BlogIndustry

Uncertainty is the new normal: 5 things the travel industry realized in 2016

May 15, 2017

1. Travel agents are more resilient than their critics thought

In June 2016, the American Society of Travel Agents unveiled a report with a surprising finding: travel agent use was actually growing among Millennials in the US. Traditional wisdom is that demand for travel advisor services has plunged, but in some senses they have found themselves on a similar trajectory to vinyl records, suffering a withdrawal of consumer interest before being ‘rediscovered’ by a generation keen to maximize their enjoyment of high-value purchases. The luxury segment in particular has proved resilient, thanks in part to complex, niche trip requirements and a time-poor customer base that is used to delegating sophisticated tasks to an expert. American Express research unveiled at International Luxury Travel Market in Cannes revealed a 110% increase in intent to use retail travel agents in the next holiday season; it also found actual usage had grown 79% from 2015 to 2016. There is no doubt that agents remain under pressure, and that self-booking services have eaten into their market share; but the assumption that declining share would lead inevitably to extinction now looks very premature.

 

2. Social media’s influence on destination choice may have been overstated

Recent research by UK company Mintel suggests not. Mintel’s 2016 Holiday Review UK report asked people who had taken a holiday in the last year what factor most influenced their choice of destination – and just 4% said social media. In the same year, German analyst IPK’s World Travel Monitor study – which surveys 500,000 people in 60+ countries – found that social networks were the least used source of holiday information online. Meanwhile, late 2015 saw the end of Snapchat’s Live Local Stories strandapparently generates good revenue, which offered a series of curated user posts from cities around the world. The wider Live Stories platform, which includes events such as sports tournaments and music festivals, apparently generates good revenue, but sources told Bloomberg that Local Stories “weren’t as popular as other features” – so destination-focused content was dropped in favor of events.

 

3. Reliable beach destinations are no longer reliable

Europe’s large, vertically integrated travel businesses have traditionally been able to rely on good volumes from bucket-and-spade favorites on the fringes of the Med, such as Egypt’s Red Sea coast and Turkey’s Bodrum Peninsula. Terrorist attacks on popular resorts in Tunisia, Turkey and Egypt have forced them to quickly rebalance capacity. To some extent other traditional beach destinations have benefited. The Canary Islands and the Costa del Sol were up 32 per cent and 26 per cent in 2016, according to analyst GfK. But at the same time the shift in demand has caused capacity problems in the Western Med, and added to a growing sense of unpredictability. Product mix and agility look likely to be key in the years to come.

 

4. Disruptors aren’t going to have it all their own way

The march of peer-to-peer (P2P) travel and accommodation services seemed to be continuing unchecked for several years, and while they still represent a threat to some traditional models, 2016 saw some significant roadblocks appear. New York Governor Andrew Cuomo signed a tough law regulating home-sharing services, and a ruling in Britain alerted leasehold property owners that they could be breaking the law by listing their properties for short-term lets. Uber ended up in a dispute with the city of San Francisco over self-driving vehicles, abandoned its Austin operation following a row over driver security checks, and was ordered by a British court to pay drivers the national minimum wage and holiday pay. For many, it was a welcome sight to see disruptor growth checked; the travel industry has had been vocal in questioning the regulatory landscape in which P2P services operate, and 2016 was the year regulators began to ask similar questions themselves.

 

5. Robots aren’t just a novelty

There’s a well-known hotel in Japan where check-in is handled by robots – one humanoid robot and two dinosaur robots, to be precise. Basic automation like this isn’t unheard of – there is another fairly high-profile robot at the Ghent Marriott – but it has always remained just that: basic. Royal Caribbean’s robot bartenders, launched in 2014 and now on four ships, brought a new level of dexterity and sophistication, but were still essentially ‘dumb’ – they couldn’t learn, and didn’t talk back. But in 2016 smart automation and smart robots began to go mainstream. Hilton unveiled Connie, a robot concierge powered by IBM’s Watson AI platform and capable of parsing and responding to voice queries about hotel services and local attractions. IBM’s tech also underpins text-based innovations such as UK brand Thomson’s chatbot, and the IVY virtual assistant for hotel guests. With even relatively mainstream brands getting involved, last year left travel businesses in no doubt that AI, and even physical robots, represent a long-term trend that requires planning and investment.