Experts advise investors in the tourism and hospitality sector to “go digital” in an increasingly competitive market. A survey shows that hotels achieve better rates by partnering with experienced complementary service providers. Additionally, allowing customers to personalize their vacation packages generates more revenue.
Getting Closer to Clients and Reducing Intermediary Booking Fees
The tourism and hospitality sector in Africa has evolved over the past decade to adapt to industry changes. Increasingly, hotels seek to reclaim their relationship with their clients, and new forms of accommodation, such as home-sharing, are becoming popular.
« Another emerging trend is direct booking instead of going through agents », reveals the report titled « New Trends in the Tourism and Hospitality Sector 2025 ». In the report, Caroline Tufft, lead researcher at McKinsey, notes that « hotels are seeking to get closer to their clients and reduce intermediary booking fees. Hence, hotels encourage direct bookings ».
Another new trend in the sector is « home-sharing », which, according to the report, has grown from 10 % to 14 % of booking value between 2017 and 2023. « Recently, home-sharing has positioned itself as much more than just a substitute for traditional hotels », says Tufft. This means that home-sharing is no longer just an alternative to hotel stays but has become a market in its own right. Home-sharing companies have also become a key distribution channel for small hotels, with lower fees than other channels.
Tapping into the Cruise Segment
As the tourism and hospitality sector evolves, cruise ships, which account for only 2 % of the overall travel and tourism market, have recorded an annual revenue growth of 6 % over the past decade. Cruises attract new travelers and offer new experiences, and this growth has been the key to the expansion of this sub-sector.
Rather than investing in new premises, luxury hotels are tapping into the new cruise segment. Notably, with the launch of yacht brands, deliberately positioned as a distinct experience from traditional cruises.
New Trends in the Tourism and Hospitality Sector
Another new trend in the tourism and hospitality sector is the increase in attendance at amusement parks. According to the report, amusement park attendance has increased by 3 % per year over the past decade.
The report divides amusement park attendance into two main groups: Asians and Millennials (25-35 years old). Two new visitor groups, in particular, are driving growth. First, the Asia-Pacific region accounts for a large part of the growth in amusement park attendance over the past decade, with 57 % of amusement park attendance. Secondly, Millennials are visiting parks in greater numbers. A similar proportion of this age group (78%) say they are interested in visiting an amusement park.
Due to this growth, more and more cities worldwide are being invited to invest in amusement parks. “Experiences are becoming increasingly important to travelers, more than the destination itself,” the report states, advising investors to focus on creating memorable experiences to attract more tourists to their destinations.
Going Digital to Attract New Tourist Groups
Countries and cities are also encouraged to go digital to attract new tourist groups. « Activity organizers ranging from walking tours, such as cultural tours in Africa, to snorkeling trips in places like Zanzibar… tend to be small businesses with limited digital presence. This has created an opportunity for tech-savvy companies to help travelers discover and book experiences », the report states.
In this regard, leveraging destination marketing organizations can be helpful. Several companies offering online discovery and booking platforms for travel activities are experiencing significant growth in the American, European, and Asian markets.
African tourist destinations are encouraged to use these platforms to market themselves. For example, GetYourGuide quadrupled its revenue between 2022 and 2023. Another platform, Viator, saw its revenue increase by 49 % over the same period, and yet another, Klook, reported gaining twice as many new customers in 2023 as in 2019.
Tourism and hospitality businesses tend to follow a power curve. That is, a small proportion of companies account for a significant share of profits and losses. The report shows that, based on this principle, publicly traded accommodation and experience providers have increased their revenues by 3 % and 4 %, respectively.
Leveraging Cross-Selling Opportunities
Accommodation providers have increased their profits by five percentage points, while experience providers have remained at an average profit margin of 18 %. Moving forward, three strategies, in particular, can help tourism and hospitality businesses stay at the forefront of innovation. First, sector players are advised to « unbundle their rates ». Hotel and experience providers can take inspiration from airlines by unbundling rates and allowing consumers to pay for the exact experience they want.
By allowing clients to find the ideal room, it is possible to increase revenue and satisfaction. Secondly, tourism and hospitality players should engage in cross-selling services. For accommodation and transportation businesses, partnering with experienced providers to sell a complete trip offers the opportunity to tap into a growing sector of traveler spending.
For example, airlines can partner with museums to offer discounted rates if the booking is made at the time of the flight. Similarly, hotels can partner with a nearby historical site to offer early entry. These partnerships can add value beyond simple cross-selling.
Finally, tourism and hospitality players are advised to use the untapped data that is readily available in the sector. Stakeholders should turn to digital platforms where data is available. For example, social media could reveal a trend that hotels and airlines could capitalize on.
