Get ready for growth and innovation: 2023 travel industry predictions
As we warmly welcome 2023, the travel industry seems poised for a comeback after a tumultuous year. The highs of a record summer of sales followed by a winter which froze expectations left many of us emotionally exhausted. So will this year give us another ride on the rollercoaster? What are the trends that will define 2023?
Get ready for a wild ride in 2023 as the travel industry looks to bounce back from the challenges of the past years and embrace a new era of growth and innovation. Our experts will make their predictions and examine the trends shaping the industry in the coming year.
China will hold the keys to a full worldwide post-Covid recovery
The Asia Pacific region was lagging behind the rest of the world in its post-pandemic recovery in 2022. But as we move into 2023, this is expected to change, thanks to the return of Chinese tourists.
Before the pandemic, China had been the largest outbound travel market in the world, with Chinese tourism expenditure totalling $255bn in 2019 - more than France, Russia, Australia, Canada, South Korea, and Italy combined. However, the country's strict "Zero Covid" policy, which kept Chinese citizens locked down for the past two years, effectively put an end to outbound tourism from China.
As the policy is lifted and travel restrictions ease, we predict a massive influx of Chinese holidaymakers flying, sailing, and driving their way around the globe. This pent-up demand for travel, combined with China's policy reversal, is expected to help the global travel industry make a full post-pandemic recovery in 2023.
Airlines will increasingly look to ancillaries to boost revenues
Before the pandemic, ancillary revenue was already on the rise. Between 2007 and 2019, total U.S. airline baggage fees increased from $464M to a staggering $5.8B. And that's just baggage fees - airlines have been adding an increasingly diverse range of ancillaries to their business models. As air routes become increasingly saturated with competition, we expect airlines to rely increasingly on ancillary revenue to fill the gaps in their income.
In addition to the growth of ancillary products, consumer trends also point towards an increase in the number of flights booked directly through airlines' channels. In 2023, the percentage of flights booked directly is expected to reach 56%, a 12% increase in only three years. This presents another opportunity for airlines to boost revenues through ancillary sales, such as by selling additional services or products during the booking process.
Currently, ancillary products account for approximately 14% of global airline revenue. In 2023, we predict that this number will be even higher. Airlines with the most responsive and innovative ancillary marketplaces will be best positioned to take advantage of this trend.
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Tours and activities to join the 21st century
One of the last major bastions of offline sales, tours and activities, will start the move online in 2023. The shift towards online bookings offers many benefits for both customers and operators, such as convenience, timesaving, and the ability to access a larger audience. Additionally, online booking platforms allow for more dynamic pricing, real-time inventory management and improved customer service.
Although the commissions on the sale of tours and activities are lower than hotels, it remains an area of untapped growth for online booking platforms. Therefore, we expect that 2023 will prove to be a year of significant online growth in this area as travel technologies bridge the gaps between brick-and-mortar operations in destinations and end customers online. In addition, the rise of mobile app usage will facilitate the booking process and will become a more common way to book tours and activities.
Investment in digital transformation will remain a top priority in the industry
The impact of the pandemic has highlighted the need for travel companies to adapt and improve their operations, customer experience and revenue. Digital technologies play a crucial role in achieving these objectives.
Travel companies will continue investing in automation, virtual reality, AI, and mobile technologies to streamline operations and improve customer experience. Additionally, with more data available than ever, we expect to see travel companies using advanced analytics to make data-driven decisions, allowing them to optimise everything from pricing to route planning and personalise marketing efforts.
The use of blockchain technology is also likely to grow in popularity, as it improves efficiency and security in areas such as bookings, payments, and loyalty programs, in addition to tracking compliance with travel restrictions and regulations. As a result, digital transformation will continue to be critical for the travel industry in 2023, and those companies that invest in these technologies will be well-positioned for future growth and success.
Hotels will go digital
In 2023, the automation of hotel services will become increasingly popular. The pandemic has greatly impacted the hotel industry, and many hotels are searching for ways to decrease costs while providing a better guest experience.
Post-pandemic, we have also seen a steep decline in the number of workers in the hospitality sector's labour market, which has had two effects; Hotels are understaffed, and the cost of labour increases.
Automation is an ideal solution as it reduces the need for front-desk, reservations and operational staff and saves the hotel money while providing guests with the convenience of self-check-in and check-out, keyless room access and online payments.
Automation can also be implemented in many ways, like through mobile apps, kiosks, or other digital technologies. We predict that in 2023, many hotels will adopt some form of automation. However, it's worth noting that not all guests will prefer an automated experience; we predict that four-and-five-star hotels will continue to rely on front-desk staff to ensure customer satisfaction but rely on automation in other ways.
Automation also means that hotels will need more powerful network capabilities to handle the new automated systems, which means, luckily for guests, better hotel Wi-Fi.
2023 looks set to be a year of growth and innovation for the travel industry as it looks to rebound from the challenges of the past years.
From China's return to the global travel scene to airlines looking to expand ancillaries to boost revenues and the increasing popularity of digital automation in the hotel industry. With new technologies and shifting consumer trends, 2023 promises to be a year of exciting opportunities for companies to adapt and thrive in the industry.
The shift towards online bookings for tours and activities and the continued investment in digital transformation highlights the need for companies to stay on the cutting edge to meet the demands and expectations of the modern traveller.
If you want to know more about how ANIXE can provide you with the keys to digital transformation, please don't hesitate to contact us today!