The Rise of Travel Hubs

Could Iceland be the next Dubai?

About 15 years ago, Dubai emerged from out of nowhere. It went from being a destination that was largely unheard of by many travelers to firmly establishing itself as a major hub for tourism. And its emergence on the travel map has dramatically shifted travel patterns, particularly among Europeans.

“A lot of northern Europeans traditionally head south for their winter vacations,” begins James Phillips, president of TravelBound. “Fifteen years ago Dubai suddenly became affordable and rather than being a connector it became a destination in its own right.”

Similarly, Iceland has morphed in recent years from a place few people had visited to being one of the most popular destinations on the planet. The growth in visitation to the country has been significantly helped along by budget carriers offering incredibly affordable flights. Iceland is also a convenient layover destination for travelers crisscrossing the globe.

The parallel between Dubai and Iceland is really just one example from a much broader discussion and trend that Phillips sees unfolding on the global stage—the rise of travel hubs. In other words, the Dubai model played out over and over again.

Dubai’s emergence as a major destination was no accident. It was part of an ambitious government tourism strategy that included the development of first-class hotels, airports, entertainment and more, far more.

Other locations around the world have already exhibited similar ambitions and effort.

Abu Dhabi, for instance, has spent several years trying to position itself as a cultural hub, striking up deals with such lofty names as The Louvre and the Guggenheim. The effort to become a major hub in Abu Dhabi’s case has taken awhile, says Phillips and hasn’t been without bumps. But Abu Dhabi is slowly emerging as an intriguing travel stop in its own right.

Qatar, says Phillips, may also have a shot at being among one of the world’s major hubs (setting aside for the moment, the diplomatic crisis with its neighbors). The country already offers the world-class Qatar Airlines. And its Doha airport is a first-class experience, featuring unforgettable amenities including a pool and multiple lounges, says Phillips.

Underlying this entire discussion, stresses Phillips, is the reality that infrastructure changes – whether it be the rise of new travel hubs or the emergence of successful low-cost airlines—ultimately drives traveler behavior. Travel, by definition, must follow infrastructure.

As yet another example of the infrastructure changes he's referring to, Phillips points to Norwegian Air, which he calls a very astute carrier with an incredibly nimble and sustainable business model.

“Norwegian isn’t weighed down by the same enormous infrastructure as other airlines,” Phillips explained. “The classic long-haul model typically includes having a hub and you invest in massive infrastructure at those hubs. But if you remove that, and focus on just flying a plane from point A to point B, you can decouple the flight from the infrastructure, and you eliminate a lot of costs.”

Norwegian's scaled back infrastructure and streamlined business model allows it to do things that legacy carriers can’t do easily.

“It’s an incredibly aggressive move,” said Phillips. “They’ve taken the equivalent of the Southwest model and brought it to the transatlantic.”

READ MORE: What's Next for TravelBound?

The takeaway for those in the travel industry says Phillips is that travelers’ choices are driven by far more than merely wanting to go to Paris, or that Italy happens to be popular. Infrastructure, such as new flight routes, cheaper point to point flights and attractive travel hubs all play an important role.

“You can look at what we do in the abstract…but what really shapes consumer choice, in my mind, is infrastructure and how people get from point A to point B,” said Phillips. “And what we in the travel industry experience is often the result of those shifts.”

“There is a reason why people are traveling where they are traveling. And at least a portion of that decision is based on infrastructure,” Phillips adds. “The Middle East is the best example of where and when that’s coordinated. When government, industry, commerce and culture converge on trying to solve a travel issue or create a travel opportunity, you get Dubai.”