- Expert tips tourism and hospitality sector investors to ‘go digital’ in an increasingly competitive industry.
- Survey shows hotels are getting better rates by partnering with experienced complementary service providers.
- What’s more, allowing customers to tailor their own holiday packages rakes in more revenue.
The tourism and hospitality industry in Africa has evolved over the past decade to match with changes in the business. Increasingly, hotels are now looking to reclaim their relationship with guests, and new ways of accommodation such as home sharing are becoming more and more popular.
“Another trend on the horizon is direct booking instead of using of agents,” reveals a report titled ‘New trends in the tourism and hospitality industry 2025.’ In the report, Senior McKinsey Researcher, Caroline Tufft points out that; “hotels are looking to get closer to their customers as well as to cut down on intermediary booking fees and so hotels are encouraging direct bookings.”
Another new trend in the industry is ‘Home Sharing’ which the report says has grown from 10 to 14 per cent of booking value between 2017 and 2023. “Recently, home sharing has positioned itself as more than a stand-in for traditional hotels,” Tufft said. What this means is that, home sharing is no longer just a replacement for hotel stays but rather, it has become a market of its own.
Tufft said, “Airbnb’s recent advertising campaign “Get an Airbnb” highlighted the differences of home sharing from other hospitality options, emphasizing the space and privacy that renting a house can offer.” Home-sharing companies have also become a key distribution channel for smaller hotels, he said citing lower fees than other channels.
“In 2019, Airbnb reported a 152 per cent increase in the number of rooms available for booking through its platform in boutique hotels, bed and breakfasts, and resorts,” the expert detailed.
Further still, as the tourism and hospitality industry evolves, cruise ships, which account for only 2 per cent of the overall travel and tourism market, have achieved 6 per cent yearly revenue growth in the past decade.
“Cruises are attracting new travelers and providing new experiences and it is this growth that has been key for expansion in this sub sector,” the expert explains.
Rather than investing in new premises, luxury hotels are capturing the new cruising segment with the launch of yacht brands, purposefully positioned as a distinct experience from traditional cruises, she detailed.
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New trends in tourism and hospitality industry
Another new trend in the tourism and hospitality industry is increase in theme park attendance. According to the report, theme park attendance has grown by 3 per cent a year over the past decade.
The report divides theme park attendance into two main groups, first Asians and secondly millennial; “Two new groups of visitors in particular are powering growth. First, the Asia–Pacific region accounted for much of the growth in theme park attendance in the past decade accounting for up to 57 per cent in theme park attendances. Secondly, millennials are heading to parks in greater numbers. A similar proportion of millennial parents (78 per cent) and millennial nonparents (75 per cent) say they are interested in going to a theme park.”
Owing to this growth, more and more cities around the world are advised to invest in theme parks. In areas where theme parks are already popular, investors are investing in making theme ever more sophisticated.
“Experiences are increasingly more important to travelers, than the actual destination,” the report reads and advices investors to focus on creating memorable experience to attract more tourists to their destinations.
Countries and cities are also urged to go digital to capture the newer groups of tourists. “Operators of activities ranging from walking tours like cultural tours in Africa to snorkeling outings in places like Zanzibar…tend to be small businesses with a limited digital presence. This has created an opportunity for tech-forward companies to help travelers discover and book experiences,” reads the report in part.
In this regard, use of destination marketing organizations can be helpful as several private companies that offer online discovery and booking platforms for travel activities, have achieved considerable growth in the US, European, and Asian markets.
African destinations are urged to use these platforms to market themselves, for example, GetYourGuide grew its revenue fourfold between 2022 and 2023. Another platform, Viator, saw its revenue grow 49 per cent for the same time period, and yet another one, Klook, reported having got twice as many new customers in 2023 as in 2019.
Companies in the tourism and hospitality sector tend to follow a power law curve, that is, a small share of companies account for an outsize portion of both profits and losses. The report shows that, based on this law, publicly listed accommodation and experience providers grew revenue at 3 per cent and 4 per cent, respectively.
“Accommodation providers increased their profits by five percentage points, while experience providers remained at an 18 percent average profit margin,” reads the report.
Moving forward, three strategies in particular can help tourism and hospitality companies stay on the leading edge of innovation. First, stakeholders in the industry are advised to ‘Unbundle their rates.’
“Hotel and experience providers can take a page from the airline playbook by unbundling rates and letting consumers pay for the exact experience they want,” Tufft writes in the report.
For example, she writes, at the time of booking, hotels can present guests with an individually priced bundle for a room on a higher floor, including breakfast and free parking. The researchers says, allowing guests to pay separately for various experiences of their choice leads to higher revenue and retention.
“Ensuring that guests can find their ideal room can lead both to increased revenue and increased satisfaction. A major hotel brand reported that guests chose to spend an additional $22 per night, on average, to customize their hotel room to their liking,” the researcher revealed.
Secondly, the researcher advices tourism and hospitality stakeholders to cross-sell services. For accommodation and transportation companies, partnering with experience providers to cross-sell a full journey provides an opportunity to tap into a growing area of traveler spending.
“For example, airlines can partner with museums to offer discounted rates if booked at the time of the flight, or hotels can partner with a historical site nearby to offer early-hours admission,” she advices while warning that these partnership needs to add value beyond mere cross-selling, offering features like insurance or an option to buy now and pay later is another way to add value and cross-sell at the same time, she suggested.
Finally, stakeholders tourism and hospitality entities are advised to use untapped data that is readily available in the sector.
Stakeholders must move on to digital platforms where data is available, for example, social media could show a trend that hotels and airlines can capitalize on.
“Stakeholders can unlock new revenue streams by thinking through what data they hold that can be of value to others, “ she suggested. In conclusion, she pointed out the fact that; “Embracing data isn’t just smart, it’s the future of travel.”
