A shift away from the purchase of goods toward investment in authentic, local experiences has gained momentum over the last few years - and that has important implications for the travel industry.
“That momentum will continue to accelerate, in turn making the impact of travel and tourism on global economies that much more significant,” says Anthony Capuano, CEO of Marriott International, during a panel discussion at the World Travel and Tourism Council’s Global Summit 2022 in Riyadh, Saudi Arabia.
Consumers are spending a higher proportion of their discretionary income on activities and experiences than ever, according to panelist Greg O’Hara, founder and senior managing director at private equity firm Certares. When asked where he would invest $1 billion, O’Hara says in wellness and adventure.
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Historically, people decided to go to Greece or Saudi Arabia or Italy, and then would decide what to do. Nowadays, “people are making decisions about travel based on what they want to do, not where they want to go,” O’Hara says. Someone who wants to go kite surfing, for example, is going to choose from the top kite-surfing destinations, he adds.
In a separate WTTC panel, Sandiaga Uno, Indonesia's minister of tourism and creative economy, says the new trend in tourism is more personalized, localized, customized and smaller in size.
“We need to change the mindset to quality and sustainability,” Uno says.
If travelers previously wanted sun, sea and sand, now they’re looking for “serenity, spirituality and sustainability. They want to try planting mangroves to offset their carbon footprint. They want to visit villages.”
Sébastien Bazin, chairman and CEO of Accor, says the industry needs to understand that the customer is different, and therefore the offer should be different.
“You just have to revisit the way we’ve been conducting business the last 50 years to a new world, which I think is a better world,” he says.
Hotels should cater not to travelers, but to local residents, through entertainment, music and workspaces.
People are making decisions about travel based on what they want to do, not where they want to go.
Greg O'Hara - Certares
“That’s a major shift,” Bazin says. “Make sure your hotel is busy from 7 o’clock in the morning until 11 o’clock at night.”
While 25% of international business travelers are “gone forever,” domestic business travel has recovered, according to Bazin.
“If you go for business [on a] less than four-hour flight or four-hour train ride, it is as strong today as it was in 2019,” he says.
Many travelers are combining business and leisure trips. Hotels are no longer empty on Sunday nights thanks to people blending business and leisure travel, Bazin notes.
Stephen Scherr, CEO at the Hertz Corporation, says the robust infrastructure that the industry needs, including charging networks, will require public-private cooperation.
The looming recession can’t possibly hit the travel industry as hard as the pandemic, Scherr says, and the industry is better prepared for crises now “because you understand how to marshal the resources and what your moves will be.”
Gloria Guevara, chief special advisor for Saudi Arabia's ministry of tourism, says countries need the vision, the leadership and the resources to maximize their recovery.
“I was very fortunate to have that in Mexico,” Guevara says. “We had a national agreement, and everyone was working [toward] the same goals, on the same plan, to recover from the crisis and to break new records.”