The Travel and Tourism Industry, and Why It Matters…
Updated: Jan 1, 2022
The travel industry is one of the biggest and most dynamic economic sector in the world. In 2019, there were 2.28 billion international trips made globally. In 2019, Travel and Tourism (including its direct, indirect and induced impacts) accounted for 1 in 4 of all new jobs created across the world, 10.6% of all jobs(334 million), and 10.4% of global GDP (USD 9.2 trillion). Meanwhile, international visitor spending amounted to USD 1.7 trillion in 2019 (6.8% of total exports, 27.4% of global services exports).
World tourism enjoyed a bloom and record year, with USD 1.7 trillion spent by tourists in 2019. The Chinese travellers are the biggest spenders as a group, spending over USD 255 billion on their trips in 2019, while American tourists came in second with USD 152 billion spent, and German travellers were third with USD 93 billion spent on their trips.
Interestingly, but not too surprisedly, the Europeans accounted for almost half (48%) of the outbound trips in the world by region in 2019.
As a result of COVID-19 and the ongoing restrictions to international mobility, the Travel and Tourism sector suffered losses of almost USD 4.5 trillion, with its global contribution to GDP declining by 49.1% compared to 2019 to reach only USD 4.7 trillion in 2020; relative to a 3.7% GDP decline of the global economy. Domestic visitor spending decreased by 45%, whilst international visitor spending fell by an unprecedented 69.4%. In 2020, 62 million jobs were lost, leaving just 272 million employed across the sector globally.
Thankfully, the world has return to a limited form of normalcy, as governments around the world scrambled to pursue aggressive vaccination programmes to protect their citizens from this terrible virus. 42.9% of the world populationhas received at least one dose of a COVID-19 vaccine by September 2021. And 5.88 billion doses have been administered globally, and 29.49 million are now administered each day.
The world post-COVID, will never be the same again… As we re-imagine the future of the Travel and Tourism industry, there are certain trends that is happening right now, and will severely impact travelers and the industry and lead the way through recovery and beyond.
Demand Evolution
With the world still recovering from the COVID-19 pandemic today, travellers' preferences and behaviours have shifted, where safety and security is of utmost importance. This means that travellers are leaning towards domestic vacations with destinations they are familiar with. It will be vital, however, to ensure early stimulation of the all-important recovery of international travel. To encourage travellers to explore new places, it is important that we provide them with clear and transparent information, which will make them feel at ease and spur demand.
Health and Hygiene
Health and safety are paramount in this new era. In the near-term, consumer behaviours will be driven by personal experiences or advice from expertswhen making decisions about safety. Businesses need to collaborate more closely with their extended value chains in order to keep up with distancing and safe travel protocols. The flow of accurate and up-to-date information from the stakeholders in the travel ecosystem to the travellers will be a key driver and engine to the recovery of the Travel and Tourism sector.
Innovation and Digitisation
The global COVID-19 pandemic has wiped out numerous companies in the Travel and Tourism industry. This enormous crisis also presents a window of opportunity, providing a catalyst in the innovation and adoption of new technologies in the industry. Amid stay-at-home orders, digitalisation has been advancing at a rapid pace and becoming a basic prerequisite for safe and seamless travel experiences. Digital identity solutions like facial recognition and biometrics has also seen faster adoption compared to pre-COVID days. Interestingly, the acceleration and adoption of digital technologies is one positive outcome of this global crisis.
“I have been in the travel industry since the early 80s, and some of the issues that travellers faced today is no smaller than it was 10 years ago.”
Greg Duffell — Chief Strategy Officer of Smoove Xperience, a travel super app
As early as the 1970s, Global Distribution Systems (GDS) were some of the first companies in the world to facilitate business to business (B2B) electronic commerce. Airlines realised that by automating the reservation process for travel agents, they could make the travel agents more productive and essentially turn them into an extension of the airline’s salesforce.
Today, a GDS is a worldwide conduit between travel bookers and suppliers, such as airlines, hotels, cruises and other travel activities providers. It communicates live product, price and availability data to travel agents and online booking engines, and allows for automated transactions. The tangled web of databases has become even more of a labyrinth following the explosion of online travel agencies (OTAs) like Booking.com, Expedia and Wotif. Hotels and other travel entities can use technology solutions to capitalise on this trend, tapping into GDSs like Amadeus, Sabre and Travelport.
In the early 2000s and after the impact of the Dotcom Crash has subsided, there was another wave of transformation driven by companies that had survived the crash. These companies were not just leaner and meaner, but also able to pick off weaker competitors. Bolstered eventually by the introduction of the iPhone in 2007, a period of rapid transformation ushered in an era of consolidation, which saw a dramatic increase in market concentration among just a few dominant players who used M&A to pursue growth in both supply and demand.
After all this consolidation, there are now just four major holding groups of OTAs and related travel sites (such as metasearch, rental cars, and restaurant reservations), controlling over 95% of the market:
Frenemies… That pretty much sums up the relationship between travel industry suppliers and online travel agencies (OTAs). On one hand, the hotel booking sites like OTAs provide a steady source of hotel bookings that reliably puts heads in beds, all without that much effort on the part of suppliers. On the other hand, this “effortless demand” comes at a hefty cost: up to 30% commissions on each booking. For the suppliers in the Travel and Tourism sector, the relationship with the OTAs becomes a necessary evil, or you struggle to get customers for your business.
Today, It’s increasingly difficult for new entrants to marshal enough resources to compete at scale. For context: Expedia and Booking spent over USD 10 billion in combined advertising dollars during 2018. OTAs remain dominant on both the demand side (due to deep-pocketed investments in digital advertising) and on the supply side (due to global footprints of local market managers), which makes for a nearly-impossible environment for upstarts — and has brought the sector into intense regulatory scrutiny.
In 2016, EU regulators recognised monopolistic tendencies of online platforms in a 2016 report entitled “Online Platforms in the Digital Single Market”, which highlighted the impenetrable competitive moat that the major companies have built over the years — often with sometimes shady behaviour. This has resulted in a series of regulatory developments in the UK, as well as a prominent lawsuit and a nationwide consumer awareness campaign from the AHLA in the US.
That’s it for today’s session. Please check back to our blog as we produce more content pertaining to travel and tourism industry, and how xTripz Network will utilise the technological advancement in blockchain and the decentralisation to build the world’s first community-owned decentralised travel experiences platform.
About xTripz Network:
xTripz Network aspires to become one of the best travel booking site in the world, one which is fully decentralised and community owned and governed. The xTripz platform facilitates discovery, shopping, booking and payment of travel products, with novel DeFi and NFT features, replacing travel gift cards with our $XTR travel token, and providing our users memorable travel experiences and wide offering of travel activities. Our travel guides provide up to date information, including popular searches on travel activities, glamping near me and travel cryptocurrency.