Travel growth globally is expected to continue to outpace economic growth, Expedia chief financial officer Mark Okerstrom told the firm’s annual partner conference in Las Vegas this week.
He told the conference, which marked Expedia’s 20th year, that there were high hopes at the beginning of 2016 despite there being looming potential threats like the US presidential election.
However, from around mid-February the world economy was in a recovery mode and global Gross Domestic product will be up by around 3% for the year. Travel, in contrast, is up 5%.
“One of the great things is that for some reason travel continues to grow a couple of hundred basis points faster than GDP,” said Okerstrom.
“The economies of the world are globalising, people are getting more wealthy, there are emerging middles classes in India, Brazil and China.
“There is this insatiable curiosity with people. One of the first things they want to do when they have more money in their pocket is travel.
“People inherently want to travel. A lot of the engine of economic growth is people travelling for business.”
Okerstrom said growth in the penetration of online travel was also tracking a hundred basis points higher than overall sector growth.
This was illustrated by Expedia’s growth in travel verticals including lodging (hospitality), up 5% in the US, air, up 6% globally, and cruise, up 9%.
Only car transportation is tracking lower than overall travel sector growth.
Despite Expedia’s size it remains just 5% of the $1.4 trillion global travel market, said Okestrom, although it is growing at six times the rate of the industry overall.
Looking ahead to 2017, Okerstrom said he expected the travel sector to grow by 5% globally. “People are going to be a little bit better from an economic perspective,” he said.
But he added: “I will be honest with you we have no idea, no one has any idea, what will happen with a Trump presidency. There are a lot of things afoot.”
Okerstrom highlighted the significant impact of that other major political shock of 2016, the UK’s vote to leave the European Union in June.
He said this saw the UK outbound and inbound markets, which traditionally track together, “unhinge” as Britain “was on sale” to inbound visitors from abroad as the pound slumped.
As a result inbound numbers spiked while outbound went in the opposite direction.
However, Okerstrom said: “We continue to be optimistic, definitely in the short-term. If you look out further towards the horizon I would say we are definitely even more optimistic.
“Look at the technological change in the industry and couple that with more money in people’s pockets, couple that with people’s insatiable appetite for adventure.
“The technology change you will see in the next five to ten years will dwarf that you have seen in the last 20.
“Together we can navigate this change. The Expedia of yesterday was your distribution partner, Expedia today is your partner in technology and innovation.”