Given recent years, it would perhaps be foolish of me to predict with any certainty what lies ahead for the travel industry. That said, whilst the headlines paint a gloomy picture when it comes to the economy, I believe the mantra should be cautious optimism.
We’re being told that Europe is already in recession, while other regions such as the U.S. are reportedly on the cusp. Amazon executive chairman Jeff Bezos recently urged consumers and small businesses to hold onto their cash and delay major purchases. And, there are already signs that organisations are tightening their spend and discouraging business travel. However, with group business meetings and events being planned and booked much further in advance, they remain much more likely to go ahead. Additionally, during recent earnings calls, executives of major airlines and hotel brands have been optimistic about what’s ahead.
Some large airlines have been especially bullish saying that current travel demand is likely to remain high despite any looming threat of recession. A Bloomberg report recently highlighted comments from Delta CEO Ed Bastian, saying that the carrier plans to add capacity with more frequent business travellers expected to travel, whereas United Airlines is pushing ahead with a record order of Boeing Widebody planes.
There are additional reasons for optimism, such as consumers saying they will continue to travel and some even saying they’ll spend more. A recent SkyScanner survey of 11,000 travellers across 10 countries reveals 45% of travellers are planning to travel more and 41% are planning to spend more in 2023. The report also highlighted recent gains already witnessed in Asia as the region continues to re-open its doors to travellers. Our own Traveller Sentiment Survey from August last year echoed a similar narrative.
A Morgan Stanley Research survey also sounds a more positive note revealing that U.S. consumers are likely to put their cash towards experiences such as travel, further suggesting that air travel demand should remain strong.
So, what does all this mean for us at Collinson? We are already seeing a 140% year-on-year increase in global lounge visits, and whilst recovery was expected as the industry emerges from the pandemic, it’s hugely encouraging news, nonetheless. In fact, we believe people’s desire to travel will keep the industry thriving long beyond 2023 and it’s why we’re forecasting an almost 200% growth in revenue for our insurance division.
While none of us have the power to see into the future, we can look at what has happened in the past as well as the more recent post-pandemic consumer behaviour patterns. The pent-up demand hasn’t gone away and according to the Morgan Stanley research study, ancillary selection has grown by up to 725%. In addition, the desire for experiences continues to grow.
Both of these trends are good news for Collinson as our lounges not only offer a sought-after experience but also represent a premium benefit for over 40 million travellers across the world. We continue to diversify with recent additions such as Game Space – the first gaming lounge in the Middle East at Dubai International – and a second sleep ‘n fly lounge, located at Doha Hamad International Airport.
In addition, our growing portfolio of non-lounge travel experiences continues to grow, with recent additions such as withU, the audio fitness app, and continued investments in Servy and Inflyter help to close some of the gaps towards a more flexible, personalised and seamless traveller experience.
If airline demand remains buoyant and pricing stays high, which looks likely given that the capacity stripped out during the pandemic has not been fully reintroduced, then the hope is that the industry will emerge relatively unscathed. Delta Air Lines CEO Ed Bastian has even gone on record to say that travel was “countercyclical” to a potential U.S. recession – something we all hope will prove to be correct.
A deeper recession won’t be good news for the industry, especially off the back of the pandemic. However, travel is showing a real robustness and only serves to reaffirm our commitment to invest and our optimism for a fruitful ‘23 and beyond.