After another year of mixed fortunes for the travel and tourism sector, we look ahead to the big issues that businesses will face in 2019.
Jack be nimble
Will the inflexibility of more traditional chartering models hold those businesses back in 2019? It is well reported that whilst we are seeing travel spend hold up in these times of economic and political uncertainty, consumer demand is shifting towards more regular shorter breaks, as the purse strings of a time precious consumer tighten across the board. Flying on a Friday evening and returning on a Monday morning may be the extremis, but those whose models can cater for increased demand here may be net winners in 2019.
Greta Garbo was ahead of her time in wanting to be alone. Solo travel has been an emerging trend in recent years, and based on UK demographics and consumer trends, isn’t set to plateau any time soon. A recent Mintel study reported that 60 per cent say there is a widespread belief the travel industry does not cater well enough for solo travellers highlighting the opportunity in a growing area of the market.
The travel sector will continue to attract Private Equity investment particularly as other corners of consumer markets suffer from on-going uncertainty in consumer confidence. PE has continued to outperform other asset classes in the face of a prolonged, low interest rate environment, resulting in record levels of dry powder waiting to be invested. Appetite for PE deals has been further supported by speculation of changes to Entrepreneurs’ relief, encouraging shareholders to sell a stake to secure the 10 per cent tax rate. Look out for more deals getting over the line in the first quarter of 2019; either through PE directly or perhaps, as we’ve seen in the second part of 2018, through PE buy-and-build strategies.
A new kind of detox
It is no wonder with President Trump claiming ‘fake news’ at any negative press, we are all increasingly adjusted to challenge what is in front of us. And with headlines in 2018 reporting claims such as ‘one in three TripAdvisor reviews are fake’, it is likely more and more are looking for recommendations offline, seeking out destination specialists and deciding to leave the devices at home altogether when it comes to the holiday itself. Digital detoxing may seem like the latest fad, but with travel businesses focused solely on wellbeing popping up and highlighting the benefits of getting away from constant connectivity, perhaps it is a segment of the market to which we should all switch on!
Hotels fight back
With AirBnB being banned in some cities amidst a backlash from local residents regarding overtourism, the sharing economy has hit a roadblock in the accommodation sector. Hotel chains had already been responding to the threat with improved web offerings, more home comforts in rooms (think coffee machines, kitchenettes, sofas), and significant growth in affordable suites and hotel apartments. In 2019, we expect hotels to continue to innovate, with deeper guest personalisation, an emphasis on promoting excellent service and, in an effort to counter the protesters, a greater focus on integrating with local communities and becoming hubs for nearby residents.
Is the party over?
Millennials have turned their back on the 18-30 package holiday in favour of more curated trips that centre around Instagrammable moments, culinary experiences, culture and great music. Holiday providers will be looking to reinvent their offering in 2019 for the under 30s. Packages will need to offer good food that caters to a range of dietary requirements, focus on wellness by offering in-resort activities such as yoga and fitness facilities, whilst also providing unique late night elements for those that still want to party.