US - Travel & Tourism: A technology driven market with high rewards (Strategy, Performance and Risk Analysis)
The US showcases strong potential in terms of domestic and international arrivals, as total tourist volumes reached 2.2 billion in 2016 and are expected to reach 2.4 billion by 2021. The large number of people travelling to the US for leisure and business purposes makes it one of the leading markets for travel and tourism. In terms of total tourist volumes, the US was ranked second after China. In terms of international arrivals, the US was ranked second after France, with leisure being the primary purpose for visits.
In the passenger airlines segment, the US ranked first globally in terms of number of seats available and sold. However, in terms of volume growth, it lags behind due to its saturated market. Other nations such as Ireland, Thailand and Portugal have witnessed strong growth in terms of seats available and seats sold due to robust growth in the number of travelers visiting these countries.
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Online channel to drive growth
Total travel intermediaries’ revenue increased from US$140.8 billion in 2012 to US$160.6 billion in 2016, and is expected to increase at a CAGR of 3.4% over 2017-2021 to reach US$188.79 billion. Revenue from leisure accounted for approximately 63% of total travel intermediaries’ revenue, showcasing increased spending by travellers on leisure activities. Sales from the online channel recorded revenues of US$58.94 billion in 2016 and is expected to grow at a CAGR of 4.2% over 2017-2021 to reach US$72.11 billion. Increasing demand for the internet and the flexibility and ease of use associated with the online channel are the key drivers of this growth.
Consolidation and investments to drive growth in the industry
US hotel revenue reached US$198.1 billion in 2016 and is expected to increase at a CAGR of 4.5% over 2017-2021 to reach US$246.2 billion. The hotel industry has attracted offshore capital which could further strengthen the industry. Anbang Insurance Group’s (China) acquisition of the Waldorf Astoria from Hilton for US$2 billion is one of the most prominent offshore investments in the country.
Growing use of internet in the US helps to drive growth in the car rental market
High utilization rate, rental occasions, and rental days have fueled growth in the car rental market in the US. The market value reached US$29.2 billion in 2016 and is expected to increase at a CAGR of 4% over 2017-2021 to reach US$35.4 billion. Growing demand for internet and smartphones fuel the use of car rental services and is expected to sustain growth in the industry.
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