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Outlook for 2024: the Rise and Rise of Experiential Travel

By Roger Allen Group CEO, RLA Global | December 2024

Seeking unique travel experiences will remain a robust trend in a growing global tourism market in 2024, which has major implications for hotel operators. Predictions paint a rosy picture for travel in 2024. UNWTO expects international arrivals to finally return to pre-pandemic levels, and even exceed 2019 figures by 2%. Airline connectivity may further rise this year from 89.5% of pre-pandemic levels in 2023, IATA said.

Growth will hinge in large part on the pace of recovery in Asia, and there are uncertainties stemming from economic concerns and geopolitical risks mostly related to the Hamas-Israel conflict and the Russia-Ukraine war. But the general outlook is fairly optimistic.

Whether or not these predictions will come true, experiential travel - or immersing in experiences that create unforgettable memories through facilitated, yet authentic programmes or events - is expected to remain a market driver and gain even more in popularity.

Travellers Value Culture More Than Attractions

Leisure travellers are searching for cultural experiences more than ever in 2024, according to a recent survey by Skyscanner. About 54% of its respondents consider culture an important factor when picking a destination, which compares with 49% for attractions.

Another telling bit of data is that travellers from the US - an important market of the experience economy, that is, selling memorable experiences rather than products - booked 4.7 tours while on a trip in 2023, up from 2.7 in 2019, in-destination experiences firm Arival said.

Going beyond the conventional is a hot trend

Going Beyond the Conventional Is a Hot Trend

Skyscanner’s survey has also found that 18% of US and 8% of UK travellers would fly long haul to see their favourite artist perform in 2024, and 47% and 11% have booked a destination purely based on a specific restaurant they want to visit.

Customers increasingly go beyond the usual museum visits, concerts, tours or excursions. Options popping up in top lists of hot travel experiences for 2024 include dark sky tours in Norway, yurting in Mongolia, expedition cruises to Antarctica or the Galapagos Islands, attending a kite festival in India, or taking part in slow safaris in Africa.

Experience-Led Tourism Is Becoming the Norm

Slow travel in general, with visitors immersing in local culture for a longer period, is expected to remain popular this year, just as purpose-driven adventures, which focus on meaningful goals, such as wildlife conservation, environmental protection or preserving traditions.

In a recent example of new purpose-led travel schemes, American Express rolled out its Stay with Purpose programme in June 2023 to provide an online directory of hotels committed to meaningful initiatives. Its Card Members can use the directory to book, among others, the Rosewood Baha Mar in the Bahamas which offers an opportunity to contribute to the growth of a coral reef nursery, or the Six Senses Ninh Van Bay in Vietnam, which offers an educational farming experience.

Experience tourism is becoming the norm as travellers want to connect with a place emotionally, booking tech provider Regiondo has pointed out. Software firm Flyware said 89% of tourism service providers have seen higher demand for experiential travel, which typically offers more personalized and unique leisure experiences compared to conventional vacations.

Experience-led tourism is becoming the norm

Wellness Travel Still Has a Great Growth Potential

Wellness, an important part of experiential travel, saw dynamic growth in recent years as Covid-19 boosted interest in personal wellbeing. The value of the wellness tourism market will climb to $1,030 billion in 2024 from an estimated $868 billion last year, and record a compound annual growth rate of 16.6% in 2022-2027, the Global Wellness Institute (GWI) predicted.

Most segments within the wider wellness economy are projected to exceed global GDP growth until 2027, and some of the segments with the highest expected growth - including wellness tourism - are those that took the greatest hit during Covid-19, GWI said.

Hotel operators must take note of two very important GWI findings. First, secondary wellness travel - where travelers seek out wellness experiences while taking any type of trip, either leisure or business, accounted for 88% of all wellness tourism trips in 2022. Second, international and domestic wellness tourists spend 41% and 175% more than average tourists, respectively.

Wellness Projects Need a Prudent Investor Approach

Wellness real estate will be the fastest-growing segment of the wellness economy in the coming years, expanding by 17.4% annually in 2022-2027, GWI forecasts. Its overall market size is expected to rise to $567bn in 2024 and nearly double to $888bn in 2027 from an estimated $473bn last year.

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

One factor investors must consider is that a higher cash inflow comes with a higher cash outflow. Hotels with major wellness offerings can achieve higher topline performance due to higher average daily rates and significant leisure revenues compared to properties with minor wellness, but that comes with higher operational costs.

Variability and Election Year Impact Hotels’ Outlook

No doubt, increasing demand for experience tourism can affect hotel performances in 2024. Hotel executives drew slightly diverging but for the most part fairly optimistic predictions for the hotel sector in a panel discussion at the recent AOHIS 2024 investors’ summit in Madrid, which was moderated by RLA Global Group CEO Roger Allen.

Alexander Schneider, chief operating officer at Sani Ikos Group, said he is expecting a 15% growth for this year, while Dilip Rajakarier, Group CEO of Minor International and CEO of Minor Hotels, foresees a record growth. However, there is a significant variability in the predictions, with differences between expected growth rates depending on the type of property, regional variations in tourism and the overall size and growth potential of managed assets.

Also affecting the outlook for the hotel industry is that 2024 will be a "super election year", with more than 60 countries holding national elections. The outcome of these elections can create a positive impact on markets, leading the way for corrections in 2025, Roger Allen said.

Can All Hotels Gain from the Experiential Shift?

Luxury hotels may be best positioned to benefit from the growth in experiential travel. This is supported by Arival’s research, which shows that affluent US travellers made up just 22% of all travellers in the country, but accounted for 46% of the total amount spent on experiences last year. They are willing to pay more for experiences, with about 58% booking private tours when travelling.

But hotels in other categories can also benefit from the rise of experience-led tourism. A YouGov survey found in 2023 that US travellers seeking to experience different cultures and learn about history tend to stay in mid-market hotels (62%), rather than luxury properties (42%). This split is more equally balanced for travellers from the UAE though, at 48% and 49%, respectively.

Wellness travel still has a great growth potential

Experiences Support City and Boutique Hotels

Experiences also play an increasing role in urban leisure travel, and are getting crucially woven into city hotel settings, panellists heard at AOHIS 2024. Covid-19 and its aftermath has driven growth in many resort markets, but the past year or so saw outstanding city hotel performances, especially in some European markets popular with US visitors, such as Paris, Rome and Dublin.

Major events, such as the 2024 Summer Olympics in Paris or the UEFA 2024 football championship in ten German cities, can support further hotel demand growth this year. Owners and investors may also benefit from the relatively low number of ongoing hotel developments and restrictions on short-term rentals in private homes in several European cities, Cushman & Wakefield said.

Another interesting takeaway from the AOHIS 2024 panel was that independent boutique hotels are not simply competing with but are also often excelling big international hotel brands. Boutique hotels traditionally have a good track record in offering unique accommodation that reflects the local culture and environment, something experience-led travellers strongly appreciate.

Demand for boutique hotels rose by 8% on the year in the first half of 2023, which compared with a 6% rise for the same class of non-boutique hotels in the US, The Highland Group said in its latest research. The fastest-growing segment was the lifestyle upper-upscale and luxury category, which recorded a 12.4% rise in demand over this period.

Experiences support city and boutique hotels

More Hotel Partnerships on the Horizon in 2024

In-destination experiences are a popular trip element travellers splurge on when making trade-offs for a trip upgrade or downgrade, Deloitte said in its 2024 travel outlook. Hotel class, on the other hand, is something they are ready to cut back on when budgets are tight.

This finding offers implications for hotels assessing the need to update their experience strategy. Deloitte expects more hotels to form partnerships with event venues, sports teams, or food and beverage brands in 2024 to give their guests special access to experiences.

IHG Hotels & Resorts signed a deal in January with Six Nations Rugby to allow IHG One Rewards members to bid their loyalty points for match tickets and hotel packages, behind-the-scenes stadium tours, pitch side visits, or a chance to watch teams train. IHG Hotels & Resorts is the first hotel partner of Six Nations Rugby. It already has partnerships with Major League Soccer (MLS), US Open Tennis and the RB Leipzig football club in Germany.

In another recent example, Spanish hotel chain operator Sercotel teamed up with TUI in February to integrate its tours and activities digital platform into the Sercotel website. Guests will be able to access a variety of experiences at destinations like Barcelona, Madrid, Gran Canaria or Malaga. Sercotel will be the first hotel company to offer the new National Geographic Day Tours, which among others include archaeologist-led explorations of historic sites, kayaking with a marine biologist or discovering landmark buildings with an architect.

Mr. Allen

Roger Allen is the Group Chief Executive Officer of RLA Global, a recognized global advisory to investors, owners, developers and management companies. Specialized in hospitality, leisure, recreation, wellbeing and tourism related to hotels, resorts, residential, mixed-use, healthcare, active living communities and destination tourism developments. RLA Global works closely with the public and private sector in the Americas, Europe, Middle East and Africa to provide conceptual planning, financial analysis and asset management of complex properties such as resorts, retreats and destination assets. A proven track record for more than 20 years, Mr. Allen has been working on multiple levels of project developments in the hospitality and leisure industries, developing a singular expertise in leisure projects: from the complexity of project planning through implementation and operations. He has been engaged with most of the leading hotel operating brands, is a former partner at Horwath HTL for Central & Eastern Europe, Russia & CIS Countries and was a contributing author to the book "Hotel & Resorts Valuation - An Investor's Guide". Mr. Allen is also a Board Director of the International Society of Hospitality Consultants (ISHC). Extended Biography & Contact Information

HotelExecutive retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.

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You hereby authorize HotelExecutive's Internet Payment Service Provider to charge your credit card to pay for your membership to HotelExecutive. You further authorize HotelExecutive's Internet Payment Service Provider to charge your credit card for any and all purchases of products, services in association with HotelExecutive. You agree to be personally liable for all charges incurred by you in association with your access or other use of any content provided by HotelExecutive or any third party in association with HotelExecutive. You acknowledge and agree that your liability for all such charges shall continue after termination of your access or any type of membership arrangement with HotelExecutive.

In the event that you have chosen to have your membership automatically rebilled, unless and until you notify HotelExecutive that you wish to cancel or terminate your membership to HotelExecutive, you hereby agree and authorize HotelExecutive's Internet Payment Service Provider to automatically renew your membership to HotelExecutive on a continuing basis and to charge your credit card (or other payment means you have selected) to pay for the ongoing cost of your membership. You hereby further authorize HotelExecutive's Internet Payment Service Provider to charge your credit card (or other approved payment means you have selected) for any and all purchases of products, services and entertainment provided to in, at, through or in association with HotelExecutive.

13. PRIVACY POLICY

The following is the Privacy Policy for HotelExecutive

We can be reached via telephone, email, or online at our contact page. When you visit our site we do not log any information regarding your domain or email address. Information Sharing: We do not share user information with any third parties other than via press release distribution as described below.

Hotel Newswire is a newswire service that distributes press releases on behalf of our users. If you decide to submit a press release for distribution through our system we will transmit your entire press release including any personal information therein contained to our media contacts and online distribution points including search engines. This is the only redistribution of your information that we engage in. Your submission of press releases through our system indicates consent with this policy. The information we collect during your registration process is used to notify users about updates to our service and inform users of any special events hosted by Hotel Newswire. This information is not shared with other organizations for commercial or non-commercial purposes.

Cookies: Our system requires the use of cookies to enable the user to log back into our website to access information from the newswire, without having to log in each time using the required username and password.

If you do not want to receive email from us in the future, please let us know by following instructions included in our communication with you. Users who supply us with telephone numbers online may receive telephone contact from us regarding their account, or informing them of new products and services available on the HotelExecutive website. If you do not wish to receive such telephone calls, please edit your account and remove your phone number from your account profile. This can be done from your user account menu.

Ad Servers: We do not partner with or have any relationship with any ad server companies. From time to time, we may use customer information for new uses not previously disclosed in our privacy notice. If our information practices change at any time, we will post the policy changes to our website to notify you of these changes and provide you with the ability to opt out of these new uses. If you are concerned about how your information is used, you should check back at our website periodically.

Upon request we provide site visitors with access to all information (including proprietary information) that we maintain about them. Users can access this information by logging in to their account.

Security: We always use industry-standard encryption technologies while transferring and receiving user data exchanged with our site. We have appropriate security measures in place in our physical facilities to protect against the loss, misuse, or alteration of information that we have collected from you on our site. We do not store credit card information in our systems.

If you feel that this site is not following its stated information policy, you may contact us.

Willis Loughhead
Patricia Olinger
Karthik Namasivayam
James Martin
Loretta Macke
Chris Green
Narda Malcolm-Kingston
Connor Vanderholm
Helen Zaver
Jacqueline Voronov
Michael Feldman
Marci Zaroff
Coming up in March 1970...