The nature of competition in the travel market is evolving rapidly. To survive and thrive, incumbent businesses must understand the nature of these changes and formulate actionable strategies to respond.
Our first paper in this series identified three key imperatives for change:
- High levels of growth: Travel and tourism outperformed the global economy for the sixth year running in 2016.1
- Increased competition: Digitisation has increased the level of competition in the industry. The World Economic Forum predicts a shift of $100 billion from traditional players to new competitors.2
- Changing expectations: Customer expectations are changing rapidly. Technology innovation is empowering customers and they are becoming more discerning.
Digital readiness is about more than technology. It’s about new business models and processes, company mind-set and culture. To be ready for the next decade a businesses’ operational processes – as well as technical systems – need to evolve. This includes the way businesses learn, make decisions and develop products.
Those leading the field are streamlining and accelerating their systems to increase the rate of customer feedback and product iteration. Online Travel Agencies are reaching customers through apps, websites, social media and voice-activated search. New business models in the sharing economy, such as Airbnb, have made a virtue of their people-powered platforms and are seeing significant growth; 49% said they had replaced a traditional hotel stay with an Airbnb stay in 2016.3
This paper examines the ways in which incumbent businesses in travel and hospitality can most successfully compete in the current market.