global travel performance © 2018 Euromonitor International 1 INTRODUCTON Global inbound arrivals are expected to grow by 5% to 1.4 billion trips in 2018. On the back of an upgraded economic outlook for major economies such as the US, Japan and the Eurozone, inbound receipts are expected to see an even stronger rise of 11%. Domestic trips are booming in Asia Pacific, where trips are expected to grow by 10% in 2018. Average spend per trip is increasing, again driven by Asia Pacific. Global expenditure is expected to rise by 9%. Low-cost carriers are outperforming scheduled airlines in terms of passenger growth7% vs. 5%and value sales growth9% vs. 8%albeit from a lower base. Absolute incremental growth is stronger for scheduled players as they are more innovative in their product offering and pricing. Total travel sales are expected to fall just short of USD 2.5 trillion in 2018. Offline sales still account for over 50% of global travel sales, but with a 20182023 CAGR of 12%, mobile sales are expected to considerably outperform offline and other online bookings, with CAGR s of 1% and 2% respectively. The global lodging category is expected to grow by 6.1% in 2018, with short-term rentals outperforming all other lodging categories and registering 12.7% growth. Hotels account for 73% of total lodging sales, with luxury hotels registering the strongest growth within the hotel category. 1.4 billion INTERNATIONAL TRIPS ARE EXPECTED TO BE TAKEN IN 2018 WHICH CONSTITUTES 5% GROWTHeuromonitor's megatrends © 2018 Euromonitor International 2 INTRODUCTION Travel is booming, but also ever-changing. Megatrends can help make sense of shifts in consumer behaviour and attitudes that impact all countries and industries. Through extensive research and input by over 1,000 expert analysts, Euromonitor International has selected eight megatrends with the furthest-reaching impact on industries and consumers in the future. A megatrend is not a short-term fad, but rather a trend with longevity, one representing a fundamental shift in behaviour that is defining consumer markets. All travel trends discussed in this report are closely linked to these eight megatrends. In a rapidly changing global environment, megatrend analysis is critical for travel players seeking to remain relevant, as competition increases and new ideas disrupt the industry.2018 trends shaping the future of travel INTRODUCTION © 2018 Euromonitor International 3 MIDDLE EAST AND AFRICA Seamless Experiences Trading Down Blurring Industry Lines Access Economy Taking Flight AMERICAS Deconstructing the Customer Journey Plastic Waste EUROPE The Joy of Missing Out Conservation China ASIAregional coverage © 2018 Euromonitor International 4 MEGATRENDS SHAPING THE FUTURE OF TRAVEL EUROPE ASIA AMERICAS MIDDLE EAST 21 countries; n: 28,487 Breaking down existing silos, and engaging with travellers outside the traditionally understood engagement phases, is becoming increasingly important. In a world where brand loyalty is fragile, being able to interact with customers in more than one phase of the customer journey is very important. Omnipresence allows brands to increase touchpoints, but also to enhance them, resulting in greater customer experiences. 0 10 20 30 40 50 60 70 80 Apparel, footwear and personal accessories Beauty, personal and health care items Cinema, concerts and theater tickets Consumer electronics or appliances Food for takeaway or delivery Groceries and household essentials Leisure and entertainment Online downloads (excluding tickets) Travel purchases % respondentscase study lufthansa thinks post-flight © 2018 Euromonitor International 11 EUROPE Understanding consumer preferences, not only when they are on the flight, but also beyond this limited time-frame, offers opportunities to personalise future engagement. Groceries might only be the start. As part of its vision to become the worlds most innovative airline, Lufthansa has introduced new initiatives such as FlyNet onboard internet and the FlyingLab programme, among others. In October 2017, Lufthansa launched a trial that allows on-board passengers to shop for groceries at retailer Rewe. Users are able to have groceries delivered by the time they get home. The service provides both Lufthansa and Rewe with opportunities to engage with customers in new ways. For Rewe, it provides access to a space previously closed to it, while allowing Lufthansa to better understand its customers. By 2020, Lufthansa plans to invest euR500 million in the personalisation of digital products. Source: Lufthansacase study hotels aren't just for travellers © 2018 Euromonitor International 12 EUROPE AccorHotels is one of the strongest examples of hotel companies starting to look beyond their core purpose to attract and engage with new customers. Hotels are good at engaging with travellers and often much better than engaging with local residents. AccorHotels wants to change the understanding that hotels cater only to travellers by opening its hotels for the local community. In the Q4 2017 earnings call, Chairman and CEO Sébastien Bazin suggested that players such as Amazon, Alibaba and Facebook are powerful because they have many touchpoints with their users. He stated: “what is AccorHotels point of contact with our customers? Well, average four times a year.” The company launched its AccorLocal app to attract more local residents to its hotels and cater to their needs. The app offers services from local merchants and hotels, including breakfast, yoga and fitness classes, co-working spaces or package delivery and collection. AccorHotels has acquired and invested in close to 20 companies over the past three years. The biggest deal of this buying spree was the acquisition of FRHI for usd2.7 billion. Source: AccorHotels © 2018 Euromonitor International 13 plastic waste TRAVEL TREND 2 MEGATRENDS SHAPING THE FUTURE OF TRAVEL Plastic plays an influential role in shaping modern society, evident through its widespread application and growth in use across all industries. It is hard to imagine living without plastic. High-profile coverage such as BBC s Blue Planet II series, which brought images of the destruction that plastic waste brings to the worlds oceans, and the launch of the Ocean Cleanup attempt to reduce the Great Pacific Garbage Patch, have greatly increased awareness amongst consumers of plastics negative attributes.plastic waste © 2018 Euromonitor International 14 EUROPE Plastic Waste Generated in Europe Source: Euromonitor International Note: Data exclude Russia In December 2017, 200 countries signed a UNEP resolution to tackle all forms of pollution, and noted that unless action was taken “oceans would contain more plastic than fish”. Companies from all industries, including adidas, P&G and Ecover, today use ocean plastics in their products, and many travel players have pledged to take action by reducing plastic waste. 0.0 2,000.0 4,000.0 6,000.0 8,000.0 10,000.0 12,000.0 14,000.0 16,000.0 18,000.0 20,000.0 2012 2013 2014 2015 2016 2017 Million tonnes Italy Germany France UK Othercase study the final straw for plastic waste © 2018 Euromonitor International 15 EUROPE While there are many alternatives to straws, including those made from paper, bamboo or bioplastic, simply replacing the material does not address the issue of waste reduction. Lolistraws offer a plastic and waste reduction solution. Due to their abundance, low reusability and recyclability, straws have become enemy number one. Many companies, including Alaska and American Airlines, Marriott, Hilton, AccorHotels and Hyatt, have pledged to end the use of plastic straws. The race is now on to find the best alternative. US-based Loliware has been working on launching edible products, amongst which are Lolistrawsedible, hyper-compostable straws. The straws can be eaten, or if disposed of, will biodegrade like a banana peel. The product is made from seaweed, organic sweeteners, flavours and colours derived from fruit and vegetables. According to a 2017 scientific study published in Science, only 9% of global plastic waste is recycled. Source: LoliwareRunning a solid sustainability strategy can become a useful marketing tool for Ryanair. Improved customer experience is on Ryanairs agenda, and the operators latest ambitions are testament to its goals to boost efficiency, embrace more “green” practices and in the process become known for more than just cheap flights. case study ryanair going plastic-free © 2018 Euromonitor International 16 EUROPE Ryanair is the biggest budget operator in Europe in terms of passengers carried, overtaking established scheduled airlines through aggressive route network expansion and rigorous cost control. In 2018, the company announced plans to completely remove non-recyclable plastics from its aircraft by 2023. The initiatives include using biodegradable cups and paper packaging. The airline will also encourage passengers to use their own cups. This mimics the increasingly popular initiative in coffee chains, which offer discounts when customers bring their own mugs. Ryanair leads the low-cost segment in Europe, with expected sales just short of usd9 billion in 2018, ahead of players such as easyJet and Norwegian Air Shuttle. Source: Ryanairasiahealthy signs for asian travel performance © 2018 Euromonitor International 18 ASIA Travel in Asia is booming. The region continues to enjoy strong performances in both inbound and outbound travel, supported by rapidly growing economies, and an expanding middle class seeking to spend its increasing disposable income on travel. The gradual process of loosening visa restrictions has made travelling in the region easier, with 80% of arrivals in Asia originating from the region. Positive geopolitical developments and sporting events further boost the regions attractiveness. The next Summer Olympics will be held in Tokyo, and the next Winter Games in Beijing, after PyeongChang hosted the 2018 Winter Olympics. The past Winter Games highlighted the potential of improved relations between South and North Korea. Major uncertainty remains, but the potential of improved relations could be far-reaching for the region. Historic % Growth of Inbound Arrivals to Asia Source: Euromonitor International 2013-2018 % CAGR Up to 2.5% 2.6% - 5.0% 5.1% - 7.5% 7.6% - 10.0% 10.1% - 20.0% Over 20%