‘You know the impact of the pandemic is over when…’ has become something of a loaded comment for a sector which suffered an almost total cessation of business from early 2020 onwards.
But the bounce back. Oh the bounce back. ‘Revenge travel’ was coined as a term, with the revenge being enacted against a virus rather than an aged relative who said you’d never amount to much/would have your kidney stolen the second you left the couch. And it paid off good. Flight shaming a mere wisp of a thought as we jostled at airports and tolerated delays and lost luggage.
Data released by RSM last weeks suggests that revenge travel is over. The group reported that, with another year of economic uncertainty ahead, consumers were feeling the pinch in their finances, and as a result, we were likely to see the demand bubble that emerged post-Covid begin to deflate.
RSM reported that, in the UK, even high-income households, had seen a reduction in intentions to travel. The luxury hotel sector was, the group said, likely to be insulated, which is good news for the luxury hotel development pipeline, which continues to gush with enthusiasm.
But back to the question at hand: how do you know when a pandemic is over? When those good old stalwarts come back into play: the rising middle classes and where they are bubbling up from. Back from the happy days when it was all about the BRICS, we are in familiar territory, although the less said about the R the better.
This soothing retro chatter was most in evidence at the Accor results, where the group celebrated just the sort of results you want if you splitting a company in two. It all got very Book At Bedtime when chairman & CEO Sébastien Bazin started talking about India, which is responsible for half the world’s one billion of emerging middle-class.
He noted that India had 35 million international travellers for the last two years to three years, commenting: “There is no question in my mind that India will reach the 150 million mark that we’re being enjoying with China and America.
“And believe me, when you’re going to have an extra 10 million, 20 million, 30 million, 50 million people from India traveling either East or West most of them will go to Indonesia, Malaysia, Southeast Asia. If they were to go east or if they were to go west, most of them is going to go to the Middle East, to Egypt, to North Africa. This is where Accor has the greatest inventory, market share and leadership. So it’s a very interesting way to look at our own core business and who are we targeting and catering for.”
There is some deviation from the old BRICS chatter. It used to be all about setting up within the country, as certain Whitbread executives probably have screaming 3am moments about.
Accor hasn’t been immune to this. The group started expanding in the country around the same time as it was growing in China, but it has fewer than 50 hotels in India and almost 700 hotels in China. Red tape, innit, said Bazin, adding ruefully: “it’s a pity because somebody will crack it”.
And it was working on the cracking. But the CEO’s primary point of interest was the country’s outbound market, where it has a front of ‘plane seat through a partnership with Indigo Airlines.
Bazin hasn’t been the only person to notice this familiar trend. The Arabian Travel Market has announced it will hold a dedicated Indian Summit at the event this year, pointing out that, in 2020, only 37 million households had annual income between $10,000 and up to $35,000, but due to India’s rapid economic growth, by 2030 that number will rise to 177 million households.
Additionally, households earning over $35,000 per annum will also increase from two million in 2020 to 13 million by 2030, a sixfold increase.
That’s a lot of people. But it’s not a lot of money when we’ve spent the last few years throwing our lot in with the luxury segment and learning what the different bits of a yacht are called.
Accor is expected to flog off its high-end division, possibly to Hyatt, possibly this year. But will others come calling for an economy and budget business with such a blooming future? Are we going to see ‘express’ added to more brand names than we see marble shipped around the globe?
A return to the old ways could mean the price-sensitive segments back in vogue. It’s not all glamour after all.