During Skift Global Forum, we surveyed the travel industry’s decision makers to find out what’s on their minds as the world opens back up after the worst of the pandemic, including their thoughts on how the nature of travel is changing and the biggest headwinds for the industry, among other topics.
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The travel industry is roaring back to health now that the severe phase of the coronavirus pandemic is behind us. Change is afoot in many aspects of the industry, from the reasons why people are traveling, to how much travel purchases cost, to company travel policies.
We asked our Skift Global Forum audience of nearly 1,600 travel industry executives, some attending in-person and some online, what’s on their minds these days regarding the next phase of travel. Read on for four key insights our poll uncovered.
Business and Leisure Travel Are Increasingly Blending
As the travel industry emerges from the pandemic, it is embracing a decisive shift toward “blended” travel — that is, trips that serve a dual purpose for both business and leisure. American Airlines provided an example of this phenomenon at the Skift Global Forum, with Chief Commercial Officer Vasu Raja revealing to the audience that such blended travel now accounts for almost half of the airline’s revenues.
We asked travel industry executives whether they themselves are likely to take a blended trip in 2023 and received an overwhelmingly enthusiastic response. More than 81 percent of respondents say they “definitely” plan to do so, while only around 6 percent say they likely will not. More than 12 percent said they aren’t sure whether they will or not.
Cost Inflation Is Hospitality’s Biggest Headwind
The fact that the pandemic is out of its acute phase is clear from travel executives’ responses to the question, “What’s the biggest headwind facing hospitality today?” Only a year or two ago, lack of demand for hospitality services was monopolizing travel industry news, with Skift’s take being that the impact on the industry was “severe to say the least.” In our latest poll, by contrast, only about 14 percent of travel executives said they’re most concerned about the lack of demand.
Instead, they see rising costs as the industry’s most significant challenge by an overwhelming margin. Almost 81 percent of respondents say that inflation in labor and other costs is the biggest headwind facing hospitality right now. Fewer than 5 percent chose rising interest rates as the largest problem.
Staffing Is Domestic Airlines’ Most Critical Issue
As the previous poll showcased, demand is up again, which means that airlines are scrambling to satisfy a flood of returning passengers. And they’re trying to do this in the middle of a tight labor market with 11 million job openings but only 6 million unemployed individuals looking for work. It’s no wonder, then, that almost 63 percent of travel executives identified staffing as the most pressing issue facing domestic airlines over the next year.
Fares are the concern next-highest on executives’ minds, with almost 30 percent of those surveyed choosing this as the industry’s biggest hurdle. This concern tracks with the data: As of June, airfares were up 25 percent from the prior year, growing faster than inflation. Service hurdles and sustainability ranked low, with less than 4 percent choosing those topics as the most critical issue.
Most Hospitality Companies Are Changing Cancellation Policies
Early in the pandemic, many hospitality and travel companies changed their cancellation policies to account for the unprecedented circumstances. For example, many airlines reduced or eliminated cancellation and change fees as the pandemic ramped up, while others provided credits or vouchers to customers who canceled trips. These policies have stayed in place for several years, but now that the pandemic is easing, quite a few companies are planning to change their policies once again.
We asked travel executives whether their business was planning to update any trip cancellation policies it implemented earlier in the pandemic. Almost 56 percent of respondents said that they would indeed be making permanent changes to those policies, and around 11 percent said they’ll be making temporary changes. Almost 34 percent of respondents are planning no changes.
Change is sure to be the one constant in the travel and hospitality industry over the next several years, just as it has been in the last several. These industry leaders provide us with some valuable insight into what we can expect as the world continues to open up to increased travel.
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