While it may not be quite as rosy as first appears, in Part 2 Sally White finds a number of factors bode well for a healthy start to 2016

While the numbers all seem to be pointing in the right direction (see Part 1) in many places, it’s not the case everywhere.

Foreign travellers to the US, for example, have found the strong US dollar (buoyed up by interest rate rise forecasts) a discouragement, though IATA’s numbers are still robust. Ebola, terrorist attacks and slowing economic growth have taken their toll in Africa. Russian outgoing traveller numbers, already falling in 2014, are dire with Egypt and Turkey now off-limits completely - bad news for both! Inevitably, the Russian government would prefer that everyone spent their holiday money at home, even if that means bailing the travel companies.

Nor are all investors happy. One that isn’t is Google’s venture capital arm. A surprising thing about 2015 was the lack of IPOs, tech entrepreneurs being able to raise all the money they wanted privately, without the hassle and cost of going to the stock market (Uber, for one, which carries a $62.5 billion ticket after its latest funding round.) However, that meant existing shareholders, like Google Ventures, are being deprived of the chance to exit and take a profit.

Stock market activity seemed to be limited to M&A, notably Expedia, which seemed to want to buy everything in sight. It acquired HomeAway for $3.9 billion and Orbitz Worldwide for $1.6 billion. Expedia also made some investments abroad to strengthen its footholds - in Ctrip in China and Hotel Urbano in Brazil.

One long-running saga that closed with a take-over was in the US hotel sector - Marriott Hotels picking up Starwood. The resulting hotel group will be the world’s largest - bringing the broad product offering, online reach to customers and marketing clout (with the OTAs) now necessary for profitability. Speculation had been running all year on who would get Starwood after it put itself on the market.  Chinese candidates and most hotel majors had been rumoured to be in the running.

Unravelling the alliances

Commercial alliances rather than M&A seemed to be the preferred Asian game in 2015, a strategy attempting to curb punitive competitive price-cutting. Priceline announced that its Booking.com business would partner with TripAdvisor, but it also has an equity stake in Ctrip.

Trying to unravel the local cross-holdings in China has become a real head-ache-maker as Baidu, Alibaba and Tencent, the Big-Three, battle it out. The latest talking JV are two of their protégés, leaders in group buying Meituan and Dianping, often dubbed the Groupon and Yelp of China.

Easier to follow has been the growth of the ‘disruptors’ - the likes of Uber and Airbnb et al, whose low prices are causing such turmoil in their respective industries. Their upwardly spiralling numbers have enjoyed headlines throughout the year. Not that expansion is going without challenges, particularly for Uber and its fellow taxi services.

Uber’s aggressive global expansion is seen by analysts as looking costlier and riskier than ever, as it struggles with regulatory and competitive obstacles in major markets. In the last few months the company has faced a police raid on its Dutch HQ, a criminal trial in France, a ban on its services in Rio de Janeiro and proposed new regulations in London and Toronto that could cripple its services.In the US alone, Uber has been involved in at least 173 US lawsuits since October 2012. Not that this seems to discourage investors.

Hostels are emerging as another game-changer, the travelling young being identified as a lucrative $230 billion global market rising to $336 billion by 2020, according to Staye Wise. The IPO by the UK specialist OTA Hostelworld could be a forerunner. Hostels are changing with the new ones being modelled on boutique hotels and designed to appeal to families and the (sociable) economy traveller.

What does all this augur for 2016? Given the current oil picture, continued cheap fares look a good bet. Combined with a little global recovery, that should keep travel a hot spot and investors happy!