Deloitte: Key forces reshaping the travel and tourism industry
Facing travel’s future
Economic, social, and technological shifts are pushing the travel industry toward seismic change. Learn more about these key changes, their implications on the future of travel, and how travel and tourism companies can adapt to meet evolving traveler expectations.
Adapting to today’s travelers
Travel is wired for slow changes. Given long aircraft manufacturing times and life cycles, it can take decades to roll out new technology across a fleet. Hotels can be retrofitted for new needs but have limited room for flexibility—and investment in new builds and updates is often impeded by economic conditions like interest rates.
In marketing and distribution, effectively connecting supply to consumer tech platforms presents challenges with content, consistency, and bookability—all of which can defy efforts at new merchandising models. Each sector of travel contends with legacy systems that can stymie nimble innovation.
These structural impediments to change have collided with major disruption over the past two decades: shifts in who travels, where they stay, and how they book (figure 1). Those changes are just the beginning. Deloitte’s Future of Consumer forecasts that the changes of the past 20 years “will pale in comparison to the paradigm shift we are about to see in the coming decade.”
The six forces the Future of Consumer identifies should compel executives across industries to chart a new course and reshape businesses and our broader shared future for the better. (Go here to learn more about the six forces, and how to apply markets, models and mechanics to harness the forces for sustainable growth.) These economic, social, and technological paradigm shifts are pushing the travel industry toward potential seismic change. Facing travel’s future requires a clear understanding of these dynamics and an adaptable approach to meet the evolving expectations of travelers. Capitalizing on these forces and their implications will likely be fundamental to success for players across travel. Ignoring them could lead to a diminishing customer base, erosion of the bottom line, and missed opportunities for growth.
- The changing consumer
- An evolving society and culture
- Exponential xTech
- Radical industry upheaval
- Extreme climate change
- Shifting economics, policy, and power
Deloitte’s Future of Consumer research, applied to the travel industry, points toward three major themes affecting the future of travel:
The changing traveler
The demands of younger, tech-savvy, and conspicuously conscious generations will steadily become more prominent than those of boomers, a lucrative segment that is beginning to age out of frequent travel. At the same time, India is joining China as a rising source of visitors. And across geographies, starker lines of affordability could tempt travel providers and investors to put all their chips on luxury, potentially causing them to miss opportunities presented by the mass market.
Exponential tech enters a legacy-laden industry
Travel providers stand to unlock significant savings and improve the trip experience by applying artificial intelligence (AI) to operational efficiencies across their organizations. And more transformational innovations are on the horizon. AI is poised to completely change travel discovery and shopping and has great potential to improve the trip experience. But to deliver functionality that meaningfully eases and enhances travel, providers will need to untangle the legacy technology that has often slowed innovation in the past, as well as commit to rigorous leading-edge data capture, curation, and enablement.
Navigating climate headwinds
The travel industry’s attention to sustainability has grown substantially in recent years. Over the coming decade, even greater investment and innovation is needed as suppliers likely face climate-related pressure on three key fronts:
- Demand for clear sustainability metrics and ways to mitigate and offset trips’ greenhouse gas emissions, especially from
corporate clients and young travelers. - Growing efforts at regulation targeting travel, potentially challenging margins in select categories.
- Accelerating impact on the viability and seasonality of some destinations due to heat waves and other extreme weather.
