Faced with continuing economic headwinds, travel companies will focus on improving the customer experience through enhanced use of technology. And travelers will increasingly turn to rail when possible for their transportation for both the cost savings and eco-friendly appeal.
These are two of many predictions that leaders in the travel space shared with PhocusWire.
Read on for the new developments that they foresee happening in the next 12 months.
Jeni Mundy, global head of merchant sales and acquiring at Visa
As cross-border travel continues to climb, digital payment methods will lead the way for travelers who want to avoid currency exchanges or hunting down the nearest ATM to withdraw cash. A Visa survey of U.S. adults found that when traveling internationally for the 2022 holiday season, 33% of adults planned to rely primarily on digital payments during their trip, while 42% intended to use a mix of local currency and digital payments. Going forward, travelers arriving with digital-first payment solutions in hand - including multi-currency wallets and real-time notification of FX rates - will be able to hit the ground running.
Belinda Hindmarsh, chief growth officer at CWT
After another incredibly volatile year, the world eagerly awaits the reopening of borders in China, a country of more than one billion people. With the easing of quarantine restrictions combined with pent-up travel demand, we expect to see a surge in travel next year from this country.
With many seasoned hospitality employees having left the industry during the pandemic, there is work to do to attract and retain talent and showcase travel and hospitality as a sector with long-term career prospects. Filling roles alone will not be enough. It will take time and investment to ensure we are training and upskilling employees and rebuilding the wealth of knowledge that was lost.
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Traveler wellbeing, sustainability and travel trends have forced policy to the forefront of sizable travel programs. Being able to forecast travel volumes and spend, understand the travel carbon footprint of an organization and ensure transparency, flexibility and content choice for travelers makes the role of the travel manager more daunting than ever.
David Naumann, hospitality and retail marketing strategy lead at Verizon
Expect to see more usage of robots in the form of room service and
delivery. As hospitality faces labor shortages, technology like robots can
help seamlessly bridge the gap for customers.
Also this year, hotel networks will be increasingly under strain due to
the increased bandwidth demand of new devices and software. Many hotels
are due for a network upgrade to meet these demands. Upgrading to 5G
offers users more speed, greater bandwidth, lower latency and better
Michael Riegel, general manager for Europe at TripActions
Due to macroeconomic pressures, the greater accessibility and affordability that rail systems provide will prompt a continuous shift away from short-haul air travel across the continent.
The ongoing improvement in train services across the European Union, plus the collective push to discourage short-haul flights, will also encourage visitors and residents to opt for the more sustainable travel option - rail - for both business and personal travel. To keep up with this demand and create a more efficient experience for travelers, EU rail systems will integrate more tech-forward solutions.
EU organizations will take advantage of the ability to purchase sustainable aviation fuel (SAF) wholesale in 2023 to meet industry emission targets. Similar to how electric cars gained rapid popularity in the past 20 years, SAF will quickly gain traction within the corporate travel industry as an effective alternative to offsetting emissions.
Cynthia Huang, head of demand growth at Dtravel
Property owners will delay selling and look to generate revenue by listing their property through an online travel agency, increasing supply of short-term rentals. At the same time, travelers may scale back or eliminate travel plans altogether for 2023 due to inflation and layoffs, reducing demand. These two forces will mean fewer OTA bookings for hosts, and hosts will need to fill this gap elsewhere such as listing with regional OTAs, long-term rental platforms, increasing their direct bookings or finding new demand channels.
With the increasing commoditization of travel, including in the vacation and short-term-rental industry where property owners and managers are cross-listing across multiple platforms, operators want to differentiate themselves with unique and rewarding loyalty programs. With large brands such as Starbucks, Reddit and Nike incorporating NFTs into their business, consumers will expect the brands they engage to have creative loyalty programs that involve NFTs. The travel companies that do this will attract more millennial and Gen Z travelers.
Looking at the venture capital industry, I believe we will continue to see a normalization in valuations from the high points seen in 2021 and early 2022. This normalization will be positive for the industry as valuations were overinflated due to the impacts of market volatility in the last few years. Many companies will likely continue to raise where they can to shore up cash positions.
However, if raising is not possible, we will most likely see companies continue to take steps to ensure they have enough runway to protect against any volatility. For both VC and corporate venture capital (CVC), there seems to be plenty of money and interest from investors, and I expect to see this strong interest continue next year. We have also seen the creation of several new CVCs in 2022, which signifies to me that corporate venture capital will remain popular in 2023.
Margot Schmorak, co-founder and CEO at Hostfully
Vacation rental companies seeking growth in 2023 will need to use multiple tactics to maintain their growth in the face of increased competition. To grow their portfolios, we expect to see more clever marketing to attract new property owners. Growing the traveler side will be even more challenging with downward pressure on prices. Operators will need to lean into differentiators like amenities, location, and quality of hospitality to attract new guests.
Emily McDonnell, senior manager of corporate communications at Omio
With rising costs, we predict that more frequent domestic travel will be a lasting shift in traveler behavior. Connected to this, we believe that train travel will boom in 2023, because travelers are taking shorter trips and the cost of train tickets have not increased since 2019. Additionally, the increase in digital products offering a choice of travel options will help this shift by empowering travelers with easy-to-understand information on rail timetables, ticket types and connections.
Roy Cohen, CEO of Fetcherr
"Air commerce" will begin to take over the industry. Using the same technology as product SKUs, airlines will use universal SKUs to price travel products (seat, ancillaries and other external products) instead of pricing flights based on routes, day and time of flight. This will allow consumers to more easily compare complete travel prices directly based on value.
Marcus Räder, CEO of Hostaway
We can confidently say that property management companies going public will be a risky bet in 2023 after the disappointing performance of the Vacasa and Sonder IPOs. Instead, there will be a continued trend of investment in B2B travel. After a significant number of acquisitions in the technology space were announced this year, this will also remain attractive in 2023 due to the massive economies of scale at play.
While the last few years have seen successful launches of OTAs that target a specific niche, such as Hopper with Gen Z or Marriott with luxury travelers, the large amount of capital required to start an OTA and the high cost of marketing one will deter new brands emerging in 2023. Instead, competition between existing OTAs for bookings and inventory market share will heat up significantly. Direct bookings with property managers will continue to grow their market share.
Mark Simpson, founder of Boostly
2023 will be the year of the "slomad." Slomads have the same approach to work as digital nomads, but they stay in places for longer. They are more conscious of the environment, traveling slower to reduce their carbon footprint and fossil traces - for example, taking a bus instead of a plane. Property managers and hosts may see a further increase in long-term bookings as this trend takes off.
Nadav Cornberg, cofounder of Virdee
The hospitality industry has lagged behind airlines for years in terms of progressing digital experience, but with the urgent pressure on hotels to hire and retain staff, there will be a big catchup in 2023. Expect to see increased use of digital identity verification (previously unseen in hotels) and mobile technology becoming the norm rather than the exception in everything from check-in to service purchasing and loyalty programs.
Max Starkov, hospitality consultant and strategist
In 2023 fewer people will be traveling. Those that do will be traveling less and choosing lower category hotels, shorter trips and closer-to-home destinations.
Automation in the hospitality industry will become the way of doing business. I believe there are two macro socio-economic factors forcing the hospitality industry to accelerate the adoption of contactless, human-less and do-it-yourself services and increase their technology investments in automation: the labor shortages in hospitality (1.5 million open positions in travel, hospitality and leisure in Q4 2022) and the emergence of the new tech-savvy travel consumer.
Four- and five-star properties could still keep a “human guest-facing façade” but automate all of the back-end operations, enable smart guest communications and automate and personalize every touch point with the customer.
Hotels need to access real-time data so they know to staff up or slim down. Real-time occupancy data can make cleaning staff more productive by helping them prioritize which rooms to service first. QR codes and digital menus not only make ordering food and other items seamless, but also have a positive impact on the environment by reducing paper.
As awareness and adoption of fintech products grows, travelers increasingly will expect the option to lock in prices and gain peace of mind. The travel companies who provide it are more likely to thrive going forward.
As we start to see and feel the impacts of the climate crisis, we will see increased customer demand for low-carbon transport alternatives, as well as transparency from travel and hospitality businesses about their green credentials. Travel tech entrepreneurs will recognize the value of providing travel services that make it easy to select to create a climate-friendly travel experience. Whether that is mapping out scenic travel routes amenable to an electric vehicle or developing flight-free itineraries, there is money to be made and carbon to be saved with climate-conscious customers.
2023 won’t be the year of the travel metaverse, but it could see the growing maturity of blockchain applications in travel. Even with the continued fallout over the demise of FTX, some of the functionality enabled by blockchain-based transactions feel more tangibly useful. From the re-selling of event tickets that allows hosts to know who’s coming while also taking a cut of that additional sale, to validating the authenticity of the world’s finest Scotch, or tours operations that can verify your presence at certain locations across a discovery trail, the time has come to start putting blockchain applications into real travel environments.
Tim Davis, managing director and founder at PACE Dimensions
Even in uncertain times, companies that understand how patterns of demand are changing, and develop well thought through “commercial playbooks” to both plan for the probable and adapt with agility as different demand scenarios play out, can out-perform general market trends.
For all destinations and operators, focusing on the experience and sustainability are key to boosting appeal. Shifting consumer sentiment towards using more ethical brands will be a real driver for companies who understand the need to stay relevant and have a future.