Online Travel in 2016: Mobile Channel and Peer-to-Peer Travel Services Drivers of Growth
Prospects for online travel are positive for 2016 due to the expected strong performance of tourist flows and travel products sales, as well as to the continuous rise of technology players in the travel industry.
“Smart travel”, which is the use of technology to enhance the travel experience, was a key trend in 2015. 2016 will see further development of this trend, with travel companies becoming mobile travel assistants for their customers. Consumers are expected to increasingly turn to peer-to-peer travel services, which represent today the best answer to some of their needs, while large travel companies are likely to gradually embrace the peer-to-peer trend.
Tourism flows growth and the terrorist threat
2015 was another strong year for world tourism, with growth estimated to reach 4.5% in terms of global international trips. The performance of tourist flows was robust across all world regions, except Africa. Growth of Asian inbound trips was mainly driven by intraregional flows, especially from China. The Americas benefited from the reprise of the economy in the US. European inbound tourism saw a rise of flows from its traditional markets, and less competition from North Africa. Africa, on the other hand, recorded a poor performance due to safety, health and terrorist threats, especially in Tunisia, Kenya, Uganda and the Western countries of the continent.
The terrorist attacks which took place in Paris in November 2015 determined a decline in flows to France in the last two months of the year, and opened new possible scenarios in case these attacks will not remain isolated events in Western Europe. Terrorism is reshaping the global tourist map with destinations, which were in the last few years extremely popular with European tourists, such as Tunisia and Egypt, suffering sharp declines, and other very important destinations, such as Turkey and Morocco, recording stagnation or a moderate decline in 2015.
However, tourism has demonstrated several times in the recent past to be a vital component of our society, with people showing a strong will to go on with their lives without fear and to continue to explore the world. This means that if the terrorist threat will be contained in 2016, and no more tragic events of the magnitude of the Paris attacks will take place, the rise of tourism flows is expected to continue in 2016, in turn fuelling growth of sales in the travel industry, and the online travel sector.
Travel experiences increasingly smart and seamless
2015 has seen technological innovation in fields such as mobile travel and personalisation make the travel experience increasingly seamless and “smart”. Thanks to these technologies it is now possible for companies to follow travellers throughout their trips in order to help them with the issues they face and provide support to enhance the travel experience.
This development, probably the most innovative of 2015, is expected to continue in 2016 thanks to the increasing popularity of wearable technologies and to the investments by companies in mobile technologies and big data analytics. Linked to this development is the expansion of online and mobile travel in land transportation, with an expected fast rise of online and mobile bookings in this area, as well as the development in the next few years of intermodal and D2D (door to door) technologies and reservation systems.
Another important development concerns travel apps. Driven by the rise of mobile travel, and thanks to the superior convenience they offer, apps are expected to gain ground over web browsers in travel in 2016 and beyond. This means consumers will tend to increasingly rely on a smaller number of travel providers, downloading their apps and using them during their trips.
Technology players further strengthen their competitive position in travel
The rise of innovative technologies in travel, and the changes they are driving in travel consumer behaviour, means technology will also be a key competitive factor in this industry in 2016, with companies leading innovation in areas such as mobile travel and personalisation gaining further ground.
The two dominant OTAs (online travel agencies), Expedia Inc and The Priceline Group, are expected to stay at the forefront of innovation in 2016, and as a result, to strengthen their position further in the consolidating OTA industry.
Instant Booking by TripAdvisor and Book on Google represented a significant innovation in 2015, which initially faced opposition from OTAs. This created an opportunity for hotel companies and other travel suppliers to become the main partners for these innovative platforms, which would have allowed them to challenge OTAs in terms of web traffic in the next few years. However, this opportunity was not fully seized, allowing the leading OTAs to reconsider their positions and renew their strong partnership with Google and TripAdvisor for 2016 and beyond.
The sharing economy, the other big disruptor in travel in recent years, together with the OTAs, also saw a positive year in 2015. Companies such as Airbnb and Uber were able to understand how the rise of online and mobile technologies and social media functionalities could have changed travel, “democratising” the supply of travel services and benefiting people both as users and providers of peer-to-peer travel services. Peer-to-peer travel services are today part of travel consumer expectations as they represent the best ways to satisfy some travellers’ needs. As a result, national laws will need to regulate them rather than try to stop them. In 2015, key travel players such as Expedia, Priceline and TripAdvisor embraced the peer-to-peer trend, especially in the lodging category, through acquisitions or organic growth. 2016 could see some further significant developments in land transportation as well as in in-destination tourist services.