Over the next few weeks we are running a series of articles looking at the changing face of tourism in a fast-evolving market. These articles are written by Bartercard’s National Manager of Tourism and Travel Mark Ferszt who has over 20 years of industry experience, and feature in PATA’s (Pacific Asia Travel Association) Issues and Trends 2018.
If you’re a travel, tourism or hospitality operator, don’t miss these latest trends to shape your view of the industry and stay on top of a constantly shifting market.
This week: the global tourism picture and how online travel agent are deviating from traditional wholesalers.
Tourism Issues and Trends 2018
Via PATA’s Issues & Trends
The World Travel & Tourism Council reports that the travel and tourism industry contributed 10.4% of the world’s GDP (gross domestic product) in 2017. If current economic, geo-political and market conditions continue, travel and tourism is expected to grow steadily into the foreseeable future. By 2022, PATA estimates that more than 808 million international visitors will be received annually across 40 Asia Pacific destinations, suggesting an annual increase of approximately 5% between 2017 and 2022. Advancements in technology, increased connectivity, relaxing visa requirements and growing disposable income in highly populated emerging markets are among the many contributing factors to this significant increase in growth. In short, the current market shows more people travelling with greater ease than ever before. While established travel and tourism operators and distributors benefit greatly from the steadily increasing number of travellers, that increase has also attracted new players, innovators and competitors. As these new entities strive to secure or increase their share of the market and carve out their own niche, their manoeuvres have altered distribution methods for travel and tourism products.
ONLINE TRAVEL AGENTS SPUR DEVIATION FROM TRADITIONAL WHOLESALERS
In the past, traditional wholesalers often directly contracted for operator products such as flights, accommodation and experiences. Wholesalers would then run campaigns advertising the most marketable inventory and time periods throughout the year. This system often pressured operators to commit to 6- or 12-month marketing plans which did not necessarily address the operators’ actual need periods, such as low seasons or short-lead distressed inventory. The entry of Online Travel Agents (OTAs) into the market had a profound impact on how tourism product is distributed, particularly in the accommodation sector.
Through dynamic pricing driven by constantly operating ‘Channel- Manager’ technology, OTAs allow operators the flexibility to address peaks and troughs in occupancy or yield at any time. OTAs provide a wealth of analytics and data, instantaneous bookings and customer support for both product merchants and consumers. Initially considered a lesser alternative to traditional distribution methods, OTAs have become a worldwide travel distribution powerhouse, and now comprise an essential part of most accommodation operators’ sales mix.
The OTAs’ ability to provide a flexible and instantaneous distribution platform allows operators to better address their needs periods. The effect of OTA platforms on the market is considerable, with some operators experiencing a drastic increase in percentages of bookings acquired via OTAs. For instance, only a few years ago the Cook Islands based The Rarotongan Beach Resort & Spa, Sanctuary Rarotonga and Aitutaki Lagoon Resort & Spa attracted two thirds of their bookings from traditional wholesalers, with only 10-15% OTA business. Within a few months this distribution completely reversed, with two thirds of their business now coming from OTA platforms and only about 10-15% from traditional wholesalers.
As Owner and Managing Director, Tata Crocombe, explains: “OTAs provide a vastly more flexible platform with provision of real-time analytical data allowing hotels to adjust their strategy in real time at a very granular level i.e. you can adjust it right now for periods of time that you have a need, and for specific room types, only marketed to specific source market segments e.g. United States. The ability to target your strategy to optimise the hotel’s overall performance is unparalleled versus the legacy traditional wholesaler model.”
OTAs are now essential for many small and independent operators because they provide online marketing around the clock, offer a global reach into traditionally unavailable markets, and stimulate the impulse market by facilitating spontaneous, short-term buying of travel product. Further, most independent operators cannot compete directly with the OTA’s enormous marketing budget and technological resources. However, recently some operators have been incorporating other methods of distribution, such as direct consumer business, into their sales mix in order to maximise profitability.
ABOUT THE AUTHOR – Mark Ferszt LLB BA
Mark has been involved in the travel and leisure industry for over 20 years in hotels, resorts, casinos and travel distribution. He’s rapidly grown Bartercard’s Tourism & Leisure Division in the Pacific region for 10 years.
Bartercard Tourism has hundreds of resort and accommodation members at destinations worldwide that welcome visitors on Bartercard and accept a cash-alternative currency of Trade Dollars. By spending Bartercard Trade Dollars instead of cash, hotels and resorts have saved millions on expenses from renovations to maintenance and equipment.
ACKNOWLEDGEMENTS & SOURCES:
The World Travel & Tourism Council
- Travel Weekly (Australia)
- Mr. Tata Crocombe – owner & Managing Director – The Rarotongan Beach Resort & Spa, Sanctuary
Rarotonga, Aitutaki Lagoon Resort & Spa
- Mr. Randall Deer – owner & Managing Director – Ignite Travel Group
- Mr. David Schlottman – Product Director – ubookdirect
- Mr. Andreas S. Philkan – Managing Director-CEO – Humus Hospitality Management
- PATA Asia Pacific Visitor Forecasts 2018-2022