Northstar

FEATURE www.travelweeklyweb.com The Travel Gold Rush 2020 Amadeus and Oxford Economics has just released The Travel Gold Rush 2020, a recent study featuring the key fi ndings in the global travel and tourism industry. Lisa Akeroyd, regional director for Amadeus's Asia Pacifi c Business Solutions Group shared her comments on the study. "The most important trend we saw was the increase in travel spend per region, especially in Asia Pacfic. In addition to that how travel agents and airlines are trying to add additional services for the total travel experience. Here are some excerpts from the The Travel Gold Rush 2020 The Big Picture • The global travel industry is making an uneven recovery from the recession. 2010 has seen a return to growth with global arrivals in- creasing 5.6 percent in the first six months of the year. However, Europe remains sluggish and there are lingering economic concerns. Hotspots remain Latin America and Asia-Pacifi c. • Asia will represent one third of travel spending by 2020 – up from 21 percent today. Macroeconomic modelling by Oxford Economics has suggested a dramatic realignment of travel spend over the next decade. Asia will account for nearly 22 percent of global arrivals by 2020 (up from 18 percent in 2008) and the region's residents will account for 32 percent of travel spending by 2020. Options For Growth • Ancillary services offer new opportunities but they may not be the silver bullet to revenue growth that many expect. Ancillary revenue generation has spread from LCCs to major carriers and become an increasingly important source of revenues; however, it may not be the answer to revenue growth many would like. Considerable uncer tainty remains about how impor t ant ancillary revenues will be in the long term, especially to major carriers. Nonetheless, with estimate s suggesting that ancillary revenues may contribute anything up to 35 percent of airline revenues in the future the industry needs to fully understand where the opportunities lie. The Future Revealed • Traditional cabin classes to be replaced by "virtual classes" as individual traveller preferences create a personalised experience. The future of the aircraft cabin is set to go through signi f icant changes as customers are able to share their preferences with airlines and airlines will be expected to meet their individual needs leading to the decline of traditional cabin classes. • Face-to-face (F2F) travel agent set to become more highly valued. F2F agents may evolve to provide more services across the entire travel experience, particularly at its weak points. As travellers increasingly try out new experiences and destinations, it is likely that F2F agents may be able to play to their strengths of being there. They are likely to focus on industry niches/deep expert advice in the future. Their customer proposition will focus on ensuring that their cl ients are assis ted across the entirety of the travel experience. Exploring The New Frontiers • Emerging nat ions' travel habits remain the great unknown. Despi te their impor tance (and macroeconomic forecasts indicating broad trends) the re is some uncertainty about where citizens from emerging nations may travel 4 | ■ TRAVELWEEKLY ASIA | 30 NOVEMBER 2010 Amadeus is interested in how to support that process. Further there is very little technology for the traveller when they are out on the road. Travellers are desperate for this type of technology and interested in self service applications and technology, so Amadeus will be working on that in the form of mobile technology or Apps. We see a trend with low cost carriers and full service carriers unbundling services and ancillary services increasing and it's something we need to take a good look at." Trends within the travel agency segment Agents have been affected by the recent recession in much the same way as the global travel industry – as indicated by the decline in global arrivals during 2009, discussed above. In addition, there are also longer term questions about their future. Concerns about the role of face to face (F2F) agents, in particular, have been rising for many years, especially given the growth of the internet as an alternative source of travel bookings. For example, by 2008, 41 percent of Europeans booked holiday travel online compared to 32 percent in 2006. In terms of overall European travel, 39 percent of outbound trips were booked using the internet versus 24 percent using F2F agents (ITB 2009). Fast Future reports that 64 percent of people believe it is very likely that they will be booking the bulk of their travel online by 2015 (Fast Future 2009). Against this, a number of analysts have argued that agents will continue to play an important role in the future. Apart from the fact that the internet simply provides another business portal for many agents (particularly larger ones), F2F agents may be advantaged by factors such as professionalism, trust, bespoke advice and the need to deal with complex and demanding travel arrangements in the context of consumer time poverty. to or how their tastes may differ from Wes tern tr avel ler s. The demographic trends associated with Western travellers may be less relevant when applied to the emerging markets. Key Points • Whi l st the global tr avel industry has steadily grown since 1995, the recent recession was a setback with global tourist arrivals down to 880 million in 2009 from 920 million in 2008. • 2010 has seen a return to global growth, but Europe remains sluggish and there are lingering economic concerns. • The global aviation industry mirrors these trends. Whilst it is forecast to return to profit-ability in 2010, its forecast annual net profit margin is only 0.5 percent. Questions over industry viability and the need for new revenue sources remain. • Agents face the additional challenges of the demise of com- mission-based travel and increasing use of the internet in place of traditional F2F contact. • Agents are likely to reinvent www.travelweeklyweb.com

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