With vaccine roll-out in the western world in a good place and many government-enforced restrictions removed, demand for travel and hospitality is beginning to increase. However, the operating environment is constantly changing and remains uncertain. Based on
dynamics such as rising inflation, restricted movement, and supply chain disruption – currently all additionally impacted by war in Europe – the shape and speed of recovery looks very different across markets.
Where there is uncertainty there are also changes in demand that have the power to disrupt. This brings opportunities to companies who can identify emerging trends, and act quickly enough to tap into them. We witnessed some businesses achieve accelerated growth during
the pandemic, while others struggled to adapt to change. There are several market dynamics that businesses need to be aware of, and understand how they may evolve, in order to achieve recovery and resilience.
Leisure travel patterns are now growing faster than business travel. Before the pandemic, business travel was growing faster than leisure, international travel was more popular than domestic, and there was greater growth in demand for travel to tier 1 and 2 city centres than smaller towns and rural areas. The average number of rooms per hotel was previously increasing in size. This is no longer the case, and these trends have reversed, including the numbers of rooms per hotel stalling.
Importance of relationship travel
Business travel has been slower to recover. The downward pressure on this sector is likelyto continue as corporates reassess their policies and approaches in this area. Despite this, businesses have learnt that it is difficult to relationship-build in the virtual
environment to the same effectiveness as in-person. Therefore, we are seeing the return of travel to facilitate culture, develop relationships and socially connect people.
Changing buying criteria
The pandemic caused great shifts in consumer buying behaviours. Consumers want greater flexibility, and full control over options and preferences. Rapid digitalisation has also led consumers to expect easy and speedy service, online and offline. Working with reduced teams in high-stress situations, the pandemic has also led people to feel burnt-out and place higher importance on their wellbeing. Travellers prioritise a stress-free experience and after missing out for so long, they also want authentic, new or adventurous experiences. But with the cost of living and inflation rapidly rising, consumers are also being forced to become thriftier.
Increasingly, values-driven and more sustainable options are driving purchasing decisions, and significantly more so than before the pandemic. Our research shows that 58% of consumers report being more values-driven than pre-Covid, with 48% wanting to make more
sustainable purchasing choices going forwards. Surprisingly, many businesses are yet to offer credible sustainable options despite many signals this shift was coming. Today, sustainability credentials are not only being driven by consumer demand and legislation, but also by corporate customer demand as businesses increase efforts to manage their own sustainability by auditing suppliers. Those that meet these changing needs will capitalise on currently untapped demand.
Travel and hospitality businesses have the chance to recover stronger by responding to these changes. They must monitor and predict market shifts while scenario planning for how they will make the most of opportunities that may come and go with greater speed than
before. With this intelligence, along with the right technology, businesses can swiftly adapt to take advantage.