Value Propositions to Capture Pent-Up Travel Demand in 2023

The Hospitality industry must discover new value propositions in 2023 and, above all, know how to communicate them in response to the needs of pent-up demand, which appears set to reach a record high this year. We are navigating a perfect storm of highly adverse headwinds triggered by the economic recession, the aftermath of Covid-19, supply chain disruption, the war in Ukraine, rising energy costs, higher interest rates and rampant inflation reducing consumers’ disposable income. Battered by this storm, which has emerged from the worst of the pandemic, people have shown they are eager to travel despite the pressure this places on their disposable income, driven by a sense of loss and the need to reconnect with family and friends. This demand is not consistent around the world, particularly because the second-largest economy, China, continues to pursue its zero-Covid policy, affecting the travel sector in Asia and the global economy. The bold wave of protests sweeping China against this policy should imminently lead to the reopening of its borders to travel. As with the previous crises following 9/11 and the global financial crisis, leisure travel recovered first, while business travel took much longer to rebound. Technology and remote working will mean fewer corporate trips, settling at around 80% of pre-pandemic levels. Russia’s shutdown of natural gas flows to Europe has caused energy prices to soar. Markets have been further affected by poor results from major technology companies such as Meta and Alphabet, whose figures highlighted considerable weakness in consumer spending and advertising space. This would normally provide clear signs of an impending recession. As growth slows and the labour market cools, the risk of job losses increases, so precautionary household savings are likely to rise. This could, seemingly, curb consumption.

Where are the consumer trends that will shape 2023 and beyond heading?

• Prices will rise, as airlines face the highest jet fuel prices in more than 20 years.
• Inflation and interest rate rises will continue to factor into travel budget decisions.
• Customers will continue to prioritise travel above all other calls on their disposable income.
• Businesses will become more welcoming, sustainable, accessible and focused on local communities.
• Combining work and leisure on international trips will help ensure employees remain motivated.
• Digital nomads are here to stay, as small and large companies develop more employment policies.
• Flexible travel options are essential, allowing people to amend bookings without penalties.
• Accommodation cleanliness standards will no longer be as critical, as they are now taken for granted.
• Social media platforms continue to evolve, with Instagram and TikTok influencers driving change.people
• Travel choices continue to be influenced by clear messaging and visuals that strike an emotional chord.

Despite concerns about inflation, there are reasons to be optimistic. People see travel as a major priority in their lives, as business and international travel resume. The travel sector’s immense resilience is driving enormous pent-up demand to date. Communicating your brand and value-added offerings has never been more important to make the most of it all.