Travel industry could lose $318B through grounded flights

The pandemic has forced consumers to change their habits with industries such as travel among the worse affected.

A report from Accenture says that up to $318 billion in annual value will be diverted from travel to other industries if current reductions in air travel remain for the long term.

The Big Value Shift report reveals that even a moderate drop in airline demand could ripple across the entire airline ecosystem. 

Already, senior executives of many large hotel groups and airlines are predicting a permanent dip in business travel of up to 15%.

However, last week at the New York Times Dealbook Conference, Bill Gates, co-founder of Microsoft, predicted 50% of business travel would go away.

The latest Accenture Consumer Pulse study, of more than 8,500 people in 19 countries, shows that 73% of consumers expect to feel most comfortable spending their free-time at home in the next six months.

The same research reveals that 61% of people would be uncomfortable taking a flight while 53% say they would be uncomfortable staying in a hotel.

The likely winners are digital entertainment, domestic tourism and outdoor pursuits.

Emily Weiss, global lead of Accenture’s travel industry group, says: “Fundamental changes in behavior, including heavily reduced air travel and consumer discomfort in public spaces, creates opportunity in other areas. Companies need to innovate to drive new revenue streams and look at their ecosystem partnerships to offer value-added services that cater to new ways of working and the health-conscious consumer.

“For example, the hospitality sector can leverage existing assets to provide hotel rooms for day rates so people can work away from home, but still in a safe space. Critically, these efforts could also become a permanent and profitable avenue for growth in the post-pandemic era.”

Groups such as Hilton with its WorkSpaces initiative and Accor, via its partnership and stake in Wojo, have already introduced schemes enabling people to use their rooms and spaces for work.

The report, which can be viewed here, concludes with advice for companies around ensuring business models are still relevant and the need for flexibility around operating models.