Hospitality and travel

Making experience the new value driver

Executive summary

Hospitality and travel players that move from volume growth to experience orchestration, while managing destination density, climate constraints and platform power, will be the ones who outperform in the next cycle.

Challenges and opportunities arise at three levels:

Brand: Asset‑light hotel and home‑sharing brands that reclaim direct relationships, position into fast‑growing luxury, wellness and event value pools, and anchor sustainability in measurable commitments will capture the most profitable demand.

Experience: As younger, higher spending travelers and new source markets reshape expectations, hospitality leaders that design journeys and interfaces for distinct archetypes, multi‑purpose trips and overtourism and climate concerns, while keeping a human‑digital balance, will win share of wallet.

Technology: Destination Marketing Organizations, hotel groups and platforms that build shared data cores, modern revenue and discovery engines, and AI and agentic AI layers on modern APIs will unlock new revenue sources, steer flows and decarbonization, and avoid ceding discovery and cross‑sell to intermediaries.

The market reality: Value pools migrate away from volume

After a historic rebound, travel and hospitality growth is now shaped less by adding rooms and more by capturing higher-value, lower-friction experiences, while managing destination density, climate constraints, and platform power.

Discretionary spending has shifted decisively from goods toward experiences: trips, events, wellness stays and cultural immersion.
Luxury leisure hospitality, wellness tourism, and sports and music travel are expanding faster than traditional hotel volume, while home-sharing and alternative accommodations continue to gain a share of total stays.
Yet growth is increasingly concentrated: demand clusters in a small set of destinations and seasons, intensifying pressure on infrastructure, residents and ecosystems, while online travel agencies and experience platforms still mediate how guests discover and book.

Most of the industry agrees: the old playbook no longer works. Adding rooms, maximizing occupancy in flagship cities, and relying on online travel agencies won't sustain margin or market position when platforms control discovery, guests demand tailored and sustainable journeys, and climate and overtourism limit expansion.

Next-generation hospitality leaders will align brand, experience and technology to capture this shift: repositioning into fast-growing value pools like luxury wellness and experiential travel, orchestrating coherent journeys across stays and activities, and building unified data platforms that keep relationships and revenue in their own hands rather than ceding them to intermediaries.

A decade of asset-light, Online Travel Agencies-dependent growth built structural exposure into the model

Hospitality and travel are growing in absolute terms but increasingly depend on a small set of destinations, platform‑mediated demand and rising‑income travelers, just as overtourism, heat and sustainability expectations tighten constraints.

Global travel spending is 8.6 trillion dollars in 2024, with lodging nights forecast to rise from 27.4 to 38.7 billion by 2030.
The world’s top ten destination countries capture about 45 % of all travel spending, while 80 % of travelers visit just 10 % of destinations; projected overnight visits per square kilometre in cities like Dubrovnik, Amsterdam and Bangkok increase 22–86 % by 2030.
Home sharing’s share of accommodation booking is at 14 %, up from 10% a decade ago, with total accommodation bookings projected to reach 1,657 billion dollars by 2027.
Wellness and events are major growth pools: the global spa market is projected to reach 66 billion dollars by 2029, sports tourism to exceed 1.3 trillion dollars by 2032, and music tourism 15.5 billion dollars within a decade.
75% of global travelers want to travel more sustainably in the next 12 months. 55% are willing to pay more for sustainable options, and 246 million Skyscanner users have already chosen lower‑emission flights when shown in search results
Experience platforms Viator, GetYourGuide and Klook scaled rapidly, and one major OTA (Online Travel Agencies) reported to grow experiences from 15 % to 50 % of revenue between 2015 and 2023.

Organizations that can't reposition and reclaim direct relationships with customers will become interchangeable inventory and lose sovereignty

These dynamics quietly undermine the model hospitality and travel players have relied on. Concentrated demand, platform-mediated bookings and undifferentiated offers turn brands into interchangeable inventory. This leads to a weakening of pricing power and makes it harder to justify investment in renovation, service upgrades and decarbonisation. Any shock, whether it is regulatory change, heatwave, resident backlash, algorithm shift, can rapidly redirect demand to better-positioned competitors.

The most attractive value pools — luxury and wellness guests, younger experience-seekers, rising domestic markets — expect recognisable brands, profile recognition and credible sustainability. A room and a search result is no longer enough.

The hard truth: organizations that fail to reposition and reclaim direct relationships will lose guests to platforms that feel more relevant and easier to book, while intermediaries set the rules for discovery, pricing and cross-sell.

Read on to explore how hospitality and travel organisations can align brand, experience and technology to overcome these challenges.

The new brand imperative: Reposition yourself into high-margin segments before platforms define you

The challenge: Asset-light expansion without sharp positioning turns brands into interchangeable platform listings

Brands in hospitality and travel are scaling through franchising, home‑sharing and cross‑category extensions, yet many still lack clear positioning and control over guest relationships and sustainability narratives. Asset‑light franchising is strongly associated with higher profitability, and large hotel groups have rapidly expanded property counts, while luxury and lifestyle brands enter hospitality and membership models to capture more of affluent travelers’ spend.

Resident and regulatory scrutiny is rising, particularly around short‑term rentals and environmental impact. OTAs and platforms like Airbnb mediate how guests discover and book. Without sharper positioning into specific segments and geographies, stronger direct‑booking and loyalty strategies, and measurable sustainability and community commitments, brands risk being reduced to interchangeable listings in platform catalogues and climate debates.

Among major hotel companies, franchised properties rose from 66% to 72% between 2013 and 2023, while owned properties fell from 27% to 9%, underscoring a decisive shift toward asset‑light growth
Luxury leisure‑hospitality is projected to grow from 391 to 584 billion dollars between 2023 and 2028 (about 9% CAGR), with very‑high‑net‑worth and aspiring luxury segments growing significantly faster
77% of luxury travellers care about hotel brands (vs 53% mass), 84% value star ratings (vs 66%), and 68% consider loyalty programmes important (vs 41%); in China and UAE around 90% of luxury travellers value both branding and loyalty.
About 63 % of travellers plan beach/sun trips and 26 % ski/mountain trips, but only 20 % of luxury lodging supply is in beach/sunny locations and 2 % in ski/mountain, while 55 % of luxury supply is in cities.
Among 250 large Travel & Tourism companies, 53% have public climate targets (up 27% since 2021) and 33% are aligned with the Science Based Targets initiative; certified hotels achieve 10% lower CO2, 24% less waste and 19% less freshwater use per guest‑night vs non‑certified hotels.

Solutions to explore

Reposition portfolios into undersupplied, high-margin segments

Concentrate brand and development strategies on segments and locations where demand is growing and under‑served—luxury and wellness (including spa), sports and music tourism, economy lodging in markets like Asia, and beach/mountain luxury where supply lags behind demand—so that growth comes from a stronger mix of factors and pricing power, not just more keys.

Rebuild direct economics through loyalty, membership and exclusive access

Strengthen direct‑booking, loyalty and membership propositions (best‑rate guarantees, differentiated rewards, branded clubs) so that high‑value guests choose your ecosystems first, across hotels, rentals and curated experiences, shifting the mix away from intermediaries and improving both margin and data ownership.

Turn sustainability and community license into competitive advantages

Choose credible certifications and climate targets, show measurable performance improvements and community benefits, and use them explicitly in positioning and communications,especially in destinations facing overtourism and regulatory scrutiny—so licence to operate and premium positioning can reinforce each other instead of coming into conflict.

What leaders should do next

Decide which segments and geographies to own and align development, partnerships and M&A accordingly. Set explicit targets for direct-booking and loyalty share. Select credible climate certifications and integrate them into investor, resident and guest communication.

The new experience imperative: Design journeys around traveler archetypes, not generic search and filter UX

The challenge: Generic list-and-filter UX fails the experience-seeking, climate-aware travelers driving the most growth

Traveller demand is strong and diversified, but many hospitality brands, platforms and DMOs still rely on generic, channel‑siloed journeys and basic digital UX that do not reflect distinct archetypes, trip purposes or device behaviors.

Guests now plan trips through a “treasure hunt” across search, OTAs, hotel and destination sites, social media and apps, yet only a small minority use human agents, primarily because they want full control and enjoy the process of planning a trip themselves. Travelers want AI as a co-planner, not an autopilot. AI layers should augment the self-crafted planning and human reassurance, not replace them.

77% of travelers say trip research is about getting good deals or saving money, with inspiration coming from multiple channels including family and friends, search engines and online booking platforms, while only 17% used a travel agent in the past year.
GenAI usage for travel in the US doubled from 8 % to 16 % between October 2023 and October 2024; among users, 84 % say it improved their experience and over 40 % booked accommodations recommended by AI.
Only about 2 % of travelers are willing to let AI fully manage bookings, while roughly half still prefer mostly or only human interaction at key touchpoints, with around one‑third preferring blended digital–human options.
52 % of Gen Z and 47 % of millennials splurge on experiences while travelling (vs 39 % Gen X and 29 % boomers), and 92 % of younger travelers say their last trip was motivated in some way by social media.

Solutions to explore

Design digital journeys around archetypes and trip purposes, not averages

Use the seven traveller archetypes and key trip types (family, solo, wellness, adventure, aspiring luxury) to structure search, filters, content and packages in owned interfaces instead of generic list‑and‑filter UX, raising relevance and conversion for the segments that matter most to you.

Build curated, AI‑assisted discovery layers on top of fragmented local supply

Turn scattered local tours, culture, food, wellness and nighttime activities into searchable, branded catalogues mapped to archetypes and moods. Let generative artificial intelligence act as a guided co-planner through natural-language conversations, itinerary drafts and recommendations with human override, so guests can assemble complete trips while staying within your experience layer rather than leaving for external platforms.

Expose climate, density and sustainability signals at choice moments in the journey

Bring heat and crowding risk, off‑season alternatives and sustainability attributes (emissions, certifications) into search and booking flows, so travelers can choose lower‑impact and less‑stressed options without leaving the experience, easing pressure on your most fragile assets while maintaining demand.

What should leaders do next?

Redesign core digital flows around a small set of priority archetypes and test against today's generic list-and-filter patterns. Integrate GenAI planning modules with clear guardrails and human handoff. Build or partner on curated experience layers connecting stays to local activities with climate signals visible in flows.

The new technology imperative: Build shared data and AI platforms before intermediaries set the rules

The challenge: OTAs already dominate experience revenue — fragmented hotel systems accelerate the handover

Tourism industry players sit on rich data across bookings, guest behavior, flows, satisfaction and emissions, but fragmented systems still limit forecasting, dynamic pricing, flow steering, sustainability tracking and cross‑sell. Destination‑readiness frameworks already benchmark 65 cities on tourism dependence, density, visitor experience, infrastructure strain and environmental impact, showing how integrated data can turn raw signals into capacity, sustainability and flow decisions at city scale.

As OTAs and AI‑driven tools invest in their own platforms and agents, they increasingly control discovery and recommendation, heightening disintermediation risk, while a few DMOs such as Amsterdam show what is possible, using City Card data on time, location and social signals to monitor visitor flows and nudging guests to less crowded times and areas.

One major OTA increased the share of revenue from experiences from roughly 15–23 % in 2015–2017 to around 41–50 % by 2022–2023, enabled by platforms like Viator, GetYourGuide and Klook that standardise inventory, payments and reviews for fragmented suppliers.
A major hotel brand introducing attribute‑based selling via a configuration engine saw guests spend an additional 22 dollars per night on average to customize rooms, evidencing revenue uplift from better digital configuration UX.
Best‑in‑class revenue‑management systems built on modern CRS/RMS stacks and external data can lift revenue by 5–10%, yet only a small fraction of travel players report using AI widely, indicating a sizable execution and value‑capture gap.
In European hospitality, AI in real‑time revenue management, personalization and predictive analytics is already paying off: 76% of operators report time savings, 54% better communication and 51% higher efficiency.

Solutions to explore

Stand up shared data platforms and modernise core systems for AI and configuration

Build DMO/group data platforms that integrate transport, lodging, activity, emissions and satisfaction data, and upgrade PMS/CRS/RMS so they support machine‑learning forecasts, dynamic pricing and attribute‑based selling exposed via APIs, creating a single backbone for revenue, destination management and product teams to act on.

Embed sustainability data into commercial and guest‑facing systems

Connect emissions tools and certifications into CRS, CRM and search/booking interfaces so that sustainability labels, CO2 estimates and certifications can be filtered and defaulted in the UX and tracked against targets. This helps commercial decisions to reflect both margin and climate constraints in a measurable way.

Define a governed GenAI and agentic‑AI layer around brand, data and escalation rules

GenAI and early agent‑based tools used for planning and service (assistants, copilots, internal agents) must have firm limits on what data they can access, when they hand off to humans, how they price and how they respect sustainability and brand constraints, so that automation boosts efficiency and satisfaction without ceding control to external platforms.

What should leaders do next?

Fund one or two data/AI foundations as shared infrastructure, not isolated pilots. Define a short list of AI use cases with cross-functional owners and clear KPIs. Set minimum interoperability standards for partners to keep offers visible in AI-mediated discovery.

AREA 17 helps you face this new paradigm

Demand is still expanding. Lodging nights, wellness travel, sports and music tourism are all growing. The organizations that capture this growth will be those that have built the positioning, data, and journeys to be chosen directly before intermediaries can define the terms of engagement.

The ones getting there are treating brand, experience, and technology as one system, repositioning into high-margin segments, reclaiming direct relationships, and building the unified data platforms that keep discovery and revenue out of intermediaries' hands.

AREA 17 combines strategic consulting with hands‑on product development, working with hospitality and travel organizations to think, design, and build the platforms that:

Define clear brand plays into high-margin segments and sustainability positions, by encoding them so they surface consistently in direct channels, partner platforms, and AI-driven discovery, turning community license and environmental accountability into reasons guests choose you.

Design unified, archetype-aware digital journeys, by connecting inspiration, booking, and in-trip experiences, surfacing climate, density, and sustainability signals at decision moments so travelers can choose lower-impact options without leaving your experience layer.

Architect modern data and AI cores, by integrating transport, lodging, activity, and emissions data to enable flow steering, attribute-based selling, revenue-management uplift, and governed AI assistants that respect brand constraints and human handoff.