by Mia Taylor
Last updated: 4:39 PM ET, Fri January 26, 2018
A strengthening global economy is fueling record growth in the travel industry.
Year after year, the global travel pool is seeing millions of new consumers both from emerging and developed markets. And many of these consumers have rising disposable incomes and a newfound ability to experience the world, according to a new report from Deloitte titled 2018 Travel and Hospitality Industry Outlook.
Travel and tourism now account for more than one-tenth of the global GDP. It's one of the world's fastest-growing sectors with bookings in 2017 hitting close to $1.6 trillion.
"Since the most recent recession, the travel industry has been growing. In the U.S. it is growing faster than the GDP and on a global level it's growing faster than the GDP," Marcello Gasdia, a research lead for Deloitte, told TravelPulse.
Looking forward, a variety of forces are poised to drive revenue for hotels, airlines, restaurants and the countless other players that make up the travel ecosystem.
Those forces include such things as healthy consumer spending, intense airline competition, healthy demand in the corporate travel sector and the shift among consumers from seeking products to seeking experiences.
There are also countless other dynamics at play in the various segments that make up the travel industry, which Deloitte's new report dives into with immense detail and insight, providing a fascinating glimpse at what lies ahead for the industry's major players.
In the hospitality sector, for instance, Deloitte's report notes that hotels continue to enjoy a run of strong performance that's projected to sustain solid five percent to six percent growth throughout 2018.
Some analysts, however, have expressed concern that the hospitality industry is typically cyclical, meaning a downturn may be on the horizon.
But Gasdia said that at the moment, optimists outnumber the pessimists.
"People are feeling bullish on the industry still," he explained. "I don't think there's any signal that there's going to be a downturn."
The Deloitte report also reveals the areas of strategic opportunity that hoteliers will likely explore in the coming year, among them: revisiting the midscale experience; traveler-facing tech; health and wellness and loyalty.
The midscale experience, Gasdia said, is one that has been somewhat neglected in recent years.
"A lot of hoteliers have become experience-driven over the last five to six years, offering guests something outside of the big brand and big box experience," Gasdia continued. "While hoteliers were becoming more experience driven, they focused a lot of those offerings and creativity on the upmarket properties and that left the midscale experience. It's been stagnant."
The three-star level of hotels have not seen much innovation in recent years. But that may change this year as the hotel industry begins to refocus on the value of this segment.
"We're now starting to see brands say 'Wait a minute. This is a high volume asset class. There's no reason why we can't think about the look and feel of these brands.' And there's no reason why the technologies can't be upgraded," said Gasdia.
The report also touches upon what can be expected in the airline and restaurant sector for the coming year.
In the airline industry, which has experienced a decade of underwhelming performance, large US carriers are turning things around, according to Deloitte. Now, they're focusing attention on defining the future of flying with key infrastructure and technology investments.
Some of the big themes that will play out in the airline industry in 2018 will be low-cost competition, air traffic reform, cabin segmentation and leveraging maturing technology, including the Internet of Things, to redefine the curb-to-gate-to plane experience.
"I think one of the real big hurdles for airlines will be moving into that next level of technology and harnessing all of the new technology that's coming out," said Gasdia. "The travel industry in general over the past four or five years has been hit pretty hard with new and emerging technologies such as artificial intelligence, the Internet of Things, block chain and consumers with mobile devices."
"The airlines now have to say 'How do we leverage all of this technology and create value for the customers and for ourselves as well?"
As for the restaurant sector, the Deloitte report notes that Americans now spend 44 percent of their food budget on eating out instead of cooking in. That volume is tied to several things including prosperity, the family time crunch and the growth in service levels and delivery options.
In order to fully seize their share of the growing travel industry pie, restaurants will need to focus on key strategic imperatives, such as embracing the "experience," driving employee engagement, dominating delivery, competing with non-traditional players, and driving operational excellence and compliance.
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