Katarzyna Sobczak-Rosochacka
Head of Marketing
The travel and tourism industry is currently undergoing significant changes. Nowadays, new challenges like consumer financial concerns, broad acceptance of remote work, climate change issues, and increasing awareness and sensitiveness tend to shape the industry in the future.
Despite the pandemics, money concerns and all the other circumstances, the travel market is strengthening. Overall, people are willing to travel more. In 2023, Americans surveyed by Deloitte were more inclined to go on three trips this summer in comparison with two in 2022. That’s partly because they can work remotely nowadays and combine work and holidays.
They are also more willing to spend more for travelling in the next 12 months (+28%; OutPayce). That means more opportunities to expand travel-related businesses or build new travel companies offering digital tools for group and solo travellers from different age groups.
But how actually is the travel landscape changing? What are the main travel trends? What are the chances and challenges for entrepreneurs who own travel apps? How to win the market in such a dynamic environment? Let’s find out.
In this article, I’ll focus on top travel trends and vast possibilities created by the sustainability approach and changing environmental conditions. If you want to learn more about spending and demographics or how modern technology boosts businesses, I encourage you to check my other articles on those points.
When the pandemic started in 2019, within a few months global travel market became significantly limited and restricted. According to Deloitte, in 2021 and most of 2022, the travel industry experienced a steady rise in demand and performance, driven by improved pandemic conditions. The most beneficial were hotels and airlines that raised profits on unleashed global leisure demand, achieving rates and revenue levels surpassing those of 2019.
While the pandemic’s impact remains unforgettable, travellers gradually move past it. But even today, people continue to prioritise hygiene and safety, emphasising the significance of contactless payments and remote work options. However, health concerns are no longer discouraging them from travelling.
According to Geoff Freeman, U.S. Travel Association President and CEO, “Robust domestic leisure travel demand has been the driving force in the overall industry’s post-pandemic comeback. Though the surge we experienced in the last year is starting to moderate, we expect this segment to remain resilient in coming quarters.” (U.S. Travel Association).
According to U.S. Travel Association, for domestic leisure travel, the currently observed trend is predicted to persist, but with a steady growth of approximately 2% in 2023 and 2024. As far as domestic business travel is concerned, both volume and spending are projected to expand, but slower, as those are influenced by economic factors. As for business travel volume, a return to pre-2019 levels is not predicted until 2025.
According to Statista, anticipated global travel revenue is forecasted to grow by 4.42% annually between 2023 and 2027, leading to an estimated market size of approximately US$1,016 billion by 2027. The Hotels market is the most significant segment within Travel & Tourism, with an anticipated market volume of about US$410 billion in 2023. The projected average revenue per user (ARPU) is estimated at US$0.46k. That means, there’s a huge market to be won by those who will respond to changing consumers’ needs best.
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More and more travellers are digital nomads who rely on technology. Regarding the broader Travel and Tourism market, the importance of the Internet is constantly growing, and it’s projected that around 74% of the total revenue will be generated through online sales by 2027.
People are not into tour operators anymore. 83% of respondents from the United States declare that they want to use online solutions for booking their trips (Stratosjets), so the market seems enormous from a worldwide perspective. On a global scale, the United States is set to contribute the highest revenue, with an estimated US$190 billion in 2023 (Statista).
According to findings from the survey conducted in 2022 on individuals, 41% exhibit a preference for making reservations through online travel agencies (OTAs), whereas only 29% opt for booking through travel agents or operators. Approximately 20% of respondents choose to contact travel agents for their bookings.
OTAs are mostly used by younger generations, especially by people under 35 (Hospitalitynet, Marketsampler). Millennials tend to arrange their trips through online travel agencies as well, but around half of them will visit a hotel’s website for more details (CondorFerris). However, if the processes are alike, 70% of respondents will book accommodation using OTSs because of higher security and reliability, convenience, loyalty discounts and access to verified reviews written by people who visited those places (Hospitalitynet).
It looks like the best development direction is to provide people with an all-in-one app that allows them to fulfil every goal that might appear during their journey right from just the app. Referring to Travelport research, 45% of participants prefer using a single website to reserve an entire trip, encompassing airline options, hotels, car rental services, and additional amenities. Half of Gen Z travellers favour booking an entire trip through a single website.
According to Statista, a research report released in March 2023 revealed that a mere 11% of leisure travellers and 16% of business travellers surveyed globally expressed a lack of frustration when arranging trips online. Around 23% of leisure travellers faced the constraint of a search function restricted to location.
Travelport noticed that a third of families encounter challenges and invest considerable time in comparing offers during their quest to search for and reserve flights and accommodations. Therefore, it’s not surprising that 23% of families do not derive satisfaction from the process of searching and booking trips.
All that creates vast opportunities for travel application entrepreneurs. The more people travel, the higher the demand for digital travel companions, as people are more and more willing to plan their trips themselves. With growing consciousness and demand for convenience, additional solutions will be required to keep up with the changing needs of consumers. That creates opportunities but also challenges.
Currently, global warming is a commonly discussed problem, and 68% of participants in Deloitte’s Global State of the Consumer Survey regard climate change as an urgent matter. A recent Booking.com report states that with the escalating climate crisis and increasing global consciousness, individuals travel with greater thoughtfulness, creativity, and purpose. Sustainable travel is no longer a niche aspiration but a widespread one.
In contemporary times, sustainable travel goes beyond mere recycling and waste reduction. The survey conducted by Booking.com underscores a growing inclination to opt for conscientious decisions throughout the entire travel journey, encompassing transportation, lodging, and expenditure patterns during trips. Present-day travellers pay more and more attention to local communities, the environment, and biodiversity. They are more aware and respectful according to traditions, value authenticity and look for more niche and peaceful experiences.
Eco-friendliness is becoming not only a trend but is internalised by people and influences our daily decisions. 94% of respondents are willing to consider sustainability, from which 40% actively look for information, and 54% do not but are willing to consider that if accessible (Booking.com).
The eco-awareness also affects the way how people perceive distances. It shapes the individual preferences of how far they travel and what means of communication they use. 51% of respondents believe that sustainable travel is defined by lower-to-no CO2 emissions. To reduce their carbon footprint, 75% declare that they would decide to use public transportation, bicycles or walking over taxis or rental cars. 28% can travel longer just to reduce their environmental impact, and 19% would pay more just to have an electric car. They need tools that allow them to make knowledgeable decisions (Booking.com).
The abovementioned Booking.com report indicates that in the past year (2022), over 53% of worldwide travellers were more determined to make sustainable travel choices when they travelled than a year before. 38% actively look for information about the sustainability efforts of a property before they book, and 71% want to travel in a more sustainable manner next year (78% of global or international travellers intend to stay in a sustainable property at least once in the coming year).
The most frequent reasons for that are to reduce their impact on the environment (41%), experience the local setting in a more aware and contextual way (33%) and a belief that sustainable accommodation means improved community engagement (31%). Some of the interviewees stated that such properties seem more stylish and trendy (19%) and are perfect for posting on social media (16%).
Despite all that, Glenn Fogel, the CEO of Booking.com, states that there’s a lot to be done to notice the profound change in terms of perception and behaviours, and sustainability must become a travel industry standard. Moreover, we shouldn’t focus on earth and nature only but keep “bringing enhanced cultural understanding, socio-economic opportunities for communities and the potential to help rejuvenate and protect our planet for future generations” (Booking.com).
There’s a lot to be done yet by the entrepreneurs themselves, as 31% of travellers who didn’t book sustainable accommodation weren’t aware that they existed, and 29% didn’t know how to find them. Currently, only 36% of travel platforms provide users with a label for easy sustainability identification. 57% of respondents would like to see if hotel rooms have sustainable certifications, and 54% would like to be able to filter them out. At the same time, only 34% of travel platforms offer such an option (Booking.com).
That means existing solutions are not transparent enough in terms of eco-friendliness. We should think about how to improve our current approach to make it more user-friendly. It could trigger the change, as 56% of people don’t look for information about sustainability-related activities of properties, but if easily accessible, they will review it (Booking.com).
However, even if people can find some, they believe that those offers don’t provide them with the luxury they want on holiday (27%) and overall are less luxurious (8%). In their opinion, such places are not located in their target destinations (29%), like metropolitan but rather in distant and remote areas (10%). More than one-third (34%) perceive it as challenging to discover sustainable travel choices in urban areas or other well-visited tourist spots. “For some, the term ‘sustainable travel’ holds connotations of having to sacrifice luxury or settle for less appealing destinations” (Booking.com).
That’s quite a comprehensive aspect that can’t be fully resolved by adjusting travel booking platforms only. The truth is that the lack of easy-to-notice labels or distinctions regarding sustainability choices affects the above-mentioned perception. It might be caused by the lack of such a solution built into specific platforms. Even if provided, some places that actually meet all the conditions are still not marked themselves as such. Some locations might not consider it important, especially in large cities or cultural hubs that attract vast amounts of visitors. They don’t need such a label to be fully booked. On the other hand, smaller, distant, less luxurious locations usually rely on their nature-friendly characteristics, and that’s their value for people, so they are willing to underscore that on every occasion, using all means possible. These tendencies might cause the feeling that sustainability means poorer conditions and a lack of luxury.
The second reason why such an approach might persist is people’s expectations itself. We, humans, are programmed by nature to seek pieces of evidence for what we already believe and what suits our expectations. Therefore, many of us would notice the exact same label when it is assigned to a camp field or wooden house somewhere in the forest rather than to a luxurious five-star hotel in the heart of Barcelona. That’s how our brain works. What we can do is help us overcome those inclinations via thoughtful UX/UI design that will highlight those aspects. This way, we all can improve the Earth’s condition even by such a prosaic activity as building travel applications.
Simultaneously, according to Booking.com, more and more people tend to avoid overcrowded and popular destinations (67% plan to do that within the next 12 months) and travel to less commonly visited areas (27%), 33% even outside the season (40% of them will travel this way only within the next 12 months). However, the report states that “Many are at a loss as to where to find these less crowded locations. Over two in five travellers (42%) struggle to find appealing destinations that are less crowded” (Booking.com).
As we all know, every hotel booking platform invites people by offering them a wide range of possible destinations, and that’s inspiring. However, most of them focus on what’s the most commonly chosen – which locations are booked the most, which are mostly viewed or preferred by similar people, etc. (or promote locations that are boosted with advertisements). That means such platforms are incompatible with users’ needs, as they still rely on the crowd’s opinion. Sustainably-aware people seek niche but charming places with a positive impact on mental health and want to avoid crowds, focusing on their personal time. That means such places might be less popular on such platforms. Therefore, I see room for improvement to resonate with those travellers and provide them with custom filtering options.
What is more, there’s a huge space for AI. As consumers are looking for calm and deep local experiences, AI could analyse billions of sources of information about past and current travel trends according to popular destinations, ratings, conditions or even weather and suggest the most suitable places at the right time. It seems quite easy when there are ChatGPT or Bard that can take people’s preferences in a written form as input and provide recommendations based on those.
Nowadays, implementing ChatGPT just to rewrite sentences, summarise or provide a bullet list is not enough. We need to take a step backwards and change our perspective. Then, we can see not that obvious possibilities and ideas for innovations, which have the power to change the industry and the overall experience.
Hand in hand with looking for serene and tranquil places, the demand for unique, exotic, luxurious travel experiences is growing. People are willing to pay more for relaxation, fresh air and out-of-the-ordinary activities, like kayaking in Costa Rica. They tend to increase their budgets for amenities like elevators right to their rooms, great sight from their windows, butler services and more (ResearchDive).
According to the Travel Market Report, the premium accommodation was the most booked, but the budget category played the smallest role when people were looking for a place to stay. As outlined in a May 2021 report by TripAdvisor, affluent millennials in the United States emerged as the primary contributors to luxury travel spending, with a significant part of this group opting for purpose-driven journeys primarily focused on self-care and relaxation. They want to feel taken care of. These trends are anticipated to positively impact the expansion of this market segment (GrandViewResearch).
All of that has significant consequences and opens new possibilities for the travel application market. First of all, it creates new opportunities for hotels and parcels in terms of making people’s lives easier. Maybe in a few years from now, a voice-driven personal assistant in a room will be considered a standard. Maybe every guest will have a hotel app that allows them to order meals, taxis or services effortlessly, with no need to make phone calls. Maybe such an app allows them to check in automatically based on facial recognition systems and provide access to their rooms by holding a remote ID or key. That might be the future of luxury travelling.
But all that must be aligned with booking platforms so people are able to find those pieces of information easily. Every innovation is like a trigger that requires following tweaks. Filtering options might need to be expanded and adjusted to the changing needs of customers.
From this perspective, luxury also defines the activities people might want to take up when visiting particular locations. They might need to search for them and find accommodation nearby. The filtering patterns might have been changing right now. People might not be looking for Costa Rica resorts but for a kayaking experience in an exotic scenery. Our solutions must follow those travel trends.
This is another use case for AI and ChatGPT. We don’t need to provide people with a finished number of options they must select to see the results. We can ask people to describe the perfect location and provide the best-matched pool of recommendations using Artificial Intelligence. They might tell us that they need an apartment near the ocean coast, with a sunset view and golf field nearby. That will not only suit people’s expectations but also make the search process more human-style, like a discussion with a personal assistant, having a positive impact on the overall travel experience.
Who knows, maybe one day after accessing the accommodation booking portal, we’ll be welcomed by a virtual assistant who starts a video discussion with us without even showing a single offer. The hospitality industry is currently undergoing a significant evolution in front of our eyes.
Sustainability, however, is way more than just taking care of the planet. It has another side, too. It’s about being aware and respectful of other cultures, as well. Booking.com studies uncover an increasing inclination among worldwide explorers to engage more deeply with culture and community during their journeys. Around 45% believe that safeguarding and understanding local cultures are integral to sustainable travel. This regenerative mindset is actively shaping the way decisions are made.
Travel choices are becoming more intentional and nowadays travellers prefer experiential travel that allows them to learn more about the local culture of their choice. The research indicated that 67% of travellers are willing to experience the cultures they visit authentically and fully. 27% of respondents want to learn more about the values and traditions of the cultures they are about to visit before they arrive there. A quarter would be willing to pay more for activities if they knew they were giving back to local communities and local businesses. However, 34% don’t know how to find such.
Let’s think about all the booking platforms we know. I can’t recall a single one that would support people in reaching this particular goal. Those are more or less transactional portals, goal- and revenue-oriented. But nowadays, when around half of travellers want to have one app for managing all travel-related activities (Travelport), it’s not enough.
That means that to attract people, it’s not enough to offer them a transactional platform to book accommodation or flights. Modern travellers demand more – for a friendly companion that will guide them through different cultures and traditions, and allow them to discover the local community and local restaurants. That will bring local experiences to them. That will help them gain as much as possible from their trips and do that eco-sensitively.
If we know that more than a quarter of travellers are willing to gain knowledge about other cultures before they even put their foot on their ground, why not provide them with such? Why not offer them a travel companion that will enhance their experience and help them to familiarise themselves with the cultures they are to visit?
On the other hand, the demand for authenticity and looking for niche places that reflect the spirit of the culture fully indicate how important it can be for modern travellers to have a reliable companion wherever they go. To become competitive, travel apps might soon need to not only allow people to book something (a hotel, flight or even a cinema ticket) but also help them to discover the heart of the culture.
Instead of watching all the landmarks specified in travel folders, travellers are likely to search for something unique that will provide them more in-depth experience. That could be a small restaurant somewhere in the suburbs, a passage between buildings with a history written down all around or a cosy art gallery that presents the local artists. All that can create authentic experiences and travel applications should help people find such, not obvious places and guide them there.
Looking for authenticity also means that food travelling is becoming more and more popular. In a world dominated by giants like McDonald’s. Pizza Hut or KFC, people are looking for more unique and location-specific experiences. Although glocalisation (a trend to at least partially resist the global unification of different cultures, focusing on local traditions and specifics; it drives the need for adjustment of business offers to fit local areas) enforces some recipe changes in some parts of the world, it’s not enough for travellers.
They want to dine in local restaurants like a 100-year-old restaurant in Venice rather than Sphinx and taste original sushi from local small businesses in Japan or ceviche in Peru. Current apps should pay more attention to such things and support travellers in finding those instead of well-known places accessible around the world in almost the same way.
Hand in hand with growing awareness, many contemporary tourists also prefer to visit small, family vineyards and taste delicious wine that is not available anywhere but locally. They might be interested in seeing what a regular day in such places looks like and want to experience that fully. That opens endless possibilities for travel apps that should enable people ways hot to find them effortlessly.
In fact, the global culinary tourism market was valued at 1,116.7 billion US dollars in 2019 and is expected to grow, reading 1,796.5 billion dollars in 2027 with a Compound Annual Growth Rate (CAGR) of 16.8% from 2020 to 2027 (Cision). Therefore, that’s a perfect occasion for improving and developing new restaurant-, food delivery- and food-related apps that will support people in reaching their goals.
If we combine this trend with the pro-eco approach, nowadays, people are also looking for transparency regarding the origin of products that constitute dishes. Organic food is becoming more and more popular. People seem to value the information that dishes are made using sustainable crops and eco ingredients. They avoid artificial add-ons and are willing to pay more to eat not-genetically modified vegetables or fruits, have fresh herbs on their plates or local seasoning.
Contemporary and future-proof apps should reflect that trend and help people to find such places, not only by filtering them based on particular criteria but also when they’re navigating the neighbourhood or simply by notifications based on personal preferences. All that is to make people immersed in the cultures they visit fully.
Both eco- and culture-awareness lead us to the third noticeable travel trend – changing habits regarding what activities people take when travelling. According to Cision, in the upcoming year, the majority of consumers (58%) express keen interest in outdoor activities like hiking, biking, and kayaking, along with wellness and relaxation experiences (61%) like spa treatments. In contrast, shopping and attending concerts or festivals are the least favoured options, with merely 6% and 7% of respondents (respectively) selecting them as their top choices for 2022.
According to Deloitte, a strong predictor of people’s travel behaviour is age. Younger travellers are more active. They tend to combine different types of accommodations within a single trip and are more inclined to engage in activities at the travel destination. Moreover, they frequently travel in larger groups, often with a significant age diversity. Individuals under the age of 55 constitute 77% of those who are travelling with children. Families with kids are also more likely to participate in outdoor activities (61% vs. 46%) and visit attractions (59% vs. 43%).
According to Future Market Insights, one of the most rapidly growing niches is wildlife tourism, with a 5% rate of growth yearly from 2022 to 2032. It’s expected to reach 219,9 billion US dollars in 2032.
The interest in wildlife is growing, and people are becoming increasingly aware of the variety of species. Instead of just watching, they want to contribute to their preservation actively, even if that means paying higher fees. Because of changing habits according to means of transportation, nature-enjoyers tend to use more green vehicles like bicycles or simply walking than cars or scooters.
Therefore, the number of places located near wildlife sanctuaries is growing, reflecting the trend to escape from city hustle and bustle and generate immersive experiences with nature. That attracts photographers and adventure-seekers who want to experience canoeing, river cruises or exotic balloon trips, as well as those who are looking for peace and relaxation. Some places like Salar de Uyuni, a remnant of a dried salt lake in southwestern Bolivia that seems like a mirror after the rain or the Great Barrier Reef are currently considered luxurious destinations.
That opens many possibilities for travel apps. I already mentioned that many booking portals attract people to the most trendy or commonly chosen destinations instead of showing the whole range of possibilities. That’s something that will probably change in the near future because of people’s preferences. Airbnb, for example, offers its users multiple accommodation categories, including tree houses or places located near lakes. There is also a category for national parks, which can be considered wildlife sanctuaries. On Booking.com, it is not that easy to find such places, but they are trying to inspire to become closer to nature by presenting tree houses placed in some wildlife areas.
With the growing demand for such destinations, we can expect that travel portals will evolve to suit their needs and help them find exactly what they are looking for. However, some portals might go even further! Jetwing Eco, a Sri Lanka resort, presents on their website a wildlife calendar, helping visitors to plan their trip according to the species they want to observe. That’s just graphics, but I can imagine a portal that will help people visit wildlife places exactly when they can see particular species by offering custom search solutions or even indicating particular locations that are habitats of all animals they want to visit!
Hand in hand with global warming comes unprecedented, sudden and wild weather phenomena. For a few years, we have observed an increase in temperatures, which causes disruptions for travellers and threatens human lives.
First of all, people feel uncomfortable and insecure with long-distance commercial flights as the weather can cause disruptions. Half of Americans said they would travel more often if there were no flight delays or hassle (TravelPulse Podcast). Those can be caused by hurricanes, heat, wildfires, floods or even volcano eruptions. Some of them can be predicted with quite a good probability, and others are unpredictable. However, they are all likely to shape the future and travel trends.
The case is that it’s not only about means of transportation. It’s also about living conditions. This summer, people in queues fainted because of the heat. Many tourists wanted to enjoy their stay fully, trying to cope with the scorcher hot at the same time. They wanted to see the main landmarks, even taking the risk of being sunburnt, overheating or dehydrated.
However, there’s something we can do about that. Having such enormous AI possibilities, we could analyse the historical and current data and try to predict some upcoming events. If the algorithms discover that in this particular location at this particular time, some things can happen, an app could inform users about that, suggesting changes for higher convenience and safety. Although that refers to the moment of booking, people might also be altered when such trends are revealed after they pay for their stay or flight. If they won’t be able to change the reservation, that would help them to prepare for what’s coming at least.
Travel apps can be great companions for avoiding poor weather conditions. Why do people need to stay in line for tickets? Why not make the buying experience digital and make the whole process more convenient and cost-effective? It’s not only the money that we pay, but it’s also about the time lost in vain. There could also be ticket storage so people could enter the attraction by themselves, remotely, using QR codes, NFCs or even facial recognition. Quick, straightforward and convenient.
Nowadays, apps can also suggest alternative possibilities for spending time. Such a dynamic, weather-sensitive itinerary could help people change their plans not to be affected by the weather that much. It’s an app that could do all the job for them, as AI algorithms are perfect for that. If there is any sign of a storm coming, an app could inform people down to the minutes when it hits. It is possible right now as there are thousands of personal and professional weather stations all around the globe and portals that gather all those pieces of information (e.g. Weather Underground or Windy).
A travel app can do even more. As it’s a daily companion, it could send short hints or tips on how to cope with such wild weather. People might be informed what to do if they are outside, sightseeing and caught by surprise by a storm or tornado. What are the tsunami indicators so they can escape immediately instead of watching how the water vanishes? How to prepare for hurricanes and what to do when a tornado is coming. They can be informed based on satellite recent data on what road to choose to escape and avoid the fire. All of that in their travel app, an everyday companion that they can rely on.
Such an app can have an alarm button, sending SOS in the case of emergency, when people are stuck somewhere during a flood, or when they see an avalanche coming. They could even have IoT solutions connected (e.g. smartwatches) that can discover anomalies in temperature or life activities and inform relevant services immediately, sending them a location.
In the coming years, we can expect even more wild weather phenomena that might sometimes come from nowhere. Those will affect our journeys even more than now, and it’s not only about choosing the right moment to travel but also how to stay safe when we reach the destination. It’s not an exaggeration to say that our role as entrepreneurs or software developers is comparable to emergency services – we have the potential to save thousands of lives every year, and we need to put all our efforts into doing that right.
The future of the travel and tourism industry is changing. The demand for travelling is exceeding pre-pandemic levels. I focused on travel trends for 2023 and beyond connected with ecology and preventing global warming. Overall, local and global travellers are increasingly aware and aiming at reducing their environmental impact and carbon footprint.
The truth is, that we are the ones who shape the travel industry by our efforts. We should consider improving existing solutions or creating new ones that will make Earth-care effortless and straightforward so that it can become a part of our daily routine. It’s not only about electric vehicles. Those apps should support people who are looking for sustainable travelling and provide easily accessible hints to those who are not.
We also need more user-friendly solutions like AI-driven recommendations on where to go and when to avoid overcrowded places at their peak, the most greeny flights and eco-friendly means of transportation.
But that’s not enough. All such activities should be supported by building eco-awareness, explaining what “sustainability” really means (it’s not only renewable energy sources and solar panels in buildings) and encouraging to make eco-driven decisions. We need to support those who are looking for such solutions and increase the sensitivity of those who don’t. That’s the challenge and the opportunity at the same time.
We can also help people to understand different cultures better and, therefore, build the ground for international cooperation in an unprecedented manner. We can move away from what is popular in favour of uniqueness and authentic experiences.
Last but not least, by improving digital travel solutions, we can help people cope with the changing environment – wild weather and natural disasters. We can equip them with knowledge that can literally save their lives.
That’s the future of digital solutions in the travel industry. Bright.
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