Looking ahead to 2024: The rise and rise of experiential travel

The search for unique travel experiences will continue to be a strong trend in the growing global tourism market in 2024, with major implications for hoteliers. Predictions have been issued for a rosy outlook for travel in 2024. UNWTO expects international arrivals to finally return to pre-pandemic levels and even exceed 2019 numbers by 2%. Airline connectivity rates could rise further this year from 89.5% in 2023 before the pandemic, according to IATA.

Growth will depend primarily on the pace of recovery in Asia, but there are also uncertainties stemming from economic concerns and geopolitical risks, primarily related to the Hamas-Israel conflict and the Russia-Ukraine war. However, the general outlook is quite optimistic.

Whether these predictions come true or not, experiential travel – immersing yourself in experiences that create unforgettable memories through easy, authentic programs and events – will continue to be a market driver and continue to grow in popularity. is expected.

Travelers value culture over attractions

Leisure travelers will be looking for more cultural experiences than ever in 2024, according to a recent study by Skyscanner. About 54% of respondents considered culture to be an important factor when choosing a destination, compared to 49% for tourist attractions.

Another key statistic is that travelers from the U.S., a key market in the experience economy—selling memorable experiences rather than products—booked 4.7 tours during their 2023 trip and booked 4.7 tours within a destination. of experiences increased from 2.7 in 2019. Arival said so.

Trends that are attracting attention are those that go beyond conventional wisdom

Skyscanner research also found that 18% of US travelers and 8% of UK travelers plan to take a long-haul flight to see their favorite artists perform in 2024, while 47% and 11% booked a destination purely based on a specific restaurant they wanted to visit.

Customers are increasingly going beyond the usual museum visits, concerts, tours and excursions. Options to emerge on the top list of trending travel experiences in 2024 include dark sky tours in Norway, yurts in Mongolia, expedition cruises to Antarctica and the Galapagos Islands, attending a kite festival in India and going on a slow safari in Africa. This includes the participation of

Experiential tourism is becoming the norm

Slow travel in general, where visitors are immersed for long periods in local culture, will continue to be popular this year, as will purpose-driven adventures that focus on meaningful goals such as wildlife conservation, environmental protection, and heritage preservation. is expected to continue.

In a recent example of a new purpose-driven travel scheme, American Express rolled out its Stay with Purpose program in June 2023, providing an online directory of hotels committed to meaningful initiatives. Cardmembers can use the directory to book places like Rosewood Baja His Mar in the Bahamas, which offers an opportunity to contribute to the growth of coral reef nurseries, and Six Senses Ninh Van Bay in Vietnam, which offers educational farming. . experience.

Experiential tourism is becoming the norm as travelers want to connect emotionally with a place, noted booking technology provider Regiondo. According to software company Flyware, 89% of tourism service providers said there is an increasing demand for experiential travel, which offers more personalized and unique leisure experiences compared to traditional vacations.

Wellness Travel Still Has Significant Growth Potential

Wellness, an important part of experiential travel, has seen significant growth in recent years as COVID-19 has increased focus on personal health. The value of the wellness tourism market will increase from an estimated $868 billion last year to $1.3 trillion in 2024, with a compound annual growth rate of 16.6% from 2022 to 2027, according to the Global Wellness Institute (GWI). I predicted it.

Most segments of the broader wellness economy are projected to outpace global GDP growth by 2027, and some of the segments expected to grow the highest, including wellness tourism, will be driven by COVID-19. is the hardest hit segment, GWI said.

Hoteliers should heed two very important findings from GWI. First, wellness travel, where travelers seek wellness experiences while traveling of any kind, be it leisure or business, accounted for 88% of all wellness tourism in 2022. Second, the amount spent by international and domestic wellness travelers has increased by 41% and 175%. each higher than the average tourist.

Wellness projects require a smart investor approach

GWI predicts that wellness real estate will be the fastest growing segment of the wellness economy in the coming years, expanding by 17.4% annually from 2022 to 2027. The overall market size is expected to increase from an estimated $473 billion last year to $567 billion in 2024 and nearly double to $888 billion in 2027.

However, real estate investors and developers need to take a wise and cautious approach to wellness projects. This is reflected in the latest edition of RLA Global's Wellness Real Estate Report, which found that minor wellness hotels outperformed major wellness hotels in revenue and profit growth in the first half of 2023. .

One factor that investors must consider is that an increase in cash inflows is accompanied by an increase in cash outflows. Hotels that offer major wellness services can achieve higher sales revenue due to higher average daily room rates and greater leisure revenue compared to hotels that offer minor wellness services, but they also also has higher operating costs.

How volatility and election year affect hotel outlook

Undoubtedly, increasing demand for experiential tourism is likely to impact hotel performance in 2024. At a panel discussion at the recent AOHIS 2024 Investor Summit in Madrid, moderated by a moderator, hotel executives offered some divergent but mostly fairly optimistic predictions for the hotel industry. By Roger Allen, CEO of RLA Global Group.

Alexander Schneider, chief operating officer of Sani Ikos Group, said he expects growth to be 15% this year, and is group CEO of Minor International and CEO of Minor Hotels. CEO Dilip Rajakarie is predicting record growth. However, forecasts vary widely, with differences in expected growth rates depending on property type, regional differences in tourism, and overall size and growth potential of assets under management.

Additionally, 2024 will impact the outlook for the hotel industry. “Super Election Year”, National elections are being held in more than 60 countries. Roger Allen said the results of these elections could have a positive impact on the market and lead the way to a correction in 2025.

Can all hotels benefit from a change in experience?

Luxury hotels may be best positioned to benefit from the growth in experiential travel. This is backed up by Arival's research, which shows that although affluent US travelers make up just 22% of all domestic travelers, they accounted for 46% of the total amount spent on experiences last year. They are willing to pay more for experiences, with around 58% booking private tours when traveling.

But other categories of hotels can also benefit from the rise of experiential tourism. A 2023 YouGov study found that U.S. travelers who want to experience another culture and learn about history are more likely to stay in mid-priced hotels (62%) rather than luxury hotels (42%). got it. However, this proportion is more even for travelers from the UAE, at 48% and 49% respectively.

Experiences support cities and boutique hotels

Experiences are also playing an increasingly important role in urban leisure travel and are becoming decisively integrated into city hotel settings, AOHIS 2024 panelists said. While COVID-19 and its aftermath drove growth in many resort markets, the past year or so has seen outstanding tourism in urban areas. Performance at hotels in some European markets popular with U.S. travelers, especially Paris, Rome, and Dublin.

This year, major events such as the 2024 Summer Olympics in Paris and the UEFA 2024 Football Championship in 10 German cities are likely to support further growth in hotel demand. Cushman & Wakefield said owners and investors could also benefit from the relatively small number of hotel developments underway in some European cities and restrictions on short-term rentals of private homes. He said that there is a sex.

Another interesting takeaway from the AOHIS 2024 panel was that independent boutique hotels don't just compete with big international hotel brands, they often outperform them. Boutique hotels have traditionally had a strong track record of providing unique accommodations that reflect the local culture and environment, which is highly valued by savvy travelers.

Demand for boutique hotels in the first half of 2023 increased by 8% year over year, compared to a 6% increase in demand for comparable non-boutique hotels in the U.S., according to new research from Highland Group. The fastest growing segment was the lifestyle upper/luxury category, where demand increased by 12.4% during this period.

More hotel partnerships coming to Horizon in 2024

In its 2024 Travel Outlook, Deloitte said in-destination experiences are a popular travel element that travelers splurge on in exchange for trip upgrades or downgrades. Hotel class, on the other hand, is something you can always cut back on if your budget is tight.

This finding has implications for hotels evaluating the need to update their experience strategies. Deloitte predicts that in 2024, more hotels will partner with event venues, sports teams, and food and beverage brands to create special experiences for guests.

IHG Hotels & Resorts signed a deal with Six Nations Rugby in January, giving IHG One Rewards members access to match tickets and hotel packages, behind-the-scenes stadium tours, pitchside visits and the chance to watch the team practice. You can now bid on loyalty points. . IHG Hotels & Resorts is the first hotel partner for Six Nations Rugby. It already has partnerships with Major League Soccer (MLS), the US Open Tennis, and German soccer club RB Leipzig.

In another recent example, Spanish hotel chain operator Sercotel partnered with TUI in February to integrate its tour and activities digital platform into Sercotel's website. Guests have access to a variety of experiences in destinations such as Barcelona, ​​Madrid, Gran Canaria and Malaga. Sercotel will be the first hotel company to offer the new National Geographic Day Tour. This tour includes an archaeologist-led exploration of historic sites, kayaking with a marine biologist, exploring landmark buildings with an architect, and more.

Reprinted from Hotel Business Review with permission from http://www.hotelexecutive.com/.

Roger A. Allen
RLA Global Group CEO
RLA Global