After hitting rock bottom, the travel and tourism industry has just one way to go – up. However, Greg Webb, CEO of Travelport says recovery in 2023 will have to contend with resource challenges and the pace of China’s reopening
How would you describe the global appetite for travel throughout 2022, and how do you expect that to continue into 2023?
This has been an interesting year. 2021 started off terribly depressed but started recovering toward the second half of the year. We started 2022 at about 50 per cent recovered and it has been pretty linear all year. I expect we will exit this year on a strong pace, at about 70 per cent or so compared to 2019.
Demand is outstripping supply right now. The demand and supply curve is inverted for the first time in a very long time. Our current shopping data shows we are well over 100 per cent of 2019’s.
Airlines did such a good job streamlining their fleet and workforce during the pandemic that now there are staffing issues. That has pushed prices up. We will go into 2023 with airlines continuing to bring on staff and aircraft, and grow air supply.
Of course, staffing issues exist across the industry and are not limited to airlines.
Will this strong pent-up travel demand hold up against a recession?
Even if we were to see some recessionary type of activity in 2023, we doubt it would have a big impact on travel recovery.
Signs of recession will show in the prices, be it hotel rates or airfares. You will know when you see prices drop. (Despite warnings of inflation and recession,) every sector has been able to hold prices the past year or so because consumers are willing to pay more to get back to travel.
It is a hot topic now – China is rationalising its Covid strategy but it is anyone’s guess how much more changes will come and how quickly. How do you expect the return of Chinese travellers to impact global travel and tourism supply, and are suppliers ready for them?
First of all, we are very excited about the idea that China will begin to ease restrictions. China’s restrictions on travel have significantly impacted all of Asia’s travel recovery, which is behind the rest of the world. A lot of that is due to the absence of Chinese travellers, who make up a significant portion of the Asian population.
Well, I don’t know if travel and tourism suppliers are ready if China goes from zero to hundred miles per hour, meaning if China lifts all restrictions at once for inbound and outbound.
Singapore feels pretty busy right now despite the fact that there are no Chinese travellers. Normally, China makes up a significant portion of inbound visitorship to Singapore. Imagine all that China demand returning on top of the current traffic. I don’t think a lot of places in Singapore are ready for that.
However, when China resumes travel and starts to allow visa and passport applications, it will experience some of the same struggles we had in other regions in terms of supply and demand.
China is now battling waves of fresh infections and healthcare challenges as it exits from its zero-Covid policy. That would impact travel demand. Can the world afford to deal with another few months or a year of no Chinese travellers?
The worldwide travel economy is able to absorb the fact that this (the return of the Chinese) may take a while. We are seeing significant load factors across all regions and hotel occupancy rates are climbing. It is still sustainable without the Chinese, but we would like to see the whole world being able to travel without restrictions.
Could you identify top two or three global trends that would benefit Asia-Pacific travel and tourism in 2023?
We have seen very strong domestic travel in India, and that has boosted the travel economy.
We are also seeing an ongoing push for luxury travel. Destinations like the Maldives and Bali have rebounded fairly quickly as a result. I think continued marketing to the luxury travel segment will help this region rebuild tourism.
However, not all of the luxury travel demand is coming from the wealthy population. Many people have acquired savings throughout the pandemic from not being able to go out and spend on nice things. So, the initial rebound is led not just by high-end travellers but also general leisure travellers who have both pent-up travel desires and cash, and are eager to reunite with family and friends through a holiday together.
Another trend to watch is sustainability, which has gone from being a topic that was discussed but little was happening, to being discussed and a lot of things are happening. One of the big things we can do as an industry is to focus on setting standards. A big issue for sustainable travel today is the existence of multiple ways to measure. The exact same aircraft flying the same route could result in different emission calculations.
The industry must push for one transparent method to calculate carbon footprint, and communicate that to travellers so that they understand how their impact is measured. Doing so will encourage more travellers and suppliers to make better decisions about sustainability.
What must travel suppliers and retailers do to make the most of recovery opportunities in 2023?
They will need to focus on the travel experience. We talk a lot about modern retailing, where the traveller feels well-served across the process. Do they feel like they have the ability to make good buying decisions? Do they feel that their needs are catered to in a fashion that they prefer, be it online or via a person they can talk to?
Automation and technology have continuously been sounded as the solution for our industry’s painful staff shortage. Where do you see automation and technology serving the most use in our industry, and what more can travel retailers do in this area to be more efficient – and even more importantly, make more money with the smaller staff strength?
Pre-pandemic, a lot of money is spent by consumers on travel changes. Airlines have removed all those fees now. What used to be a financially painful process is now a lot easier, but we are still not at that place where it is a super simple process.
Travelport is therefore very focused on creating a simple and automated refund and exchange process that will allow travel agents to easily refund and/or exchange tickets for their travellers.
We are also focused on AI (artificial intelligence) and machine-learning-driven search capabilities. The airlines have done a good job differentiating their products to improve the retailing experience. As airlines differentiate their products more and more, we can no longer just identify the lowest fare. We will have to return a search criteria that is more honed to what the traveller is looking for.
Therefore, I think more intelligent searches as well as faster and more effective refunds and exchanges will help the industry.
Technology is helping with the current manpower shortage. That being said, it is not helping enough. Our industry is the world’s largest and one that makes up 10 per cent of the world’s GDP. We have got to find ways to get people back and interest them to be part of the travel ecosystem.