Skift Take
The pandemic may be in the rearview mirror for hotels and online travel agencies, but the challenges for those sectors are far from over â especially with the threat of a recession still looming.
The Skift Research team recently unveiled its State of Travel 2024 report, a 400-page that documents the consumer and business trends in various sectors of the travel industry â including hotels and online travel agencies.
Editor-in-Chief Sarah Kopit and Head of Research Seth Borko discussed these trends with Senior Research Analyst Pranavi Agarwal and Senior Hospitality Editor Sean O’Neill in this episode of the Skift Travel Podcast.
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Key Points
Post-Pandemic Dynamics: 2024 marks a significant shift as the first non-pandemic year, making it challenging to compare current trends with 2019. The industry is navigating new opportunities and challenges, such as staying relevant amidst increased competition and changing consumer behaviors.
Challenges for Hotels and OTAs: The major challenges for hotels and online travel agencies (OTAs) include maintaining market share and staying relevant in a market with more competition and price sensitivity among consumers. Legacy players must evolve their business models to keep up.
Impact of Potential Recession: A potential recession could lead to a softening in travel demand, particularly in leisure travel. However, luxury travel might remain resilient, while midscale hotels could benefit from travelers trading down from more expensive options.
Gen Z’s Influence on Travel: Gen Z is seen as a key demographic, with a strong interest in experiential travel and a preference for experiences over material goods. This group is likely to continue traveling even in uncertain economic times, though they may prioritize value and unique experiences.
Role of Credit Card Platforms: Travel loyalty credit card platforms, such as those from Capital One, Chase, and American Express, are becoming increasingly influential in the travel industry. These platforms are reshaping the competitive landscape, challenging traditional hotel loyalty programs, and becoming significant players in the travel sector.
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Episode Summary
In 2024, the travel and hotel industries are experiencing a significant transformation as they navigate the first fully post-pandemic year. The industry’s landscape has shifted, making comparisons to 2019 difficult due to evolving consumer behaviors and heightened competition. Hotels and online travel agencies (OTAs) face the challenge of maintaining their market share and relevance in a market where competition is fierce, and consumers are more price-sensitive. To stay competitive, legacy players must adapt and evolve their business models to meet the changing demands of travelers.
The potential for an economic recession poses additional challenges, particularly for leisure travel, which could see a decline in demand. However, luxury travel might prove resilient as affluent travelers continue to spend on high-end experiences. Conversely, midscale hotels may see a boost as travelers opt for more affordable options, trading down from luxury accommodations.
Gen Z is emerging as a critical demographic in the travel industry, with a strong preference for experiential travel over material possessions. This generation is expected to continue traveling even during economic uncertainty, but they will prioritize value and seek out unique, authentic experiences. Their influence is reshaping travel trends, as they favor experiences that offer more than just traditional sightseeing.
Additionally, travel loyalty credit card platforms like those offered by Capital One, Chase, and American Express are becoming increasingly powerful players in the industry. These platforms are not only challenging traditional hotel loyalty programs but are also redefining the competitive landscape. As a result, they are becoming significant drivers in the travel sector, offering travelers new ways to earn and redeem rewards, further influencing consumer choices and loyalty.
