To put this into context, this is 95 per cent of the travel industry’s value in 2019, and amazingly while we are in the midst of a cost-of-living crisis. It is increasingly evident that the sector is experiencing a renaissance.
After some turbulent years, the travel industry has found its stride once more –and is booming The WTTC has even predicted that in 10 years’ time, the industry could reach a value of over $15 trillion. It is clearly a timely moment for both investors and entrepreneurs to seize the opportunities that lie in the sector.
Despite weak consumer confidence, the travel industry’s rebound clearly demonstrates an evolved market narrative – making great headway from the doom and gloom rhetoric of the pandemic years. But what are the driving forces behind it, and what does the face of this resurgence really look like?
What does the digitally enabled future look like?
As the pandemic forced many travel companies to embrace technology at an accelerated rate, many that came through the pandemic resurfaced stronger than before. Indeed, Steven Potter, Founder and CEO of HotelMap believes this had a net positive impact, as the time lost not only prompted innovation across the sector, but also forced it to eradicate legacy complexities.
Today, data science optimises booking systems, and AI eliminates the need for costly translators in customer support. A case in point is online search platform Direct Ferries – former Executive Chair Richard Segal has said that the introduction of technology enabled the company to maintain flexibility in booking prices in line with demand, and allowed the team to expand to include a growing data science department.
As global attention remains focused on developments in AI and advanced technology , investors will likely keep an eye on opportunities for digitally-enabled businesses in the future.
Many industry experts suggest that digitally enabling businesses is not only the future but is essential to survival in the sector. As technology continues to evolve – from AI-enabled customer services to dynamic pricing engines – it brings a unique level of optimisation that could profoundly impact both the customer experience, and the overall efficiency of business operations.
The convergence of technology and the travel industry is not merely a fleeting trend; it is a transformation that holds immense promise for businesses ready to adapt to the digital age.
The travel revolution: is the traditional holiday disappearing?
Consumer travel behaviour is ever changing. Despite the backdrop of the cost-of-living crisis, spending on travel remains robust. Mastercard’s 2023 Travel Industry Trends report takes a closer look at how the economy’s mixed signals have created a ‘complex backdrop’ for the industry.
Despite frugality being a mainstay of 2023 for many, the Mastercard report points out that the figures suggest that travel spending remains important to consumers. In particular – it is “high income consumers, backed by wage growth and excess savings of $1.7 trillion in the U.S. and €1 trillion in Europe, that are driving robust consumer spending.”
Iain Griffin, Co-founder and CEO of SeatFrog – the business building a better future for rail with modern ticket solutions – believes the real opportunity lies in three-day getaways, highlighting a substantial potential for the sector to customise its offerings accordingly.
Where is the investment opportunity?
So what does this mean for investors, and budding entrepreneurs looking to break into the sector?
The travel industry will inevitably continue to face challenges. This means it is more crucial than ever for smart entrepreneurs to have investors who understand the sector’s challenges and opportunities. Investors who trust and support a vision, especially during times of instability, are invaluable. The industry’s significant contribution to the global economy, with strong, projected jobs growth,, underscores the extraordinary investment opportunities that are ripe for the picking.
Grant Thornton’s ‘Cut Back Economy’ report also recognises that holidays and travel take precedence for consumers with disposable income – over and above household goods and clothing. The report also looks at M&A activity in the sector – which is slowly but surely gaining momentum. There were 10 announced deals in the UK travel sector in the second quarter of 2023. It is not only the volume of deals that is significant, but the sentiment – these are not ‘distressed’ mergers – but positive signs of growth in the sector.
Evidently, the resurgence of the travel industry offers considerable prospects for SMEs, founders and investors. Embracing technology, adapting to shifting travel habits, and fostering a strong relationship with investors are key to thriving in this evolving landscape. With innovation as the compass, the travel industry’s revival opens doors to a new era of opportunities and growth for businesses and investors alike.