In January 2020, we partnered with 3GEM to survey over 300 middle-market consumer business leaders in the retail, travel and tourism, leisure and hospitality, and hotels and accommodation sectors. In this article we address the concerns of the travel and tourism sector.
Travel and tourism sector headlines
|Travel and tourism businesses are optimistic about their future prospects, with 86 per cent feeling positive about 2020.|
|Travel businesses view product development and responding to environmental issues as the biggest priorities for 2020, mirroring increased public concerns around the environment and sustainability.|
|61 per cent of travel businesses plan to expand into new markets over the next two years despite political uncertainty being cited as a key barrier.|
|The sector is ahead of the wider consumer industry on the implementation of innovative technologies but remains aware of the barriers to adoption.|
|Less than half of travel businesses view ATOL as being fit for purpose.|
Historically, the travel industry has proved to be hugely resilient despite their exposure to global events. This may explain why 86 per cent of businesses are positive about the prospects for their business. 77 per cent of respondents are also confident the current UK government can broker a Brexit deal which would protect their industry.
With the current outbreak of Coronavirus and the full economic impact yet to be realised, we expect further challenges throughout 2020. However, the confidence in the market indicates that any effects can be mitigated. Respondents considered their biggest threats to be market competition and product differentiation (35 per cent) and regulatory policy changes (35 per cent).
Travel and tourism business leaders believe carbon footprint shaming and sustainability (both 37 per cent) are the consumer trends that will impact their business most in the next two years, followed by environmental concerns and digital lifestyles (30 per cent). This is no surprise given the recent rise of Flygskam and the carbon-neutral growth agenda. 2020 will almost certainly see these social movements gain traction, with increased publicity, and respondents appear all too aware of this.
Expansion to new markets
61 per cent of respondents plan to expand into new markets over the next two years. This includes 44 per cent planning to move into EU markets, perhaps in an effort to maintain an EU base following the UK’s exit from the European Union.
Almost 40 per cent of businesses say a lack of local market knowledge is the main barrier to expansion, and 35 per cent consider the current political volatility across the world as a concern when making these decisions. Tapping into new markets clearly remains a priority, but the potential rewards come with increasing challenges.
Implementation of technology
Our survey found that respondents in the travel sector are miles ahead of the wider consumer sector in terms of the use of new technologies such as drones (30 per cent compared to the consumer sector average of 17 per cent). This trend continues in other key adopted technologies such robotic process automation (RPA), 3D printing, machine learning, and AI. Travel businesses are clearly embracing new technology in order to find a competitive edge.
However, respondents also recognise the current barriers to the adoption of new technologies. These include high costs, the resources required to manage change, and the lack of understanding of new technology amongst key decision makers.
In order to adequately implement these new technologies, focus on maintaining customer service remains a priority.
Less than half of respondents believe ATOL in its current form is fit for purpose. Criticisms include the inconsistencies in the application of repatriation, the lack of freedom it provides travel agencies, and that ATOL no longer achieves its objectives.
Popular adjustments to the current system include bringing the airlines into the system and reducing regulations around agencies. Is now the time for modernisation?
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