Travel, Tourism & Hospitality Industry

Some of the key influencers on the travel and tourism industry in recent years have been globalization, digitalization, sustainability, and the coronavirus pandemic. Ease of mobility, increased awareness of new destinations, and the internet as a source of information and commerce have caused the industry to grow exponentially. Yet with this growth has also come increasing public concern about the industry’s impact on the environment, resulting in consumer demand for more sustainable travel options. That being said, the industry’s environmental impact declined significantly during the coronavirus pandemic, with travel bans and social distancing measures having a devastating effect on travel and tourism worldwide. When it comes to the future of the industry, increased domestic tourism, excellent hygiene conditions, and contactless service are all examples of changing consumer interests due to the COVID-19 pandemic.

INDUSTRY DEFINITION

The travel and tourism industry does not sell one specific product, rather, it incorporates many industries. These include leisure travel, business travel, accommodation, food and drink services, and more. Within these industries there are many markets such as hotels, short-term rentals, cruises, meetings and events, and the online travel market. Additionally, these individual industries are subject to different trends, one example that is relevant to all of them is the rise of digitization and the online market. Trend topics can also be more industry specific, the home-sharing economy in the accommodation industry being one. These emerging trends are sure to shape the industry’s outlook, and the long-term impact of the coronavirus is expected to change the face of the travel and tourism industry for years to come.

LEISURE TRAVEL

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Travel & tourism is one of the biggest sectors in terms of global economic impact. Within this context, leisure travel represents by far the most important market. In 2019, travel leisure spending in the United States and China – leading countries in terms of travel & tourism contribution to the global GDP – accounted for 70 percent and 81 percent of the national tourism expenditure respectively.

Within the leisure travel market, tourism digitization plays an essential role. Revenues of Booking Holdings and the Expedia Group – the biggest two online travel agencies (OTAs) worldwide – more than doubled between 2013 and 2019, while evaluating services on travel review websites, such as TripAdvisor, became an important part of the overall tourism experience. As the COVID-19 pandemic turned the travel industry upside down, digital innovation, together with new hygiene measures, domestic destinations, and sustainability will likely lead the way in the new era of leisure travel.

INDUSTRY DEFINITION

Leisure travel refers to trips taken for relaxation and pleasure. It includes the segments cruises, travel destinations, holiday activities, online travel market, tour operators, and travel agencies. The cruise market mainly focuses on passenger movements, cruise ports and calls, occupancy rates, and bookings. The holiday destination and activities sectors look at the main domestic and international tourism destinations, exploring tourist attractions, and trip purposes.

The internet age has brought about the rise of the online travel market. This segment includes online travel agencies (OTAs), which allow tourists to book travel services on the web, and digital travel-related experiences, like online reviews. While brick-and-mortar travel agencies lost ground to OTAs, some consumers still prefer face-to-face support when booking trips. As well as analyzing the state of such businesses, this market also looks at the online presence of travel agencies and tour operators.

MARKET SIZE

The calm before the storm

Before the dramatic impact of the health crisis on the travel industry, leisure tourism spending worldwide had increased steadily since 2015. Global expenditure on leisure trips peaked at roughly 4.7 trillion U.S. dollars in 2019, increasing by 3.1 percent over the previous year. Overall, leisure tourism spending made up 78.6 percent of total global travel spending in 2019.

MARKET SEGMENTS

Before the pandemic, the cruise industry was smooth sailing

The number of global ocean cruise passengers has risen gradually since 2009, peaking at nearly 30 million in 2019. In that year, North America recorded the highest passenger volume. The Caribbean, the Bahamas, and Bermuda were the most popular destinations, welcoming about 12 million cruise travelers. This scenario changed drastically in 2020 as the pandemic disrupted the cruise market. For instance, TUI AG’s global revenue from the cruises segment roughly halved in 2020 over the previous year.

INDUSTRY TRENDS

Staycation is the new vacation

Domestic travel will likely recover sooner than international tourism, as countries adopt different travel restrictions and safety measures depending on the local impact of the pandemic. In the United States, both domestic and inbound visitors dropped sharply in 2020. However, the U.S. still contended with roughly 1.4 billion domestic trips and 7.2 million overseas arrivals in 2020.

INDUSTRY LEADERS

The two giants of the online travel market

In 2019, Booking Holdings and Expedia Group were the world’s leading online travel agencies. Revenue of Booking Holdings – which, among others, owns websites such as Booking.com, Priceline.com, Agoda.com, and Kayak.com – peaked at over 15 billion U.S. dollars in 2019. In that year, revenue of the Expedia Group reached over 12 billion U.S. dollars. Alongside from the Expedia site, the company owns Hotels.com, Vrbo, Trivago, and other travel fare aggregators and metasearch engines.

REGIONAL OVERVIEW

Europe leads, Asia and the Pacific follows

As of 2019, Europe was by far the most visited region worldwide, recording about 745 million international tourist arrivals, with Southern and Mediterranean Europe being the most popular sub-region. That was more than double the visitors recorded in Asia and the Pacific, which ranked second in terms of international arrivals. In 2019, three European countries – Spain, France, and Germany – also topped the World Economic Forum’s Travel & Tourism Competitiveness ranking.

BUSINESS TRAVEL

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It is a critical moment for the business travel industry. Before the COVID-19 pandemic, global business tourism spending was thriving, with the U.S. and China being the two biggest markets. Hit hard by the health crisis, corporate travel will need time to adjust to a new normal.

Travel policies are changing according to the current scenario. Apart from considering new health and safety guidelines, the need for more flexible bookings is also an important topic, as prices of several business travel services are expected to change drastically during the pandemic.

In a gradual recovery dictated by proximity, companies are planning to resume domestic trips first, while interest in travel digitization is rising. However, as face-to-face meetings are considered a key element in this market, a phased rise in hybrid solutions seems more likely than a complete shift to virtual events.

INDUSTRY DEFINITION

Business travel is the branch of the tourism industry focusing on trips taken for business purposes. It comprises the segments of business travel accommodation, business travel spending, meetings and events. Business travel accommodation encompasses tourism establishments mainly dedicated to corporate travelers. This market particularly focuses on hotels. Business travel spending includes all expenses associated with trips, such as transport, accommodation, and food costs. The meetings and events sector covers meetings, conferences, exhibitions, and incentive travels.

To efficiently manage logistical and financial aspects of business travel, companies rely on travel managers, namely employees taking care of travel programs, travel policies, and travel & expense (T&E) reporting. Usually, big companies decide to outsource this job to so-called travel management companies (TMC). The main players in this field are American Express Global Business Travel, BCD Travel, and CWT.

MARKET SIZE

Global spending reached its peak before the pandemic

Before being decimated by the coronavirus (COVID-19) pandemic, business travel spending worldwide increased steadily between 2015 and 2019. Overall, global expenditure on business trips has more than doubled since 2000, peaking at roughly 1.29 trillion U.S. dollars in 2019. In that year, the United States, China, and the European Union generated more than half of the total expenditure.

MARKET SEGMENTS

COVID-19 hit the exhibition industry hard

In light of travel bans and safety measures adopted during the pandemic, most trade fair organizers and exhibition professionals had to cancel or reschedule events. In the first quarter of 2020, exhibition industry revenue in the United States dropped by roughly 15 percent over the same period in 2019. The number of attendees, exhibitors, and net square feet (NSF) also experienced a consistent decline.

INDUSTRY TRENDS

A step-by-step recovery, starting with domestic trips

While there is still uncertainty about travel planning, domestic trips will likely return faster than international ones. In an April 2021 survey, 37 percent of interviewed travel professionals claimed that companies are planning to resume domestic trips soon. Only 10 percent of the survey sample thought the same about international destinations.

INDUSTRY LEADERS

Three companies lead the Travel Management market

In 2019, two online travel agencies topped the list of travel companies worldwide ranked by sales revenue. When focusing on the travel management market, America Express Global Business Travel recorded the highest value. BCD Travel and CWT were the other two major players in this segment. Aggregated sales of these three travel management companies (TMCs) reached over 86 billion U.S. dollars in 2019.

REGIONAL OVERVIEW

Most global business travel spending comes from U.S. and China

In 2019, the United States and China alone generated more than 40 percent of global business travel spending. When also including the aggregated expenditure of EU countries, the share rises to over 60 percent. Overall, 30 percent of total tourism spending in the U.S. came from business tourism in 2019. In China, the expenditure on business trips accounted for 19 percent of total travel spending.

ACCOMMODATION

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The accommodation industry has had to completely reshape its predictions for the future. The coronavirus (COVID-19) pandemic has impacted the industry significantly due to international and domestic travel disruption and a range of ensuing safety measures. All parts of the industry have been affected, from hotels, motels and resorts, to bed and breakfasts and home-sharing platforms like Airbnb. Some of the current trends resulting from the pandemic are contactless technology, high hygiene standards, and increased domestic travel or “staycations”. These days, consumers are more aware than ever of the importance of planetary and personal health and, due to a lack of connection, are seeking more authentic experiences than before. As a result, larger trends that were already reshaping the accommodation industry have been further cemented as a result of the pandemic. These include digitization, sustainability, and the demand for authentic, personalized experiences.

INDUSTRY DEFINITION

The accommodation industry is part of the wider hospitality industry. In its broadest definition, it encompasses many different sectors that offer overnight lodging services. These sectors include hotels, hostels, short-term rentals, holiday homes, RV parks and camping services, and more. There are also other industries working in conjunction with the accommodation industry, for example, food and drink services, and wellness and spas. These individual sectors are subject to different trends – one example that is relevant to all of them is the rise of digitization and the online market. Trend topics can also be more specific, contactless service in the hotel industry being one. These emerging trends are sure to shape the industry’s outlook, and the long-term impact of the coronavirus is expected to change the face of the accommodation industry for years to come.

MARKET SIZE

Accommodation industry reached its peak prior to COVID-19 pandemic

Globalization, the rise of the online market, and increasing ease of mobility means tourism has grown exponentially over the past decade. It therefore comes as no surprise that this has also caused growth in the accommodation industry. This is particularly the case in its largest sector, the hotel and resort industry, which has seen a steady upward curve in its market size during this time. The largest decline in size was seen during the coronavirus pandemic.

MARKET SEGMENTS

Home-sharing’s impact on the accommodation industry

With home-sharing services becoming ever more popular with consumers, more traditional modes of accommodation are facing increasing competition. The sharing economy offers consumers the ability not only to stay in people’s homes, but also to make money by sharing their own homes. Competitive prices and lodging ranging from basic to luxury mean that other segments like hotels, hostels, traditional bed and breakfasts, and even campgrounds will need to rethink their business outlook.

INDUSTRY TRENDS

Accommodation industry must adapt in the face of COVID-19

As a result of the coronavirus pandemic, consumer needs have changed significantly. Suddenly, exceptional hygiene standards, contactless service, and enough space for social distancing have become essential requirements to those seeking overnight accommodation. Businesses have had to adapt quickly to these changing trends in order to survive. Many accommodation services are still struggling in the face of travel restrictions but, as more consumers turn to local travel, this may yet improve.

INDUSTRY LEADERS

Hotel companies dominate but Airbnb is hot on their heels

When it comes to accommodation industry leaders, hotel companies take the top spots. Chains such as Marriott International, Hilton Worldwide, and the Wyndham Hotel Group dominate in terms of revenue, units, and brand value. Meanwhile, Airbnb is currently the leader in the home-sharing market, with its revenue and bookings rising steadily up until the coronavirus outbreak.

FOOD & DRINK SERVICES

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The food and drink services industry has faced unprecedented change due to the coronavirus (COVID-19) pandemic. Social distancing requirements and a range of ensuing safety measures meant that, across the globe, it was no longer possible to dine or drink in-house at food and drink locations. This forced the already established trend of digitalization to accelerate in the industry. In order to survive, food and drink service providers have expanded their digital presence by introducing online ordering and delivery services to stay afloat. Furthermore, virtual concepts, or “ghost kitchens” – restaurants in which only cooking is done, but no guests are served – have proved their viability during this crisis. Today, the marketplace for food delivery and takeout is soaring, a trend that will likely continue to influence restaurant operations and reshape the dining experience for years to come.

INDUSTRY DEFINITION

The food and drink services industry can be broadly defined as the process of preparing, presenting, and serving food and drink to customers. It incorporates many different sectors, including quick service and causal dining restaurants, full service restaurants, cafes and coffee shops, catering services, canteens, and more. Additionally, these individual sectors are subject to different trends, one example that is relevant to all of them is the rise of digitization and the online market. However, trend topics can also be more specific, for example, the demand for ethically sourced coffee in cafes and coffeeshops. New trends will continue to transform the outlook of this industry, the most notable of which being the coronavirus pandemic which is predicted to change food and drink services for years to come.

MARKET SIZE

Growth in food and drink services sees dip amidst COVID-19 pandemic

Up until the coronavirus (COVID-19) pandemic, the food and drink services industry had been seeing consistent year-over-year growth in all of its sectors. Yet, while the pandemic has proved to be a difficult time for the industry, it is still predicted to see growth. In particular, the online food delivery market size is forecast to grow more than was expected prior to the pandemic in the upcoming years.

MARKET SEGMENTS

Quick service restaurants prove the most resilient

Many quick service restaurant (QSR) companies already offered online ordering and delivery services prior to the COVID-19 pandemic. As a result, they were far more prepared for the crisis than their full service restaurant (FSR) counterparts. Coffeehouses, having a similar business model to QSRs, have also proved resilient.

INDUSTRY TRENDS

Food and drink services adapt to changing consumer demands

Consumer needs have changed significantly as a result of the coronavirus pandemic. These days, exceptional hygiene standards, online ordering, and home delivery have become essential requirements. Food and drink establishments have had to adapt quickly to these changing trends in order to survive. Even after adapting, many businesses are still facing difficulties due to changing restrictions in their regions forcing them to close their doors at short notice.

INDUSTRY LEADERS

Quick service restaurant companies dominate the market

When it comes to food and drink service industry leaders, quick service restaurant companies take the top spots. U.S.-based, quick service behemoth, McDonald’s, has been the largest food service chain in the world for many years, with Starbucks holding the second spot. Meanwhile, when looking outside of North America, 7-Eleven in Japan accounted for the highest sales of any food service provider, with the country being home to more 7-Elevens than anywhere else in the world.

ADDITIONAL REPORTS & MARKET OUTLOOK (COVERING A BROAD RANGE OF SECTORS):

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