Optimism comes easy in an auditorium filled with hundreds of enthusiastic – and maskless - travel professionals. With COVID shutdowns relegated to the past, and demand for travel withstanding inflation fears in the present, how could the sector’s future be anything but bright?
Yet a panel of industry leaders offered some words of caution at the opening day of the first MarketHub Americas conference in four years Wednesday in Cancun, Mexico. Their message in short: Don’t let the pent-up appetite for travel and experiences blind you to the need to adapt to the changing climate and consumer expectations.
“The recovery post-pandemic has been just amazing. We see that travel really ranks very high in life priorities,” said Nicolas Huss, the CEO of Hotelbeds, the conference’s host. “But with the blessing come the challenges.”
Chief among those is sustainability, a troubling subject both for the complexity of any response and the frequent contradiction between surveys that show growing concern among travelers for environmentally-friendly policies and booking data that indicates a reluctance to pay for those measures.
“Sustainability. You will see a lot of that. And some of you may be thinking, ‘Yeah, yeah, we’ve heard that for a long time. It’s there but not real.’ We think that things are changing,” Huss said. “There will clearly be a reshaping of our industry in the coming years, and we need to take that very seriously.”
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Nejc Jus, the head of research for the World Travel & Tourism Council, said COVID has made travelers more concerned about sustainability.
“They do care about the environment,” he said. “If you ask me the question where next for travel, one answer is we all need to become climate leaders of our sector, the guardians of nature, so that our sector can thrive not just one or five more years but serve travelers for generations to come.”
It’s hard to argue the point as record droughts give way to unprecedented floods and bigger wildfires to more damaging hurricanes. Yet it can also be hard to focus on a sobering future when the party punch bowl is still brimming.
While Konrad Waliszewski, CEO and co-founder of @Hotel, sees the danger in that, he also spoke to the effects COVID had on travel demand.
“We had many years where we took for granted that there will always be a plane to fly somewhere and an open border waiting. And that we can always do that next experience next weekend or do that thing with our family next year,” he said as part of one of the panel discussion’s more spirited exchanges. “The one thing that people are not taking for granted and they’re prioritizing more than anything is travel experiences. … They had two years of not being able to do anything or go anywhere.”
That demand hasn’t even been blunted by persistent inflation, Huss conceded.
“The cost of living has increased dramatically in many countries. Even though we knew that travel and tourism are pretty resistant industries in crisis time, some of us were concerned that this would hurt badly,” he said. “As you go through, you see that it [demand] has climbed much higher. It doesn’t mean that we’re immune and that it will continue forever. … We have learned through COVID that we shouldn’t consider that the good will be there forever, but that we need to make it happen collectively.”
Antonio Herrera of Blue Diamond Resorts said he’s been surprised inflation hasn’t already taken a toll on travel demand.
“It was amazing to see how it was working the past 12 months. But I think at [some] point this has to all come to an end because you only have what you have,” he said. “People were really eager to go out. They had some savings through COVID but, my opinion, once that’s gone, we head back to normal. … Slowly, I think it’s coming to an end. That’s what I think, though I hope to be wrong.”
Waliszewski pushed back. “I think it [travel] will be the last thing that consumers cut,” he said. “Usually, it’s the first thing, but after a pandemic, it will be the last thing. People are making a lot of other hard cuts in their life. But their vacation – they’re not ready to give that up yet.”
The recovery post-pandemic has been just amazing. We see that travel really ranks very high in life priorities. But with the blessing come the challenges.
Nicolas Huss - Hotelbeds
Diana Marin, a senior vice president at NH Hotel Group, said just as COVID helped make more people sensitive to environmental concerns, it also led more people to prioritize experiences.
“At the end of the day, it’s changing behavior,” she said. “I think in the past it was more focused on buying things or investing in a house or investing in a car. But now people are looking more at investing in an experience, and that is changing in terms of priorities in our lives. It’s something that’s clearly here to stay, and I think it’s going to be extremely positive for our industry if we are able to deliver those experiences that our customers expect.”
Huss pointed out another seeming incongruity between consumer attitudes and behavior. He noted the complaints the travel industry has heard about things like operational capacity and staffing challenges — even as satisfaction survey rankings remain as high as before COVID.
“There is maybe here a contradiction between the reality of the performance … and the customer satisfaction,” he said, musing that consumers’ desire for travel might make them more willing to forgive the inconveniences. Such a honeymoon won’t last forever, he warned, creating a potential “wave of dissatisfaction.”
“The traveler is increasingly sophisticated,” he said. “They are technology savvy. And what is sure is that they want the value for the price they pay.”
Those views lead him to conclude that even as good as consumer appetite for experiences has been for travel, it doesn’t relieve industry leaders from preparing for a more sustainable future.
“It’s about more than [sustainability]. It’s about ethics and doing right by business: What is it that we want to do collectively, how do we want to position our company, our family, our person, etcetera,” he said. “We tend to think we can kind of play with this at the margin. My view is that when it comes to ethics, it’s non-negotiable. It’s one strike and you’re out. …
“The good thing, on top of the ethical part of it, is there’s also a business model for it. I mean people are really willing to pay more because now they have been assured and they understand there are some additional costs from a hotel perspective, from an airline perspective, etcetera, and I think it’s very positive.”
Waliszewski said the business imperative was even more evident when looking at generational attitudes.
“You see that Gen X, 50% of people are willing to spend a little bit more [for travel] if it’s sustainable and ethical. Millennials are 66%. Gen Z is 76%. And it’s continued to rise,” he said. “The younger generation, especially Gen Z, is willing to put money where their mouth is. Their money is not a meaningful part of purchasing power today, but each year that is changing, and it’s growing quickly, so I think now it’s a responsibility that we all have and it’s a great business model. But in a few more years, it’s just going to be a necessity. You won’t be able to survive if you’re not thinking about that.”
*The reporter's attendance at the event was supported by Hotelbeds.
Phocuswright Europe 2023
Top leaders from European hotel groups speak about servicing high demand, solving the labor shortage, protecting the environment and accelerating revenue.