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PSI 2018 Global Travel Predictions

2018 looks set to be another roller-coaster year for the global travel industry. Here PSI identify some of the political, economic and technological factors that will impact the way consumers travel this year.

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PSI 2018 Global Travel Predictions

  1. 1. 2018A NEW ERA FOR OOH
  2. 2. 2018 looks set to be another roller-coaster year for the global travel industry. In this piece, James McEwan, Managing Director of PSI, identifies some of the political, economic and technological factors that will impact the way consumers travel this year. Introduction
  3. 3. Geopolitical changes, terrorism, events such as Brexit, and the presence or absence of international trade deals can all significantly influence international travel patterns. However, the duration of this impact can be harder to forecast, as even long-haul visitor decline into London in the aftermath of the shocking acts of terrorism in the city last year, actually rebounded within a matter of weeks. What certainly helped revert these numbers back up was the British Pound’s decline to a 5-year low against the US Dollar - making the city an increasingly value destination choice. As currency markets began to adjust towards the end of 2017, inbound bookings stabilised at an overall +4% year-on-year (YOY) growth level. And, already in 2018, London’s West End is preparing for a record influx of big-spending Chinese tourists for the New Year celebrations after, according to ForwardKeys data, a doubling in flight bookings. Along with the weak pound, and easier visa applications, this has been driven in part by the publicity blitz surrounding Teresa May’s visit to China earlier this month. In 2017 political tensions with South Korea impacted on Chinese tourism levels to the country with ForwardKeys data showing a 67% drop YOY. Consequently, there was a boom of Chinese visitors to other destinations across Asia. With these tensions showing no immediate signs of abating, we anticipate continued pressure on South Korea’s tourist and retail industries from a Chinese perspective, however this will be somewhat alleviated by 2018 Olympic Winter Games visitors soon arriving. With Brexit negotiations still being fought out in the European halls of Brussels, plus wider geopolitical events afoot across the USA, Middle East and Asia, market factors will continue to be a major influence on travel patterns in 2018 - being reactive and acting with agility within the Global Travel Arena will be a must. 1. Volatility the new ‘normal’
  4. 4. Consumers have become experts in the way they navigate an increasingly fragmented media landscape to get the content they most desire. By connecting the dots, and through better use of consumer insight, brands will become more effective in the way that they tell stories throughout the myriad of online and offline touchpoints increasingly available within the travel corridor. New technologies and better-branded content are allowing for progressively relevant ways with which to engage consumers on their terms. It is the increased integration between traditional OOH formats and mobile that will inevitably blur the line between offline and online targeting, allowing for more effective content delivery. Visa China is one such brand that has realised the importance of such integration, using a mixture of traditional OOH and Hotel Wi-Fi to promote credit card usage to Chinese travellers arriving in London, using marketing touchpoints and messaging that resonates most with this important audience. 2018 will see brands increasingly understanding the value of employing clear location-based strategies, and recognising the need for a more holistic approach to content distribution. 2. Seamless integration between offline and online
  5. 5. The travel industry anticipates that China will soon be the world’s largest source of outbound tourism demand, despite only 8.3% of Chinese owning a passport, signalling a revolutionary change and opportunity. According to the Chinese National Tourism Administration (CNTA), outbound travel has grown 270% since 2008 and it is forecast to reach 200 million departures by 2020. ForwardKeys data projects strong year-on-year growth for outbound travel during 2018’s Chinese New Year period, currently double that of the previous year. Outside of Asia, Europe, Russia and UAE are likely to benefit most, due to their visitor-ready approach. The increased spending power of China’s growing middle classes means that such consumers are now contributing over half of their disposable income to travel, with the leisure sector projected to account for 62% of this by 2023. Following recent improvements to its visa application process, Japan continues to be a growing destination for Chinese outbound travel, with ForwardKeys data projecting +27% YOY growth for the beginning part of this year. Global Blue reports that tax free sales in Japan are showing +80% growth YoY, driven by a 44% increase in transactions from Chinese consumers and a 25% rise in average spend. China’s growing love affair with international travel continues to present an exciting opportunity for global brands in 2018 and beyond. 3. The future of Chinese travel
  6. 6. 2018 will see airports and commuter environments continue to optimise their use of customer data, and roll-out connected services to enhance the travel experience for consumers. 2018 will continue to see brands leverage the growing connectivity of devices and everyday objects, combining technology with data from personal devices to truly personalise and streamline the travel experience. From mobile boarding cards to hotel Wi-Fi, new opportunities for data capture are already starting to provide valuable insight into consumer behaviour within a travel context. As data capture in these environments becomes more sophisticated, brands can match messaging and service provision to audience behaviours and needs. The ongoing emergence of dynamic feed capabilities across digital OOH and mobile screens on a global basis will present increased possibilities for brands to serve more relevant messaging to consumers, tailored across the specific locations they are in. Dell Technologies did just this in 2017. This media-first, data-driven OOH campaign effectively reached business travellers through serving real-time flight, sports and event content simultaneously across 17 U.S. airport hubs. This proliferation in being able to harness audience insight in real time, and couple this with reactive services and messaging, is paving the way for engaging travellers in far more relevant, connected ways than ever before envisaged. 4. More tailored & connected travel
  7. 7. Travel is changing. This availability of new technology and data streams is transforming the way that people navigate between cities and countries - paving the way for a new golden era of travel. In this new era, people are increasingly looking for more authentic experiences, wanting to move beyond being seen as passive tourists to becoming active travellers - according to a recent Expedia survey, 76% of Baby Boomers rate experiencing authentic local culture as “the most important” aspect of their travel decision-making process, while 62% of Generation X consumers rate local culture most important. As people continue to seek out more immersive ways to explore places, 2018 will see brands look to empower these audiences, creating more innovative ways with which to support and enhance their exploration, building immersive experiences. 5. It’s all about the experience