How the On-Demand Economy Is Reshaping the Travel Experience

by James O'Brien + Skift Team - Aug 2015

Skift Research Take

The on-demand economy is on the rise, but what does on-demand mean, exactly? In this report, a look at the nature of a technology-driven sea change in consumer behavior and the business models emerging to meet it in the travel industry.

Report Overview

Executive summary

The on-demand economy is populated by an emerging set of businesses sharing similar models: Inventory and selection are available to the consumer on an anywhere-anytime basis with the process facilitated by digital devices — from desktops to smartphones. On-demand delivery also occurs in a short timeframe, from less than an hour to no longer than day-of-order.

It is a rising economy, but it is one still faced with the challenge of amplifying consumer awareness — only giant players such as Uber enjoy more than 50% awareness rate among mobile users. But investors are pouring billions into the companies that represent the on-demand model, and the market for on-demand services promises significant returns.

Within the travel industry, airline apps and third-party apps are driving pre-departure on-demand options for passengers. In the airplane cabin, on-demand entertainment is becoming increasingly the norm, and the advent of on-board streaming content is providing on-demand hungry consumers with movies, music, and TV while opening much sought-after bandwidth to other Wi-Fi users.

Hotels are exploring on-demand apps and functionality as a way to bring their guests better experiences. In-room services, food and amenities are available to travelers at a quickening pace, and third parties are giving guests within mobile-savvy, marketing-resistant demographics access to in-the-month local hotel bookings with deep discounts based on proximity and other factors.

Dining out while in-trip is becoming a more egalitarian landscape, thanks to on-demand. Apps allow for last-minute reservations at the most coveted spots, which food-delivery enters a newly sophisticated on-demand space in terms of options and potential partnerships with external on-demand delivery services.

On the ground, Uber is the model that appears to be a locus for both on-demand as a growth industry, and also one that will be tested by stakeholders in legacy models of the travel business. Within that context, however, the future of on-demand is marked by new approaches, new technologies, and the emergent concept of a parallel partnership economy. The implications are vast across all travel verticals.