Tracking Tourism: The Tourism Research Blog Archive for the ‘Public policy’ Category

I spoke recently to Ian Yeoman, formerly Scenario Planning for Visit Scotland. As Ian is in the process of taking up a position at Victoria University, New Zealand, and has recently published Tomorrow’s Tourist, it seemed a good time to catch him to get his views on where industry is heading.

Anyone who has seen Ian speak will know that he does not speak from an ivory-tower but rather in a very accessible way on what could be a dense topic. And the book is little different – it’s aimed at business and planners within the travel and tourism sector definitely not a scholarly tome designed to gather dust.

Although Ian mentioned that Scenario Planning was a little like science fiction, I don’t think we should interpret this as meaning that what he does is a flight of fantasy. On the contrary, his work is backed up by a lot of empirical research and this one of the reasons why it is worth paying attention to him.

It’s important to note that at the outset that Ian’s work concentrates on the changing nature of the traveller. While this obviously has implication for how the supply side of the industry meets that demand, his work is not about the development of the supply side per se. Instead he looks the changing picture of demands, desires, constraints and impacts that the traveller and thereby the travel industry may face.

Ian’s work offers predictions through to 2030 but this interview concentrated more on the short term issues that we could be facing. For those of you wanting to find out what happens next, you’ll just have to buy the book.

So what is changing for the traveller and what are the implications?

While it is tricky to condense the whole conversation down into a couple of lines, I’ll start by trying to do just that.

• We are moving from a world of seemingly unlimited opportunity through to a world of constraints. These drivers are largely external leading to constraints that are economic, environmental, political and moral in nature.
• The growth of tourism will not stop – although it might be slower than it has been.
• The traveller will want more in less time or with less effort – this has implications for everything from the format of events through to booking processes and the nature of breaks.

Before this becomes a shopping list of changes, lets take those points and develop them more fully.

We are entering a world of constraints

It will have escape no-one’s notice that the economy is not as robust as it once was. And, although there is still resistance in some quarters about the degree to which climate change is attributable to human activity, governments are acting to lessen its impact whatever the cause. On the home front, we notice that our disposable income doesn’t goes as far as it did, say, 18 months ago. We notice that the cost of travel is rising, both at the immediate level of our cars and at a wider level.

When Ian described this as “leaving a world of low inflation – moving to an era of constraints”, it suggests that this is not just a short term blip on a historically inevitable rate of progress but rather a longer lasting change of pace.

“The consumer is being squeezed by rising prices and falling levels of disposal incomes, as a consequence out of home expenditure will fall. In the short term, rural Scotland will feel the pinch rather than Glasgow/ Edinburgh / Aberdeen. Leisure spending will fall but business tourism in cities will remain robust in the short term. The middle classes are the market that is going to be effected the most.”

We have been in situations like this before though, most notably in the oil shocks of the 1970s. In the case of the 1974 oil shocks, the economy rebounded swiftly but the problems of the79-83 took a lot longer to recover from.

It should be noted that the constraints are not just economic but political as well as governments make move to combat climate changes and other examples of environmental degradation.

On a positive note, Ian noted that we are more fuel efficient today than in the 1970s – our cars do more miles/kilometers to the gallon/litre for example. In the medium term, he sees coal and nuclear as the only realistic players in the energy market but acknowledges that the political and environmental issues surrounding this are immense and are constraints in themselves.

However, although ‘grid’ power could be delivered through coal/nuclear energy generation, the fact still remains that the vast majority of transport in the UK is oil based which will have an impact on people’s willingness to travel longer distances by car in a time of rising prices.

Some other examples of constraining factors include:

• Environmental constraints: Some destinations start to become too hot to visit on account of climate change – the eastern and southern Mediterranean countries particularly will be challenged under this scenario. In other areas, decisions will be made to limit the number of visitors on account of their impact on a sensitive region (I suspect that Antarctica cruises might be see this)
• Moral constraints: Ostentatious luxury will be frowned upon in some travel sectors – Ian noted that there was a trend for businesses to meet in ‘misery locations’ that sent a clear message that money was being spent on doing business, not having fun.
• Cost constraints: Airlines will protect revenue by reduce capacity. Effectively, this would mean that we could go back to 1990s style prices for some of the less profitable routes.

The growth of tourism will not stop – but it might slow down

Ian discussed two scenarios - one in which demand is not constrained and one in which it is. His estimate was that under the scenario where there is no limiting factor on growth, then we could be looking at around a 3.4% rise per year leading to 1.9 international arrivals by 2030. However, in world of constraints, that growth rate would slow to 1.2-1.5% per annum, resulting in 0.8 billion fewer arrivals by the same data.

How the constraining factors affect visitors

But how will the present situation affect the travel industry? Well, I’ll detail a few of Ian’s predictions below but I think they can be summarised as, ”travellers will want more from what they can get.” This shouldn’t be immediately interpreted to mean (for example) that travellers will want 2 meals for the price of 1 as standard but rather they will want to seek travel options that enable them to do more in the time they have available to them and this has implications for the process, products, promotional and logistical aspects of the delivery of travel.

• Proximity of destination to home will rise in importance

In a post on peak oil tourism a while ago, I speculated on whether local destinations would again become popular. Ian answer suggested that local destinations would indeed become more important but probably not in the way that many of us might imagine it. 30 years ago, ‘local’ would have suggested ‘domestic’, it now suggests ‘regional’ and regional should be understood as being within a three hour travel zone. Therefore, from a UK perspective, Paris, Athens, Tunisia etc are local.

The driver behind this shift to local is that the traveller does not want to waste their precious break (or indeed their work time) travelling. If they can only afford to take 5 days break, they do not want to spend the equivalent of 2 days travelling.

This has a number of implications including:

• A rise in city breaks (but only if they offer good transport links)
• A fall in rural breaks in remote areas
• A fall in long-haul customers.

It should be noted that city status does not guarantee that an area remains attractive to potential travellers – the important thing will be its accessibility and it’s role as just one of many competing destinations. From a Scottish perspective, the ‘local’ nature of Edinburgh and Glasgow to London will be no guarantee of their status as major tourism centres when the London customer has a choice of the whole of Europe from their local airports and international rail terminals. It should also be noted that good transport links extends not only to the nearest airport to the destination but also the connection between the terminal and the end destination.

• There will be complex customer strategies of trading up and down

Although there will be a move in time of economic challenges for people to seek cheaper and better value accommodation, the picture isn’t a simple as everyone suddenly deciding that 5 star hotels are beyond their budget. Ian noted the tendency for some people to trade up – but only if they could trade up to their first choice of hotel (for example). And if this first choice were not available, then the visitor would trade down - meaning that the choice would be between Gleneagles or the local Travelodge.

This reminded me of a paragraph from a recent edition of the Wall Street Journal, discussing Walt Disney Co’s recent performance “[Chief Executive] Mr. Iger said one factor helping the company during the downturn - as opposed to previous economic slides like the one in the early 90’s - is that 75% of our hotel product is “moderately priced”or “value priced”. In 1991, over 55% of the rooms were considered “premium priced”. Our portfolio of rooms is more accessible.

The article also notes the impact of the weakness of the dollar leading to a) an influx of visitors from overseas and b) “US residents looking to avoid the high cost of travelling abroad are visiting the domestic parks instead.”

Ian said he thought that families especially were looking to trade down at the moment and that accommodation that was ‘difficult’ to book would suffer and this point is discussed more fully in the context of the next bullet point.

I found this observation about the how people trade down interesting because it obviously applies in some markets but not others. As we discovered recently, in some markets trading up is seen as a necessity as it is a hygiene/standards factor – people simply do not trust a three star in that area to be of comparative quality and so ensure that they are getting decent hotel by booking a five star.

Ian used a couple of examples to illustrate how activities re adapt themselves to a world where people are unwilling or unable to divert as much time to that activity that previously.

You see it in sporting events. In cricket the move toward the 20Twenty format (essentially a cricket match lasting about 3 hours instead of 3-5 days) reflects how people want the experience but want to be able to have it in a condensed form to fit in with their busy lifestyles.

Ian pointed to the importance of quicker booking and check-in processes as being something that issued from the same impulse – cutting down on the ‘hard’ parts of the travelling experience to maximise the pleasurable or profitable parts.

From a Scottish perspective, Ian thought that B&Bs will lose market share to budget accommodation due to their lack of ecommerce. “Only 4% of accommodation providers in Scotland operate a dynamic on line reservation system like Easyjet. Many SME’s still only have website that effectively says, “Please make a reservation and we will contact you the next day.” In today’s society the consumer won’t wait.”

Many SME’s still only have website that effectively says, “Please make a reservation and we will contact you the next day.” In today’s society the consumer won’t wait.

He also cited the City of York’s outside gallery as an example of allowing visitors access to culture ‘on the hoof.’

So who’s getting it right?

There will continue to be destinations that are approaching these challenges in the right way. Ian cited the following as examples of the right approach:

• Scotland: Scotland has invested in research and understanding its customers to an extent unrivalled by most other areas (and my own experience suggests that this is the case also).
• Vienna: Vienna (and Austria as a whole) also collects great visitor data and Vienna has a really strong emphasis on delivering quality to the MICE market.
• Las Vegas: Vegas is a hedonism hotspot and well positioned to exploit gambling opportunities coming from Asia

Additionally, some niche markets will continue to do well but other broader markets will struggle. This shouldn’t be understood as meaning just destinations but also visitor segments – for example, single people travelling in a group.

Ian’s message for operators and providers is simple. “Overall, this means that business needs to know the price elasticity of consumers - using a process of segmentation - some consumers will continue to pay a premium.” In other words, you need to know your customers inside out and really ‘up your game’ when it comes to customer intelligence as there will be people out there who will pay for good value. Obviously a lot of big players do this already but, from a personal perspective, I fear that there is a lot of the market who view the notion of understanding and identifying the tolerances and desires of distinct customer types as something akin to a science beyond their grasp and not worth attempting.

There will also be parts of the world that continue to be profitable. We suggested Canada would be a beneficiary of the fuel rise in a post a while ago and Ian added Aberdeen to this list on account of its status as the home of North Sea Oil.

So, what does this mean?

I think the thing that history tells us is that, although circumstances can look similar and indeed share similar traits, no period will be exactly like a previous period. So we will not be going forward to the past to 1974 or 1979 and here are a number of reason off the top of my head why this will be the case:

• Tourism and Travel have grown since the 1970s and so we live in under a completely different set of circumstances than those experienced at that time. Put simply, we are standing in a different place and that is not one characterized by 1970s travel levels and expectations.
• Technology plays a more integrated and personal role in the process of travel and tourism than it did in the 1970s and we can expect this to remain the case – the internet will not be ‘un-invented’ any more than commercial television was ‘un-invented’ in previous times of economic scarcity.
• The demographics are different – we are about to experience the mass retirement of the baby-boomer generation for example.
• Markets are more free now than in the 1970s

So the constraint of ‘only’ going to Milan for a break instead of a break to Vancouver will be the equivalent of someone in the 1950s only going to Blackpool instead of going to Paris

It is clear that some providers will need to fight harder for their customers. My take on it is that knowing your customer and the whole market in which you operate will be key to navigating these waters. Reading a book like Ian’s or blog like this are part of that process but understanding the customer and their trends needs to be ingrained within the tourism industry even at the smallest level. To navigate these water blind would be to immediately operate at a competitive disadvantage.

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I would just like to finish the post by thanking Ian for his time with this post and to wish him the best in his new position in New Zealand. I suspect, though, that we haven’t heard the last of him!

Calling all Scottish tourism providers - we’re after your views for the 2008 Scottish e-Tourism Survey.

The survey looks at how tourism providers in Scotland are using technology and what their pain points are. The size or shape of the business doesn’t matter - we’re as interested in receiving replies from DMOs and event organizers as we are from camping sites or guides. All we ask is that you do business in Scotland and you are a tourism provider in some way - I’m afraid some public sector bodies will have to sit this one out!

When we conducted a similar survey a few years ago, we were able to discover small pockets of innovation while a lack of awareness was evident in other areas. We’re hoping that we might find a few new surprises this time round as well as some pointers to how the market is preparing for the challenges and where it might be lacking.

Let me know what you think by taking the survey. It should take about 5 minutes and, upon completion, you can register to receive a summary report when it is published as well as being entered into the draw for our Data Detective Kit.

Austria’s national visitor statistics success

In a recent interview in this blog, leading tourism attraction owner Freda Rapson of Jacobite explained why she believed joined up destination visitor data should be a research priority for Scotland’s tourism industry. She mentioned how a learning journey to Austria had really opened her eyes to just how valuable nationally collected visitor information could be.

So it was terrific to be able to discuss this very subject with Martin Schobert, from the Austrian National Tourist Office (Österreich Werbung). Martin is Region Manager for Austria and responsible for both research and knowledge transfer. He is also one of regular bloggers at the Austrian National Tourist Office’s corporate blog: Kulinarisch Reisen.

Martin explained the practicalities of the Austrian visitor data system:

“In Austria there is a central register of residents (population) and therefore it is ruled by law that also each visitor has to register when he/she stays at a commercial accommodation. So it is Government requirement to log everybody that arrives in Austria. Each region/city is responsible for collecting this data and they send it to a federal data collection organisation. It is then sent to a national organisation called Statistik Austria and they are our partner organisation.”

The paper based system is all implemented through the accommodation provider and data collection is a governmental regulation. Visitors register on arrival, using a simple form (one per party) and then there is no additional time or resource required. While only one person fills it out, the form records group size and where the visitor came from, and of course, this also ties this back to the specific type and class of accommodation visited.

The official form has four copies, which means that not only does the government and national statistics office have access to the data, but the individual business also has a full and standardised record of all guest data.

Martin adds “it is very easy for us to access this data but it’s a huge and difficult process to organise!”

Yet the data is typically then available just 2 or 3 months later, which strikes me as pretty quick. All the statistics are available online and can be seen for free at TourMIS. It is a system everyone can use.

As Martin explains “it helps benchmarking for destinations and federal provinces but it also means businesses do not have to do this work themselves.” Its no surprise then that Martin says Österreich Werbung is “very glad with the system - and it costs us nothing because it’s a governmental regulation.”

There is also potential for the TourMIS system to be used by other countries. As Marin points out, the data is there and in co-operation with the European travel commission and other bodies, it is a model others can use.

Due to data protection, the personal data is only allowed to be used for marketing purposes by the individual accommodation businesses. These retain their own copy of the personal registration details of their own guests.

But the Austrian National Tourist Office may use the anonymous data for marketing “intelligence” and market research purposes, which given the completeness of the data set, is still powerful stuff.

Going forward, Statistik Austria is looking to include more country of origin references (for example, singling out Dubai from the Arabic countries now they have opened new office there).

Martin adds “the only thing we can’t solve right now is the difference between business and leisure travel – because there is no official need to differentiate on this on the official form. It seems pretty simple, but actually it is difficult to get form amended.”

No doubt this is something the team will overcome, making there data even more powerful and allowing even greater targeting and segmentation of Austria’s national marketing.

Is this something Scotland can do?

To come back to the question Freda Rapson originally posed - if Austria can get this data, why can’t Scotland? - I asked Martin if he thought their system was something Scotland (and indeed other destinations) can emulate.

His answer: “Yes. But it has to be Scotland-wide, because if collection is not obligatory (and ideally organised by the local authorities, because tourism organisations never would be able to afford this registration-process) and nation-wide on the exactly the same criteria, it doesn’t work. The results will not be good enough to compare to each other.” And normally, businesses have to do this research themselves so they do not get this standardisation or quality, which is why Scottish tourism organisations have to make a case for a national system.

Certainly, Austria’s paper based system of national visitor registration clearly works for them and is enhancing both national marketing and the performance of individual businesses.

Is there any reason why the same approach wouldn’t work here? I’d especially love to hear from you if you have first hand experience of visitor data capture systems used by other destinations worldwide.

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At the Business Tourism Conference recently, Rick Antonson of Tourism Vancouver was extolling the virtues of a bed tax. In the British context, bed taxes are anathema and so I appreciate that I am being provocative in considering the case for it.

Subsequent to Rick’s talk, I discussed bed taxes with a representative of an industry body representing small accommodation providers and his objections can be described as follows:

• It’s unfair - why tax accommodation providers and then use that money to benefit the whole tourism industry?
• It would be another nail in the coffin - prices are high enough and this will kill the industry as visitors will chose to go elsewhere; and
• It’s too bureaucratic - can you imagine a Bed and Breakfast owner struggling to deal with the tax implications of this?

Although I continue to keep an open mind, I am not yet convinced by these arguments and think that the benefits could outweigh disadvantages.

If it assumed that a bed tax is used to fund developments, initiatives and promotions that would otherwise have been funded by central government, I think the following advantages follow:

• The central marketing agency (bodies like Tourism Vancouver or VisitScotland) has a more defined stream of income. Funding for public sector bodies usually follows political imperatives and timetables - wouldn’t it be great if they followed industry needs instead?
• The central marketing body has a stake in making sure this works - if fewer visitors visit, the central marketing body suffers as a result. It therefore makes the body much more responsive to industries needs on a results basis.

Obviously, the bed tax process also lays the ground work for much more robust visitor data collection and statistics (as I believe has happened in Austria for example)

But in response to my friend’s original observations,I would say

• A bed tax indeed is collected by the accommodation providers and it benefits the entire area - but people rarely visit an area just so they can sleep! They come to you place because of the other things in the area and so you are all in it together.
• People still visit New York, Vancouver, New Orleans and many many other great destinations despite the imposition of a tax - if your area has value, visitors will come. If your area has little value, a bed tax will be a determining factor but, if this is the case, perhaps you are focusing on the wrong issue?
• It’s no more bureaucratic that any other tax you currently pay.

I appreciate that this is an emotive issue. No one likes paying tax and I’m sure there will be many that disagree with what I have written. Perhaps what’s needed is a change of terminology - from the antagonistic ‘bed tax’ through to things like ‘environmental levies’?

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My eye was caught by two articles in the last few days.

On the one hand, our local government economic development agency here is Scotland is running workshops promoting the tourism potential of whisky.

On the other hand, the Scottish Government is seriously thinking about banning alcohol advertising with the Justice Minister accepting that there will be ‘collateral damage’ from the move.

Apart from the difficulty of such a ban (do you impound copies of Whisky Magazine at the border to prevent them being read by impressionable Scots?), research consistently shows the strength of whisky as part of the Scottish brand. Will courses such as that included in the first link fall victim to the new regulations? Will we be able to serve whisky but not not tell anyone how good it is?

As the second article shows, flagship events such as the T in the Park music festival also stand to face more difficult times under the proposed ban.

I would be fascinated in learning from any of our readers whether they have similar difficulties in their countries (eg state vs state) and how these areas have managed with this?