As is customary at this time of the year, we turn out minds, strategy and expectations to what we might expect to happen over the course of the next 12 months.
As part of the PhocusWire Forecast 2018 series, I have singled out five elements in the travel, tourism and hospitality industry that we at Travelport will certainly be keeping an eye on.
Consolidation
There will be further consolidation in the online travel agency sector with either outright purchases or holdings taken by CTrip, Priceline and Expedia in a number of players.
I expect mergers among a range of smaller players seeking scale, especially in Europe.
For example, CVC has bought Etraveli which in turn is buying e-Travel SA as part of a roll-up strategy.
Meanwhile, eDreamsOdigeo is looking at "strategic options".
Shift to mobile will accelerate
Travelport’s recent Global Traveller Survey highlighted how one in three travellers now books on a mobile device.
We believe 70% of all OTA bookings will be via mobile by 2020, with global smartphone ownership forecast to rise by 50% from 3.8 billion in 2016 to 5.7 billion in 2020.
The mobile networks’ improved connectivity will help drive this with 3.6 billion 4G users, two-thirds of the mobile base, expected by 2025.
Apps are still very much the way to go, enabling levels of engagement with the consumer which are not possible through other media.
Mobile enables the creation of a whole new raft of players specifically specialised in this channel and deploying different cost models for customer attraction which are not reliant on either meta search or search engine fees for traffic.
NDC APIs will commence, but with a slow start
There has been much hype about the impact of IATA’s New Distribution Capability technology standard.
2018 will see a few initial such “direct” connections linking bookers to airlines, but the real shift will be the integration of content sourced this way into the platforms and enterprise management systems used by travel agencies which are mostly the GDS.
This will commence in 2018 as the GDS channels become fully certified and the technical as well as commercial solutions are worked out.
But it will not be a “big bang”.
Dark horses
We will see further travel offerings from “newer” players.
These may come in the guise of Airbnb, Hopper, Google, Microsoft, Facebook, Alibaba, Paytm or others.
And such moves will be either be through M&A or organic development.
The quest here is for an improved integrated experience of researching, buying and sharing travel will continue, leveraging massively big data, connectivity and Artificial Intelligence.
The same will be true for the existing travel players of scale in the form of Expedia, The Priceline Group and Ctrip.
Growth (with a difference)
Passenger numbers will increase but airline margins will not be as good.
IATA believes the worldwide fuel bill will rise to 20.5% of total costs in 2018, up from 18.8% in 2017.
At the same time, Chinese airlines will continue to expand internationally and transformtheir already massive destination airports into major connecting hub airports.
It will copy the pattern established by the Gulf carriers from the 90s/00s and cities such as Hong Kong, Singapore and Bangkok before.
At some point India will join the fray, not only as a destinationbut also a connecting point.
Tougher competition from Asia with its higher capacity, coupled to higher oil prices, will make margins a challenge despite buoyant demographics and relatively healthy economies.