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The World Trade and Tourism Conference took place this week in Abu Dhabi. The conference has ended, but interested parties can still comb through the taped sessions that discuss the trends and challenges that the industry is facing in the future.
Dr. Daniel Stelter of The Boston Consulting Group provided an economic context for the changes that the industry must adapt to in the coming years. He outlines four global and economic “megatrends” that the travel industry will be wrestling with in the coming future.
Those, and the challenges and opportunities they create, are outlined below:
Changing customer needs: An aging population, the rising importance of rapidly development economies in China, India, and Brazil, and an increase in globalization is changing who travel consumers are and what they are looking for in a travel experience. The most basic of these changes include a desire for expedited booking processes and greater convenience in the booking process.
|Growth shifting to new destinations||Continued market growth|
|Shorter trips and short term booking||Tailored products for specific segments|
|Pressure on traditional products||Growth from new source markets|
Infrastructure and mobility: All countries struggle with tourism infrastructure whether it’s developing more sustainable, well-designed alternatives or lacking the basic transportation infrastructure needed to accommodate booming tourism industries. Energy scarcity and rising fuel costs are a very real and present concern, as well as developing sustainable practices to keep business operating in the long run. Risk and security challenges are also changing the balance of global tourism; political events like the Arab Spring carry very real consequences for regional tourism.
|Supply restrictions||Revival of local travel|
|Increasing price of mobility||Niche green trips|
|Higher regional volatility||Relevance and value of safety|
New technology: The emerge of cloud solutions and big data analytics is changing the way that travel companies conduct business. Companies like Rosetta Stone are adapting to the cloud by acquiring startups and newcomers like Duetto Research are changing the hotel business based on big data alone. Mobile is the predominant platform for travelers on the road and increasingly becoming a source of bookings; as social media breaks down the barriers of consumer-company communications and opens new avenues for customer insight and service. The role of travel agents and tour operators is changing rapidly, with both parties at risk of becoming obsolete if they neglect to adapt.
|Continued disintermediation||Deeper customer insights|
|Know-how scarcity||Direction interaction|
|Distribution channel (r)evolution||Mutli & cross channel marketing|
Capabilities for the future: Customization, innovation imperative, and seamless user experiences will define the travel products of the future. Today’s travelers are seeking authentic experiences as seen in the rise of nontraditional accommodations services like Airbnb and an emergence of tour operators and destinations promoting local travel. The companies that are the quickest to innovate and provide travelers with technology that offers them with experiences and services they seek before they have to ask will succeed.
|Success factor technology||Mass customization|
|Loss of safe havens||High profits for first movers|
|Innovations kills business models||Adjacent business models|
Watch Stetler’s comments on the four megatrends from 6:30 to 14:25 in the video below: