern as market forces and competition are shrinking margins.

Acquisitions reflect consumer demand and innovation

Alaska Airlines’ purchase of Virgin America and rumours of a British Airways takeover of Norwegian reflect the strong consumer demand for low-cost flights, which is rising despite high consumer confidence in the economy. Additionally, Expedia Group’s acquisition of Silverrail Technologies in 2017 is a sign that consumer interest in rail travel has been piqued, especially among younger adults.

Scheduled airlines embrace cabin segmentation on transatlantic flights

In a bid to stave off competition from low cost carriers without diluting their entire pricing structures, the “big three” scheduled airlines in the US – Delta, American, and United Airlines – have all made an effort to introduce a wider array of airfare price tiers for flights on domestic routes over the last few years. This practice is known as cabin segmentation and allows scheduled airlines to attract the most price-sensitive consumers by offering what is typically referred to as a “basic economy” ticket.

Costs, commissions and connectivity the future of travel

Given their affordability, low cost carriers should see further growth during the forecast period, barring any regulation pushed by traditional carriers. In the absence of regulation, the latter may look to compete by acquiring smaller companies, including Asia- or Europe-based carriers that have a proven track record.

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