Outlook for 2024: the rise and rise of experiential travel

You may read an extended version of this article at HotelExecutive.

Predictions paint a rosy picture for travel in 2024. UNWTO expects international arrivals to finally return to pre-pandemic levels, and even exceed 2019 figures by 2%. Airline connectivity may further rise this year from 89.5% of pre-pandemic levels in 2023, IATA said.

Growth will hinge in large part on the pace of recovery in Asia, and there are uncertainties stemming from economic concerns and geopolitical risks mostly related to the Hamas-Israel conflict and the Russia-Ukraine war. But the general outlook is fairly optimistic.

Whether or not these predictions will come true, experiential travel – or immersing in experiences that create unforgettable memories through facilitated, yet authentic programmes or events – is expected to remain a market driver and gain even more in popularity.

Travellers value culture more than attractions

Leisure travellers are searching for cultural experiences more than ever in 2024, according to a recent survey by Skyscanner. About 54% of its respondents consider culture an important factor when picking a destination, which compares with 49% for attractions.

Another telling bit of data is that travellers from the US – an important market of the experience economy, that is, selling memorable experiences rather than products – booked 4.7 tours while on a trip in 2023, up from 2.7 in 2019, in-destination experiences firm Arival said.  

Going beyond the conventional is a hot trend

Skyscanner’s survey has also found that 18% of US and 8% of UK travellers would fly long haul to see their favorite artist perform in 2024, and 47% and 11% have booked a destination purely based on a specific restaurant they want to visit.

Customers increasingly go beyond the usual museum visits, concerts, tours or excursions. Options popping up in top lists of hot travel experiences for 2024 include dark sky tours in Norway, yurting in Mongolia, expedition cruises to Antarctica or the Galapagos Islands, attending a kite festival in India, or taking part in slow safaris in Africa.

Experience-led tourism is becoming the norm

Slow travel in general, with visitors immersing in local culture for a longer period, is expected to remain popular this year, just as purpose-driven adventures, which focus on meaningful goals, such as wildlife conservation, environmental protection or preserving traditions.

Experience tourism is becoming the norm as travellers want to connect with a place emotionally, booking tech provider Regiondo has pointed out. Software firm Flyware said 89% of tourism service providers have seen higher demand for experiential travel, which typically offers more personalized and unique leisure experiences compared to conventional vacations.

Wellness still has a great growth potential 

Wellness, a key part of experiential travel, saw dynamic growth in recent years as Covid-19 boosted interest in personal wellbeing. The value of the wellness tourism market will climb to $1,030 billion in 2024 from an estimated $868 billion last year, and record a compound annual growth rate of 16.6% in 2022-2027, the Global Wellness Institute (GWI) predicted. 

Wellness real estate, another segment of the wider wellness economy, will grow even faster, at 17.4% annually in 2022-2027, GWI said. But real estate investors and developers need to take a savvy and prudent approach to wellness projects. This is reflected in the latest edition of RLA Global’s Wellness Real Estate Report H1 2023, which found that hotels with minor wellness offerings outperformed hotels with major wellness in revenue and profit growth in the first half of 2023.

Variability and elections impact hotels outlook     

There is no doubt that increasing demand for experience tourism can affect hotel performances in 2024. Hotel executives drew slightly diverging but for the most part fairly optimistic predictions for the hotel sector in a panel discussion at the recent AOHIS 2024 investors’ summit in Madrid, which was moderated by RLA Global Group CEO Roger Allen.

Alexander Schneider, chief operating officer at Sani Ikos Group, said he is expecting a 15% growth for this year, while Dilip Rajakarier, Group CEO of Minor International and CEO of Minor Hotels, foresees a record growth. But there is a significant variability in the predictions, with differences between  expected growth rates depending on the type of property, regional variations in tourism and the overall size and growth potential of managed assets.

Also affecting the outlook for the hotel industry is that 2024 will be a “super election year”, with more than 60 countries holding national elections. The outcome of these elections can create a positive impact on markets, leading the way for corrections in 2025, Roger Allen said.    

Can all hotels gain from the experiential shift?

Luxury hotels may be best positioned to benefit from the growth in experiential travel. This is supported by Arival’s research, which shows that affluent US travellers made up just 22% of all travellers in the country, but accounted for 46% of the total amount spent on experiences last year. They are willing to pay more for experiences, with about 58% booking private tours when traveling.   

But hotels in other categories can also benefit from the rise of experience-led tourism. A YouGov survey found in 2023 that US travellers seeking to experience different cultures and learn about history tend to stay in mid-market hotels (62%), rather than luxury properties (42%). This split is more equally balanced for travellers from the UAE though, at 48% and 49%, respectively. 

Experiences support city and boutique hotels

Experiences also play an increasing role in urban leisure travel, and are getting crucially woven into city hotel settings, panelists heard at AOHIS 2024. Covid-19 and its aftermath has driven growth in many resort markets, but the past year or so saw outstanding city hotel performances, especially in some European markets popular with US visitors, such as Paris, Rome and Dublin.

Another interesting takeaway from the AOHIS 2024 panel was that independent boutique hotels are not simply competing with but are also often excelling big international hotel brands. Boutique hotels traditionally have a good track record in offering unique accommodation that reflects the local culture and environment, something experience-led travellers strongly appreciate. 

More hotel partnerships on the horizon in 2024

In-destination experiences is a popular trip element travellers splurge on when making trade-offs for a trip upgrade or downgrade, Deloitte said in its 2024 travel outlook. Hotel class, on the other hand, is something they are ready to cut back on when budgets are tight.  

This finding offers implications for hotels assessing the need to update their experiences strategy. Deloitte expects more hotels to form partnerships with event venues, sport teams, or food and beverage brands in 2024 to give their guests special access to experiences.