It’s impossible for any of us to predict the future – however, that doesn’t mean we shouldn’t seek to understand the forces of change which are likely to shape it. With our sector continuing to evolve and traveler expectations always developing, we cannot assume things will be the same tomorrow as they are today. Our industry will never reach a final state, and the only constant will be continual change.
With this dynamic in mind, we have in recent months codified four potential scenarios for the future of the travel sector and the wider geopolitical environment. While none will come to fruition in its entirety, they offer a glimpse of some possibilities. They are plotted along two axes: one which runs from increasing consumerism toward more values-based decisions, and a second moving from less open to more open. These “critical uncertainties” have shaped the main thrust of our analysis as we seek to examine what just might be around the corner.
Here we can see the potential macroeconomic scenarios and below we explore what each might mean for the travel industry of tomorrow in more detail.
It is important to stress these are not predictions for the future – merely potential scenarios which could unfold. Nonetheless, as an industry we must be ready to respond to whichever scenario, or forces of change, we find ourselves confronted with. Let’s explore the four in more detail.
In It Together
In the "In It Together" scenario, consumption is driven by new and forward-looking values with their foundations cemented in sustainability. From a political perspective, we would see a coordinated policy agenda enacted globally in response to a deteriorating climate and deepening economic crisis. In the economic sphere, trends such as “stakeholder capitalism” and “conscious consumption” would drive the adoption of new values, behaviors and relationships between travelers, travel operators and local communities. In terms of technology, we would see the promotion of innovative alternatives to travel, such as the metaverse. Developing technologies will act as an enabler to drive “conscious consumption” and accelerate the trend toward sustainable travel.
Of course, this scenario would prompt change across the travel industry. If the global community were to develop an enhanced sense of solidarity, we would see a renewed focus on sustainability and local community-based initiatives. Travel would remain a way to connect people, but we would also see a range of digital alternatives substituting some elements of travel. For the traveler, we might see increasing divergence between those who seek short, local stays (forgoing air travel) and those who remain committed to longer international trips.
Bloc Party
Under the "Bloc Party" scenario, we’d experience a less open world, but with a high demand for consumption. We would see the global economy fracture into communities that we call “blocs”. In this world, we would see numerous, diverging responses to global technology, environmental and economic challenges. While there would be common rules, norms and tech-enabled standards for smooth travel within the blocs, differences would raise barriers between them. At the same time, economic growth rates would diverge between blocs, potentially heightening geopolitical tensions and eroding trust.
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Outcomes will provide challenges rather than opportunities for travelers and for the wider industry. There would be a divergence between intra-bloc travel, which would grow and become standardized, while traveling outside of a domestic bloc would become more complex, declining over time to become a premium leisure product. Competition would also decrease, with a limited number of bloc champions - including flag-carrier airlines and large hotel chains - dominating each market.
Don't Stop Me Now
This scenario is centered on global economic growth and digital innovation, driven by consumers who enjoy the benefits of an open world. In this scenario, global growth would be powered by booming markets in India, China and Southeast Asia. On a macro level, we would see globalization thriving as global trade would be prioritized over politics across the entire global economy and as major geopolitical players resolve their key areas of tension. At the same time, we would see strong economic growth, as well as the development of non-Western, emerging market competition in key sectors.
So, what would this scenario mean for the travel industry? During the period under consideration, which runs from 2025-2030, we would see all verticals experience strong growth, while intensified competition would drive down prices. Dynamic leisure demand would increase, as travelers take more breaks. Digital giants and lifestyle brands would become mainstream travel distributors, mediating most travel experiences and commoditizing many travel providers.
Turbulent Times
At the other end of the spectrum, the "Turbulent Times" scenario (one that would see an increase in border closures, fragmentation and conflict) would see a rise in populism and political instability, potentially leading to more nationalistic foreign policies. Geopolitical fragmentation would increase, with interests diverging at a national level, making it challenging for businesses to operate even regionally. Elements of this process were evident in the border restrictions introduced during the COVID-19 pandemic and could return, albeit in a new form.
The ramifications of such trends would mean strong headwinds for global travel. Heavier regulation, security requirements and government control would create extra complexity and friction in travel, resulting in an overall decline in spend, with a structural shift from international to domestic trips.