Skift Take

These Megatrends over the years transitioned from future outlook to facts. You could look it up.

Dennis Schaal

Megatrends at Skift over the last decade of our existence have become the biggest annual franchise we put out, it is where we connect the dots across thousands of hours of reporting from our editorial team and research and data insights from our Skift Research team. These megatrends are how we see the travel industry unfold that coming year, backed by our research and an early identification of wider consumer dynamics. Looking back on the annual megatrends that Skift nailed in its 10-year history, they seem so engrained and taken for granted that it’s hard to recall they were even questioned at the time.

But they were.

Here are 10 of the megatrends we wrote that aged nicely over the years and turned out to be on point:

1.    Everyone Wants a Chinese Tourist — 2013

Just about everyone still desperately wants Chinese tourists in 2022, although they are relegated mostly to domestic Chinese tourism because of Covid policies these days. In 2012, the number of outbound Chinese tourists had grown more than 17 percent to 83 million, and we wrote: “If you’re in travel anywhere in the world and don’t have an evolved and nuanced China strategy, you aren’t a serious player in 2013.”

2.    Blurring of Business and Leisure Travel — 2013

In 2013, we couldn’t have envisioned Covid-19 and the extent to which business travelers, including digital nomads, roam the earth in 2022 mixing traveling for work and kicking back for vacation add-ons. At the time, we saw corporate booking tools as becoming much more online travel agency-like in content and design. While that has happened in fits and starts, the blending of business and leisure travel is undeniable today, and the only debate is how long-lasting and scaleable it will remain.

3.    Rise of Local in Hospitality — 2014

The rise of hotel soft brands with their local-infused personalities and Airbnb, which gave guests the ability to travel, if not live, like a local, are proof points today of the validity of this 2014 Megatrend, the Rise of Local in Hospitality. We wrote at the time: “Many independent and branded properties promote themselves as a travel experience, versus merely a place to sleep, to a growing range of travelers defining who they are by where they stay. Global hotel brands have more recently jumped on the trend.”

4.    Video Is the New Language of Brand Communication — 2016

YouTube or TikTok, no matter the platform or style, brands in 2022 are connecting or reconnecting with their audience in ways that seek to evoke emotions. We wrote about the then-burgeoning Megatrend, Video Is the New Language of Brand Communication, in 2016: “Smart brands have learned that a customer’s feelings, in many ways, determine what they buy. Instead of selling hotel rooms and airplane seats as commodities, brands are learning to tell stories using video that create an emotional connection with a specific audience.”

5.    Overtourism Goes Mainstream, Destinations Get Smarter About Solving It — 2017

It’s not uncommon for destinations these days to place limits on the number of visitors to parks or other tourism spots, and others to ban cruise ships, but the overtourism issue is far from being crossed off a bucket list of tourism issues to be resolved. We wrote in 2017: “We’ve been talking about overtourism since Skift launched in 2012 … It’s not all gloom and doom since various destinations are approaching their challenges from different angles.”

6.    Personal Fulfillment Is the New Ultimate Luxury — 2018

In 2022, especially after the advent of Covid, you can see it everywhere in hospitality and beyond. The penthouse suite isn’t good enough any more — unless it comes with experiences that can foster emotional or physical nourishment and makeovers. In 2018 we wrote: “the ultimate luxury lies in the transformational value of the experience and how it helps travelers become the person they aspire to be. In other words, the new luxury is personal fulfillment.”

7. Labor Shortages Force a Wake-Up Call — 2019

We saw it coming even before the pandemic, which exacerbated the labor issue has travel industry employees first got layed off, and many left the industry seemingly permanently for more lucrative fields. We characterized it thusly in 2019: “The dilemma for hospitality workers at the low end of the wage scale is that they often live paycheck to paycheck trying to support their families, and some chains’ business models seem to be based around outsourcing and not giving their workers enough hours to make ends meet.”

8. Subscription Travel Is the Next Frontier of Loyalty — 2020

From Edreams to Inspirato and Selina, travel companies want in on those recurring monthly and annual renewals. But they have to reset their businesses to do so. We wrote in 2020: “Earning consumer loyalty means more than giving them rewards. Subscriptions and memberships represent a compelling way for travel companies to create lasting relationships with consumers.”

9. Climate Resilience Is the New Return on Investment — 2022

As parts of the world bake, Blackrock is one of the entities espousing a sustainable investment strategy — not to be politically correct, but with the idea that the benefits will fall to the bottom line. In 2022 we said: “Cutting carbon and greenhouse gas emissions aren’t new corporate priorities, but an urgency is taking hold … Investors are demanding more than greenwashing. New models are emerging with a keen eye on actually boosting the bottom line.”

10. The Financialization of Travel — 2022

Whether it is insurance-like price freezes on airfares or forays into banking, travel companies around the world are expanding beyond the trip-booking realm. As we wrote this year: “New forms of fintech services in assorted flavors and tied to the needs of local customers are becoming a must-have feature for many travel companies.”

Skift Take

Demand for summer air travel is sky-high. But let’s be honest, these are still uncertain times. The airline recovery might continue to grow in a linear way. But it also might zig and zag. There’s no guarantee the good times will last through the fall and winter.

Brian Sumers

In March 2020, then-United Airlines President Scott Kirby was the only airline executive to speak candidly about how the Covid crisis would affect business. Now, as CEO, he’s one of the few executives giving an honest assessment of what sales might look like in the coming months.

To be sure, Kirby is mostly bullish. He knows demand is robust, and he understands airlines are reducing capacity because of operational constraints, giving them increased pricing power. And on United’s second quarter earnings call Thursday, he was happy to share United recorded its first profitable quarter since the pandemic began, with airline reporting net income of $329 million, on revenues of $12.1 billion. In addition to ticket sales, revenues from ancillary items, including seat assignments, baggage fees and premium class upgrades, have been particularly strong.

Still, during United’s call, Kirby also told analysts of several “storm clouds” that likely will affect carriers for the next six to 18 months, making recovery choppy. Kirby assured analysts United is preparing for them, just as it prepared for the pandemic.

First, Kirby said, the airline is concerned about “industry-wide constraints,” that will hamper a carrier’s ability to operate efficiently.  Like many airlines, United has struggled with on-time performance, particularly in the Northeastern United States, and it has blamed air traffic control and congested skies over Newark for increased flight delays and cancellations. Newark has been so difficult the airline cancelled 50 flights per day for the entire summer.

Kirby said United will remain “smaller and overstaffed,” for the foreseeable future, which should make it easier to recover from irregular operations. Despite robust demand, the airline’s capacity this summer is down 11 percent compared to the same period in 2019.

Chief Commercial Officer Andrew Nocella told analysts the miscues are depressing corporate demand, at least in some markets, including London Heathrow, which has been in the news.

“We look forward to this getting resolved but I think it’s having a negative impact on the return to business in the short run,” Nocella said. “Those headlines are just really disturbing to read.”

Second, Kirby said “sharply elevated” fuel prices are a concern. At today’s fuel price, Kirby said the airline is on track to spend $9 billion more this year than in 2019. With demand high, United has been able to pass that increase onto customers, but there’s no guarantee that will continue. Kirby said the airline is preparing for fuel prices to continue to stay high.

Third, Kirby warned analysts of “the growing likelihood of an economic slowdown or recession,” which could depress demand. So far, Kirby said, the Covid recovery remains so strong it is canceling out any effects from a slowing economy.

Nocella also outlined a fourth issue. Because of production and regulatory delays, Boeing has struggled to deliver aircraft to United and other airlines in the past two years, forcing carriers to cut capacity. As with operational problems, this increases unit costs, because airlines fly less than expected but don’t shed fixed costs. However, having fewer airplanes improves pricing power, since it decreases how many seats an airline can sell, while demand remains constant.

Nocella said Boeing delivery delays “will take some time to fix.” The fleet plan shows United expects some deliveries later this year, with five 787s and 43 Boeing 737 Max jets scheduled to arrive between July and December. But that’s subject to change, CFO Gerry Laderman said.

With the extra jets, United plans to grow capacity in 2023, compared to 2019. The plan is to grow by 8 percent, Nocella said, “significantly lower” than first planned. But given the operational constrains and potential macroeconomic pressure, United want to be prudent, executives said.

“We will deliver the 8 percent, assuming that Boeing also delivers the planes to us,” Nocella said.