Low Cost Evolution - Thematic Research

Low Cost Evolution - Thematic Research

Summary

Travel, especially international travel, was once confined to the wealthy but, as airfares have decreased and hotels have become more affordable, travel companies have been able to target a wider range of customers. The industry now encompasses every type of traveler, from budget to ultra-luxury, but every segment has to be treated separately as they each come with their own opportunities and challenges.

Low cost evolution began to accelerate in the 1990s as low cost carriers (LCCs) expanded and the internet allowed travelers more autonomy over their holiday bookings. Booking.com and Expedia were both established in 1996 and have been increasing in popularity since.

The rise in demand for cheap flights has resulted in an array of LCC operators; Ryanair and easyJet are two of the forerunners, along with Southwest in the US and AirAsia in Asia. In terms of accommodation, AccorHotels is a leader across multiple price bands, managing six economy brands including Ibis and BreakFree.

Hostels and motels are alternatives to traditional hotels and chains such as Nomads and Super 8 (a Wyndham brand) are focused on low prices. Indian hospitality company OYO is a company to watch and could be a very important player in this theme if its ambitions work out as planned.

Low-cost long-haul is a difficult segment to master. Short-haul flights are better suited towards the low-cost business model because of efficient utilization of time and quick turn arounds. However, in long-haul flights, fuel cost is a larger portion of expenses and travelers typically expect more when they travel long haul so can become more agitated at poor service.

Scope

- This report provides an overview of low cost evolution as a theme within the travel & tourism industry.
- It clearly defines and explains the concept of low cost evolution in the context of the airlines and hotels markets.
- It identifies the opportunities available for companies offering budget products and services and assesses how these can best be exploited.
- It provides an inisght into the purchaser profile of budget tourism services.
- It presents a number of real-world case studies that clearly illustrate low cost evolution in action.

Reasons to buy

- Understand what low cost evolution is
- Understand who buys such services
- Learn about the opportunities that low cost evolution presents for players in the hotels and airlines industries
- Identify key case studies to understand how low cost operating models work in reality.