I’m down in London this week for the World Travel Market and this is the first of a few posts with some thoughts and impression. Given an event of this size, there is always the danger that you are going to miss something and so this is by necessity a subjective account.

WTM Global Trends Report

OK, let’s start off with an overview of the WTM Global Trends Reports prepared in partnership with Euromonitor.

Despite the talk of markets that have growth potential, it is clear that in the next few years, there is going to be, at best, a slow down in the tourism and travel sector. Beyond that, however, there are new markets and new possibilities. So here are a few of the highlights for me from the report:

• Free and cross-subsidized pricing will become increasingly used (but regular Tracking Tourism readers knew that back in March!)

• Customers are downsizing in a variety of ways – but still travelling. In some cases, this downsizing happily coincides with a desire for more authenticity (home swaps, for example, so that you get to live like a local) and in other cases it’s simply a move to cheaper alternatives (good old price elasticity of demand coming into play).

• Destinations are having to cast their nets wider to catch customers. For example, the report cites the Bahamas and the British Virgin Islands marketing beyond the traditional US market. Although not made explicit in the report, this surely means greater competition among destinations for similar pools of customers, something I’ll touch on a little later.

• The downsizing/authenticity nexus can arguably be described as resulting in a travel 2.0 experience in which ‘user generated’ social network interaction online result in real visits made to real people in real neighbourhoods as a logical extension of that way of interacting. Obviously, before we get to breathless about this, most of you will appreciate that this is a variant on ‘visiting friends and relatives’ and it’s what people do when they have less cash. But, I can see that Web 2.0 technologies can make this a more easily facilitated process than might have occurred in previous years.

• There’s an increasingly complicated pictures of inter-regional travel and tourism. For example, a Scot working in the Oil industry in Saudi and part of the large expat community there should be considered not only as a Scot in terms of travel preferences but also as a potential traveller defined by where he currently works. So, to take our example further, his circumstances mean that a jaunt to Dubai might be more appealing than a jaunt to Ibiza or somewhere similar popular with British people.

Some elements of the report I disagree with or feel that they occupy a really niche market. For example, there is a section on philanthropic tourism whereby rich westerners have a feel-good break that ethically engages with the local community (a bit like Fairtrade travel). I don’t deny that such travel exists and that there is some customer demand for it (as opposed to it being part of the Corporate Social Responsibility PR agenda of the supplier) but wonder how large such a market will be over the next torrid couple of years and their lingering aftermath. I’m not too sure how charitable I might be feeling in 18 months time!

The press release for the WTM Global Trends Report can be accessed here.

Increased competition

I also attended a press conference yesterday for Croatian Tourism and, as with most countries, there is a real recognition of the benefits of tourism for the economy and the image of the country. But seeing Croatia’s efforts also made me realise the sheer intensity of competition in some regions and the need to define a really clear proposition for the customer.

Put simply Croatia is a great Mediterranean country with a great coast that wants to get more upmarket customers. Great ambitions but I suspect that it has France, Italy, Turkey, Greece, Cyprus, Malta, the Balearics, Israel, Lebanon, Morocco, Libya, Tunisia, Egypt and the rest of the 25 countries bordering the Med. as competition and all adopting similar strategies.

This doesn’t mean that Croatia shouldn’t try but rather that each of these areas needs to have a clear USP, brand or market position to get ahead. And while ‘quality tourism’ remains an attractive prospect, I often wonder whether ‘good value’ (i.e. cheaper) tourism isn’t still a viable aspiration. Your thoughts on this one gratefully received.

Stop me!

Finally, I suspect that many of Trackingtourism.com’s UK readers are attending WTM so do email me if you want to meet up on Tuesday 11th November.

Great examples of the tourism industry successfully combining research and technology (and what the rest of us could learn from this)

My post last week was a bit of a moan – probably something to do with winter returning to Scotland and the general state of the world.  So, I thought I would balance out some of the negativity with some posts on people that are really getting things right.

Firstly, I would like to point you to William Bakker, director of eBusiness at Tourism British Columbia. As an area marketing agency, I think Tourism BC has one of the most sophisticated and advanced operations I have seen and the following paragraphs encapsulate one of the reasons why:

“We have conducted focus groups, phone interviews, card sorts and/usability tests to find the best way to organize the content on each website. We start with research about how our target audience in a particular market approach their trip planning; their mental model. We adjust our taxonomy where needed. For example, in North America a farm accommodation is called a ‘guest ranch‘. In the UK it’s called a ‘cowboy ranch‘ and in Australia a farmstay.”

What can I say apart from, ‘Wow!’  Although this approach might seem sophisticated to some, I recognise it as actually very simple at heart.  It’s the approach that says you should remember that your customers are human and need to be researched as such to get the full picture.

I particularly liked William’s comment about language.  This is something I think might be overlooked by a number of businesses and organisations but is vital if you want people to recognise what it is you are offering.  In some instances, you might get a clue to this if you are able to analyse searches made from within a site that have ‘odd’ terms but I think that the larger issue of language and its use is probably best started with real live people in focus groups.

Its an approach we always take in our tourism research projects as well – we recognise the immense value of quantitative data (whether that’s web analytics or traditional surveys) but feel that the best value is derived when you go that one stage further to probe the human element and combine it with the quant. I think this usually leads to a far more sustainable outcome.

You can read more at William’s blog here.

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Another post that caught my eye was from the Karin Schmollgruber’s interview with Angela Zechmann(Director of E-Marketing and Internet for Salzburg Area Tourism) at the blog Fastenyourseatbelts.com. The interview is about about the Salzburg Area Tourism’s efforts to attract a younger audience to the area the site www.onebigpark.at and, in some ways, continues the theme from British Columbia that you need to understand that different audiences need information in a language specific to them.

But the other thing that made me sit up was that I was reminded of a conversation related to me a while ago about Austrian tourism to the effect that their ongoing research revealed that the country was having difficulty attracting young people.  I am not privy to the data for Salzburg so will assume that their research also suggests that, for mainland Europeans, Salzburg means Mozart and pretty mountains and, for people from the UK and the US, the Sound of Music – none of which suggests to me a largely younger profile of visitor (Angela, Karin – let me know if I am way off the mark here!).

And it’s not only a case of identifying an issue but doing something tactical about it with a considered Web 2.0 to help fulfil a strategy to encourage younger people back.  In other words, it’s a piece of joined up thinking and a good example of the intelligent application of 2.0.

The original is in German here and one of those rather odd internet translations for you non-German speakers can be found here.

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My eye was also caught by this post at Phil Caine’s Tourism Tide on the potential conflict between Yield Management and Price Transparency.

To some of you, this might sound at best an arcane venture into a world far beyond your business.  I would disagree as it concerns something fundamental to all business – trust and transparency.  So, for example, reviews on tripadvisor at the moment just have people discussing the condition of an establishment.  What if those reviewers ever started comparing prices with one another?

Well, there are already moves that way in the accommodation sector with the likes of Farecast. This added-value price comparison site is essentially doing for the accommodation sector what price comparison sites have been doing for the transportation sector for a while.

For many establishments thismight not seem an  issue but, from experience, I know that accommodation prices can fluctuate at certain parts of the market and for much the same reasons as at the top end of the industry – such as sellers want to make a buck without having to pay an intermediary.

To that end of the tourism sector that thinks this is some far-off fad, let me say that this will happen whether you like it or not.  It doesn’t matter that you think of intercontinental air jouney is a big ticket item and your accommodation offering as small ticket item – customers will apply the same standards of transparency of value to both. Looking beyond the lowest common denominator horizon will help you prepare for changes like this.

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Finally, I think the Canada-e-Connect Tourism Strategy Conference 2009 might just be the place if you are looking for intelligent debate and insight into how best to harness the new opportunities.  I don’t think the program is finalised yet but, judging on the people behind it, it won’t be looking at ‘lowest common denominator’ stuff but instead offering something for those with more vision.

I left a tourism group meeting a while back somewhat depressed as it seemed to me that a sea-change had taken place and that new attitude seemed to be, “we can’t move forwards until those at the very back have caught up with us.” I suspect this is a somewhat familiar feeling for those of you that work in DMOs and was especially disappointing to me as there has always been an emphasis within the group on being dynamic, entrepreneurial and unafraid of technology.

To my mind, this attitude is not one of caution or inclusion. It is rather one of unwitting slow suicide.

The image on the right is a reprint of an advert that appeared in the Wisden Almanack in the 1920s (possibly earlier?). You’ll notice that all three establishments have had this new-fangled device installed called the telephone so that you can make bookings and inquires. You also notice that they sell themselves on the fact that there are ‘electric lights and bells throughout’ and no charge for attendance or lights.

The point I am making in pointing to this is that lights, telephones, internal communications mechanisms are now taken for granted in hotels. They are not optional extras. And in the same way, modern standards of service are not optional extras – they are as fundamental as electric lights and telephones.

As a colleague recently said, “I don’t expect to pay for my towels so why should I be expected to pay for WiFi?”

So, to my mind, it would be ridiculous as a DMO to overly indulge a bed and breakfast owner who was losing bookings because he wasn’t sure about having a phone line. Put brutally, he would deserve to go out of business because his business model was fundamentally flawed (note that I’m not talking here about isolation holidays or that kind of thing).

And in the same way, tourism businesses that are unsure whether they should

• respond to email enquiries;
• have a professional website;
• have online booking; or
• attempt to understand what travel 2.0 involves;

should feel the chill winds of the current climate and either step up to the plate or make way for someone who does understand these modern business fundamentals.

You might think this is an exaggeration – surely it is only a minority now who act like this? Maybe so but I fear its a larger minority that we sometimes suspect (I speak only of the UK here) and there sometimes seems excessive attention paid to their concerns which frankly seem more like indulgence that encouragement. My recent experience suggested that this was at the cost of those who had made moves to improve their businesses through adoption of these fundamentals and who now needed that little extra advice to take it to an even higher and successful level.

Whenever I am in North America, I am often impressed at how hard many travel companies work to earn your dollars. There is often a level of intelligence and aspiration that, whatever the level of the product, signals a more grown-up market with big aspirations. However, while they look to the stars, it seems that we are too often left staring at the floor.

Perhaps I’m being unfair here – let me know how I am wrong!

“Tourism is everyone’s business”

From Scotland to South Africa, Beijing to the Cook Islands, it’s a much quoted maxim that “tourism is everyone’s business”.  Not surprisingly, it passes particularly from the lips of those national and regional marketers charged with putting a destination’s best faced forward to the world.  They are only too aware of the severe damage that gaps between the promise and delivery of experience can cause.

With all the multiple touchpoints that impact on a visitors end-to-end experience, one bad apple has the power to sour the visitor experience. Sometimes to the extent that the good businesses cannot fully redeem it.

As a result, the investment to win, satisfy and re-attract a customer at national, regional and individual business level is undermined.

Sound like I’m exaggerating?  Here at Highland Business Research we conduct direct visitor satisfaction research across countries, destinations and individual businesses.  We seek out visitors for face to face or internet research, plus they seek us out to share their experiences through our systematic customer experience measurement programmes.

Here are some first hand examples of the bad apple effect in actions.

“I just had to get this off my chest”…

I recently received a phone call from a visitor who’d just experienced the worst meal of their life.  The hotel in question was not our client and had provided no means for the visitor to give feedback.  But so incensed and upset was this individual that they went to the trouble of using a feedback postcard from a completely different business to track down our number and call.

They felt that had wasted money they could ill afford, a special occasion had been spoilt and their impression of the overall destination was unquestionably tarnished.  So they went to the effort to tell someone “in tourism” about it, in the hope someone cared.  Another person would have been on Tripadvisor, blogging or writing to the local newspaper.

Our client, who has invested in their business and in analysing and acting on customer feedback, not only lost trade to the bad apple but in effect subsidised the means for the bad apple’s customer to complain.

In another incident, a visitor almost shook with rage during a recent face to face interview as they recalled how a few days earlier they had been subjected to particularly patronising and abusive “service” in a shop where they were browsing for high end gifts.  They had decided to keep their money and weren’t planning any more shopping.

Because we spend a lot of time asking visitors about their experience and represent a disinterested party they can be frank with, we not only hear about some appalling examples of bad apples in action – we also get to see just how strong the emotional reaction is to the negative experiences.

The ripple-out effect is wide.

When conducting research for destination A it is common to be told about an emotive incident that occurred in destination B – completely beyond the scope of influence of those undertaking the research, but one and the same in the visitors mind.

Bad experiences stick and people want to get them off their chest by telling others about them.  And they now have the tools to tell a bigger audience than ever.  The ripple out is a problem because it takes more than an equal amount of good experiences to offset the damage from a very negative one.  Additionally the negative experience anchors satisfaction low, so that the visitor is also likely to rate the other tourism businesses that they encounter lower than they would otherwise have done.

Wired’s take on the anchoring effect: “If a customer watches three movies in a row that merit four stars — say, the Star Wars trilogy — and then sees one that’s a bit better — say, Blade Runner — they’ll likely give the last movie five stars. But if they started the week with one-star stinkers like the Star Wars prequels, Blade Runner might get only a 4 or even a 3.”

So what to do about the bad apples?

There’s no deny that tourists and therefore tourism and travel businesses are facing an economic struggle.  With vacation time and income tight, the sting of a very bad experience with the bad apple is potentially even more potent. And with competition fierce, a good business or destination that is making effort and investment is justified in being frustrated when future business is lost thanks to a bad apple.

So assuming that a Beijing Olympics approach to obstacles is not taken, what does a destination or a group of businesses do about the bad apple that is impacting on the experience of their own visitors?

I must be honest and say I have no grand plan – only some loose ideas below.  I would be very interested to hear your thoughts and experiences.  Here are my views on some possible options:

• Just let market forces take their toll. If they’re that bad they’ll go out of business.  The trouble with this one is that in current economic circumstances they’ll probably go out of business slower than a far better business that has debt from investment in its product and expensive well trained staff.  I’m not sure “do nothing” can be enough for a destination that is fighting hard to stay business.

• Provide a band aid, moral support and try to outshine the negative. The good business tries to offset the negative impact, by virtue of its qualities, winning the visitor round in the process.  The trouble is, the negative has already had an impact.  An anchoring effect kicks in, meaning that the rating the good business achieves may still be lower – despite them doing everything right – than it would have been after a series of good experiences by the customer.

• Name and shame – let the customers do the talking? Tourism businesses have always listened to their customers’ feedback on the associated experiences in their visit that they did or didn’t enjoy and have used these to formulate future recommendations for customers.  The popularity of online travel ratings and user generated content means it possible for you to have a wider than ever view of who the bad apples in your market are.  Visitors are talking and you can listen.  Whether you then encourage your customers to avoid the bad apples like the plague, or are tasked with trying to bring them up to standard depends on your job description!

• Apply the carrot of training/rewards and the stick of policy at a national or regional level. Not an option that tends to have teeth in free market Western democracies, but still wrestled with the world over.  But with so much of the tourism sector operating in a grey zone outside of official quality assurance programs, or impacted by businesses such as retail that may not even regard themselves as “in tourism” – taking this approach as a standalone seems doomed outside of planned economies.

• Lead by example to drive sector, community or destination level quality control activities.  Ah, a tough one.  Movements like Scotland’s Pride and Passion have taken this approach, with the private sector trying to lead by best practice example.  However, the concern is that they are preaching to the converted.  Are they ever successful in influencing the indifferent, ill-willed and the incompetent that make up the bad apples? (This is a genuine question – please do tell me if you know!)

If I had to pick one, personally it would be name and shame by letting the customers do the talking – and really utilise what you are hearing for competitive advantage.  As my recent distressed caller said “there are clearly so much nicer places about, I want other people to be able to find them instead of places that don’t give a damn”.

I’d love to hear if you know of different appraches to this issue that have worked.

How ubiquitous plugged-in travel is becoming a reality

Some of you might have noticed in passing reports last week about the beginnings of a Ubiquitous City (or U-city) in South Korea. If you didn’t (or passed the articles by because, well…, how exiting can urban planning be?), I would suggest you revisit those articles (cited below) as this is yet another trend that will have profound ramifications for how we lead our lives.

And, it could give rise to a breed of traveler I have called ‘the U-traveler’

What is the Ubiquitous City?

Well, before the ubiquitous city and the ubiquitous traveler, there is the foundation concept of ‘ubiquitous computing’ (“ubicomp“).

At the moment, we interface with information processing mainly through a PC . However, as the Wikipedia article states,

“As opposed to the desktop paradigm, in which a single user consciously engages a single device for a specialized purpose, someone “using” ubiquitous computing engages many computational devices and systems simultaneously, in the course of ordinary activities, and may not necessarily even be aware that they are doing so.”

So, we are talking here about the potential of networks and processes to move beyond ‘the computer’ and into many other aspects of your life. Examples might include your fridge sending a message to your phone when you were running out of milk or smart sensors monitoring the balance of your exercise/nutritional intake regimes and advising if they were badly off optimal. A travel application might be your phone ‘talking’ to the hotel check-in with your preferences so you don’t have to explain these afresh to staff.

This technology sets the foundation for the Ubiquitous City which is defined in its Wikipedia entry as,

“A ubiquitous city or U-city is a city or region with ubiquitous information technology. All information systems are linked, and virtually everything is linked to an information system through technologies such as wireless networking and RFID tags.”

In other words, the examples I used above of ubicomp are applied on a much larger scale – a move from the body to the body politic if you will.

To get an idea of what this means in practice, have a look at this presentation by Anthony Townsend about U-cities and how they could affect its users.

A few of the ideas that caught my attention included

• The basis of a U-city and the ubiquitous traveler is ubiquitous computing. Many cities are on their way to becoming U-cities by dint of their concentration of ubicomp, albeit with fragmented solutions. London, Amsterdam, New York, San Fransisco are cited as examples of this.
• A U-city differs from an area of fragmented ubicomp in that the information flows are somehow integrated into central processing areas.
• It will encourage the development of online social networks that relate to and complement offline social networks.
• “There is evidence that telecommunications and face-to-face are compliments, not supplements”

So What?

The potential for travelers is immense. As is the potential for a worrying degree of surveillance.

Let’s have a look at those in turn. In terms of the travelers, I’ll cast a few thought out about what this means at both supply and demand levels but at its core is the notion that the consumer gives up an element of their privacy in order to allow a more seamless flow of highly information tailored to their needs.

Before I do that though, I’ll spend a number of short paragraphs talking about what makes for ‘good information’. Many years ago I worked with the dissemination of real time Financial Market data and this sector provides an interesting example of how the better the information flow, the richer (in all senses of the word) the market. And there were three elements needed to make it rich.

The first was timeliness (anyone relying on 2 minute old data at the opening of the London Stock Exchange on Tuesday morning would have lost a lot of money, for example).

The second was the context the information appeared in in which is appearing. In financial market terms, a lot of orders of a stock at a similar price means that the information you are seeing is more reliable that a single price from one market player only. In Tripadvisor terms, this means that if you have a 20 lousy reviews spread out over the space of a month you are more inclined to believe that there is a real problem as opposed to the one disgruntled customer who posted six months ago. Market data can also contain other vital elements information that help you make an investment decision.

The last piece of information was the synthesis of the last two, namely the price it was quoting. The article (see here for the start of a fascinating conversation about Hayek’s notion that prices “aggregate widely dispersed information and tastes” -and how this relates to a online information aggregator like Wikipedia).

In other words, if the data was up to date and could be trusted to be representative of the market, then it would deliver through the medium of the price an accurate indicator of how people felt about that product.

Demand side

So what do equity market transactions have to do with our U-traveller?

Well, for example, it means that in a streamlined network environment, the traveler’s desires and aims can be ‘matched’ much more efficiently than at present. When you trade equities, you essentially have a large system in the back ground that joins specific buyers and sellers who agree on a trade price. In our example, the technology enables the traveler to identify 3 ‘friends’ of friends’ in the foreign city they are visiting who share in interest in certain kinds of clubs and ‘matches’ (or introduces) them through its knowledge of existing social networks.

Another example, is that the system notices that you have an interest in, say, folk dancing, based on places you have visited in previous destinations (and where you have been discretely monitored attending such events) and can recommend events in your new destination in an apparently ’spontaneous’ text.

In both examples, the flow of information to the traveler has been timely, contextual and (it is assumed) based on a solid basis of evidence that suggests that the ‘trade’ is one that can be meaningfully evaluated.

There are indeed privacy concerns but I am always surprised by just how much information people are prepared to give up in order to streamline processes. Given a stable political system with appropriate safeguards against both public and private sector misuse of data, I suspect that a huge number of people would prefer to be ‘wired in’ and reaching their goals more efficiently through this network than they can presently do.

And this will breed an attitude that to be without a ubiquitous network is to slumming it and not getting the most out of a destination.

Finally, it should be noted that this move fits in perfectly with the desire for more efficient use of time as discussed in the post with Ian Yeoman recently.

Supply Side

So how does this affect the supply side of the travel industry?

Well, from a customer insight point of view it enables you to access a richer stream of data than you have ever been able to lay your hands on before. For example, you can relate online and offline travel related behaviour perfectly. For example, your airline site knows that in the last three trips abroad you went to Italian restaurants three quarters of the time and so is able to recommend an add-on package that features Italian restaurants (remember that this restaurant information has not been revealed by the customer but by a system marrying data up behind the scenes).

In another example, it might allow reservation systems to cut out all of the ‘uncharacteristic’ choices for that customer and just offer them targeted booking options based on their previous booking behaviour. Or, it could allow the hotel bar to know that having two cold local ales ready for you even before you’ve stepped into the bar (and really impress you by doing so as well as helping you avoid the crush and saving time).

Privacy concerns

Myself, I find a lot of this quite creepy. There are time when I want to be genuinely surprised and not kept in a walled garden of recommendations. I also don’t trust such systems not to be closed to abuse (and that’s taking a long term view – your government might be nice now but what about in 20 years time?).

So, two recent articles then to present a more distopian view of U-cities and the technology of ubicomp.

The first from is from the New York Times. The second, entitled Want some torture with your peanuts? comes from the Washington Times.

By way of a conclusion, it seems to me that this is a significant change in how people will operate in advanced societies and that this will have enourmous impacts on the traveler. My guess is that it will start off with a hardcore but itself become ubiquitous within 30 years.

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?