| The tourism and recreation industry is increasingly recognized as an important economic, environmental and social force which can bring both benefit and adversity. The business community and governments also know that the industry has had spectacular successes and colossal failures. A key element of a successful tourism industry is the ability to recognize and deal with change across a wide range of behavioral and technological factors and the way they interact. For the 21st Century, we will see major shifts in the leisure and tourism environment reflecting changing consumer values, political forces, and the explosive growth of information technology. No aspect of the industry will remain untouched. |
| These shifts will fall in ten principal areas, which together form The New Tourism and Leisure Environment. |
| Means Turning Away From: | And Turning Towards: | |
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| Established Destinations |
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Emerging Destinations |
| Old Products |
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New Products |
| Fragmented Tourism Industry |
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Economic Development Tool |
| Developer Control |
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Community Control |
| Financial Illusion |
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Financial Reality |
| Passive Consumers |
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Involved Participants |
| Observing Technology |
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Orchestrating Technology |
| Mass Markets |
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Specialty Markets |
| Mass Marketing |
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Direct Customer Communications |
| These changing realities make up the strategic context within which
long term tourism industry commitments and investments should be made.
They should guide decision processes and resource allocation. Each of these
shifts will have subcomponents as well as occasional counter trends. Some
of these are discussed briefly below. Only by understanding and acting
upon reliable trend forecasts will the tourism industry be able to avoid
the most common cause of bad decisions: misassumptions about the external
demographic, economic, political, and technology environment.
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| New travel patterns reflect changes in consumer behavior, economic
strength of source markets, new destinations, and political realignments.
Shifts to North-South tourist flows are occurring in Asia (towards ASEAN
countries, Australia and the Pacific Islands), in North America (towards
Mexico, Central and South America) and in Europe (towards the Middle East,
North and South Africa). Along with the growth in North-South travel is
the growth in relative importance of travel within the Asia-Pacific region.
This region represented 25% of worldwide air travel in 1985 and is forecast
to represent 40% by 2000. The growth of travel within the Asia-Pacific
region will be both a blessing and a challenge to the industry. There is
a new mass tourism "wave" that is arising from developing Asian economies
and less restrictive travel constraints in the region. To a lesser extent
this type of pent up demand is also becoming evident out of Eastern Europe.
Aggressive public and private sector development on a scale perhaps not
fully comprehended will be needed to create the infrastructure, attractions,
and services that can handle large numbers of people and not unduly impact
natural and cultural environments. Perhaps most critically, this will create
enormous demands for an educated and well trained tourism workforce.
In mature markets the trend away from long trips to short breaks will increase the demand for leisure facilities close to source markets. This has been reflected in the success of close-in artificial environment resorts in Europe (95% ± occupancy) while some long haul resort products are in difficulty. These experiences will spread to North America and Asia. There is also a counter trend toward high yield and extended vacations that are purpose driven by education, wellness, or other forms of programmed self improvement. These visitors, whether they are backpackers or retired corporate executives, often provide substantial economic benefits and interact well with local communities. Artificial barriers to travel will continue to come down with the deregulation of international air travel and the decline in usefulness of bilateral agreements. Political realignments in the EC and North America free trade zone will encourage travel within each region. Reductions in price differentials on branded goods as well as duties and tariffs will encourage many forms of travel but reduce the importance of shopping as a trip generator. (As the price differential for branded goods in Japan drops below 20%, both shopping trips and expenditures will decline.) Countering this trend are destructive efforts to increase direct and indirect industry taxes (through departure fees; air fuel surcharges and tourist business taxes). Strategic Implications for the Tourism Industry
Encourage extended stays through education and cultural programs attractive to overseas visitors |
| New destinations will provide the traveler with greater choice and
lower cost alternatives to established destinations. Principal new international
destinations include China, Vietnam, the Middle East and North Africa,
Eastern Europe and Latin America.
New destinations also include new forms of development within established destinations. These new developments will increase the range of experiences offered to potential visitors. The role of cities will expand from a 2 or 3 night city visit to an integration of urban experiences with rural or special interest excursions. There are also emerging markets, including the new economic powerhouses of Asia (Korea, Taiwan, Hong Kong, Singapore and Malaysia) and the increasing number of potential travelers from large population countries (India, China, Indonesia, Brazil, Argentina, Mexico, and, to some extent, the Eastern European countries.) Existing markets, however, will continue to dominate leisure development for the most part. China will be an exception. Although its current focus is on domestic tourism, it will soon become a dominant market for regional travel, particularly to destinations with strong ethnic ties. Strategic Implications for the Tourism Industry
Provide convenient packages that link overnight city stays with excursions to special interest attractions |
| New leisure products must be created away from environmentally and
culturally sensitive environments because of undesirable impacts and carrying
capacity constraints. Developers will use new technology to create artificial
environments close to origin markets. The Centerparcs "Tropical Paradise"
resorts represent a first stage of this but other environments will follow.
For example, Kajima has developed an artificial ski hill near Tokyo Disneyland.
Simulation and virtual reality experiences being developed in California
and elsewhere will revolutionize the design of resorts, attractions, retail,
and education/interpretive facilities. Nearly all the large entertainment
companies are developing their own versions of the "urban recreation center"
to meet this demand and take advantage of the new technology. Interactive,
in-home, entertainment centers are not far behind.
Multi-dimensional leisure development will move further to the true integration of shopping and recreation, entertainment and education, and culture and meetings/business center development. Leisure destinations will have to provide a greater menu of activities to accommodate the increasingly wide range of activities and interests desired by the individual consumer and the family. Destinations and products will seek to become both weather independent (through artificial environments) and attractive to markets that are less weather dependent (conventions; specialty markets -- ecotourism, culture/heritage, education and training). Strategic Implications for the Tourism Industry
Build on established strengths |
| Governments are slowly realizing that tourism is not fun and games,
but serious business with far reaching community consequences. Destinations
will increasingly measure leisure and tourism success not by number of
visitors but by total benefit and, particularly, net benefit per visitor.
The old "numbers game" focusing on market share inevitably means greater
mass marketing and eventually into giving away product for no net benefit.
The emphasis on net benefit and market share of tourism receipts will mean
targeted marketing to consumers who spend more and interact well with social
and environmental resources.
This greater realization of the business of tourism will lead to more intelligent cooperation between the public and private sector and among destinations and regions in marketing, promotion, and product development. This cooperation will lead to a better focus on the needs of the customer. As time replaces money as the currency of the next century, all segments of the travel industry must increasingly consider how tourism products and marketing systems interact with the time value needs of their customers. If products and marketing systems do not respond properly to time considerations, they will be ignored. Areas and regions will develop destination databases that react quickly, interface with the consumer directly, and cross functional product lines. Strategic Implications for the Tourism Industry
Have a system of anchor attractions that are linked by key tourist routes |
| The host community is becoming increasingly sophisticated, demanding
and wary in terms of leisure development. Entitlements are increasingly
difficult to obtain and maintain if the developer cannot demonstrate a
range of economic, social, and environmental benefits.
Community interest and tourism must work together for any chance of long term success. In the long term, it is not useful to have isolated tourist enclaves. The most rewarding forms of tourism are those that involve both residents and tourists. "Rewarding" means both in terms of the visitor and resident experiences and the economic viability to the developer. A reasonably safe range of participation is a balance between 30% and 70% for either resident or tourist attendance. Being outside this range generally leads to alienation and an unstable long term operating environment. Small business development opportunities, not just jobs, will be an increasingly important element of the community benefit package. The tourism industry should encourage and promote entrepreneurship and privatization particularly at the local level. The trend toward environmental enhancement and heritage protection is a great asset to the tourism industry -- and it is the right thing to do. Strategic Implications for the Tourism Industry
Implement transportation and utility system improvements that serve both tourism and resident purposes |
| The late 80's and early 90's were not kind to the schemes and dreams
of many tourism and recreation promoters and investors. The hotel industry
was under great pressure in many destinations. Some overbuilt resorts were
reportedly losing up to $3 million per month and major attractions had
to reduce effective prices to maintain attendance. Economic reality brings
a renewed discipline to the planning, development, and financial community
to first, improve the performance of existing assets; and second, acquire
strategic undervalued assets before considering major new investments.
Experienced market analysis and economic simulation models will guide future
development.
Major leisure operators are also looking to capitalize on their brand equity by franchising smaller scale, specialty recreation opportunities. They are expanding internationally, with special emphasis on Europe and the Asia-Pacific region. Public and private sector partnerships as well as mechanisms to limit political risk in developing countries will need to be further developed if the tourism industry is to meet its public obligations and attract private sector capital. Strategic Implications for the Tourism Industry
Improve the efficiency of government infrastructure and marketing expenditures |
| Leisure participants need to be treated as individuals and feel a positive
interaction with their physical and social environment. As travelers become
more experienced, they are no longer satisfied to be processed through
an impersonal, non-interactive system. It is the "old tourism" to see rows
and rows of deck chairs surrounding an artificial rockwork/waterfall tropical
paradise. This style reflects an attitude of "processing the numbers" rather
than providing a rewarding customer experience. The new consumers want
to be involved - to learn new experiences, to interact with the community,
and to learn about and appreciate the destination at more than a superficial
level.
Repeat tourists see travel as a life enriching experience. One dimensional tourism to unshaded beaches, all night gambling haunts, and sex factories will be replaced by new forms of tourism targeted to education, wellness, family values, and greater mastery of special interests. Destinations must respond by broadening their product offerings to reflect these changes. Tour operators are increasingly structuring their itineraries around optional programs and increasing schedule flexibility. New technology will facilitate this accommodation of individual choice and could become a competitive advantage if properly applied by the industry. Product development will also have to respond to an environment of greater individual choice. Large theme parks will have to move from mass attendance attraction packages to smaller capacity, more personal products. Standardized hotels targeted to rating systems will lose out to individual properties that discover boutique markets, deliver personal attention, and discard unwanted standards. Strategic Implications for the Tourism Industry
Provide live entertainment venues, particularly for evening presentations. |
Successful professionals must be able to imagine, perceive, and gauge
the effects of oncoming Science and Technology upon demand, supply, and
distribution. A typical example could include:
Communication and Information Technology (IT)
Transportation
Medicine
Recreation Equipment
Natural Sciences
Built Environments
Automation
Strategic Implications for the Tourism Industry
Plan for high-speed, high-capacity water transport |
Segmenting markets into special interest groups may seem a more difficult
task and a more expensive way to reach consumers. In reality it is a great
opportunity -- since each of the specialty markets usually has a sophisticated
information system and distribution network to reach its members. These
are often represented by reasonably accessible databases that can be acquired
for direct customer communication. Examples include:
Targeted communication to specialty markets is extremely cost effective given this type of leverage. As an example, ERA regularly conducts a major study of the international meetings market. This includes an extensive survey of meeting planners from around the world and covers such subjects as incidence of past and future meetings, needed services and facilities, sizes and types of meetings, effectiveness of each destination's marketing efforts, and a profile of each destinations' strength and weakness. We ask the meeting planners to rate hotel chains, airlines, and travel trade publications in terms of preferences and effectiveness. The results of the study show that international meeting planners have very specific decision criteria for selecting a destination - and they are substantially different criteria than those of other travel segments. For example, the four most important considerations in selecting an international conference site are ranked as follows:
Strategic Implications for the Tourism Industry
Identify tour operators that include you in their tour packages for specialty markets and help them communicate their message via database marketing and information technology |
| The conventional ways of looking at consumer behavior -- especially
in tourism and leisure - are becoming outdated. No longer (if they ever
were) are the purchasing habits of the leisure customer predictable by
labeling a group as a segment of the market and describing it with average
characteristics. More and more, marketers are turning to tailored and targeted
marketing to individuals. This is now possible through new technology with
sophisticated database management systems and immense amounts of historical
and purchased information (lists) on individual preferences and consumption
patterns. This trend is particularly appropriate for tourism marketing
since there is a world of paradoxes in leisure behavior. Sameness and diversity
and security and risk taking seem side by side. Some accountants sky dive;
people eat at McDonalds for lunch and a four-star restaurant for dinner;
take luxury BMW's to the self service petrol pump; visit Hawaii and never
go in the ocean. Leisure lifestyles, in particular, are inconsistent and
contradictory.
This multi-profile customer is difficult to motivate by traditional institutional means. The 1990s and beyond belong to the individual. Destination marketing and leisure product development must adjust to this new environment. In this new environment, marketing messages will be increasingly targeted to individuals through the development of customer databases and private media. Relationships will be built using clubs and other loyalty devices, but their effectiveness will depend on the quality of follow up services and their success in meeting individual needs. Increasingly, the use of print media will give way to personally activated visual data delivered by CD-ROM, interactive television, on-line services, kiosks or other forms. This new consumer will also be increasingly technically competent. The Internet is growing at a million subscribers a month and on line services now reaches over 55 million users in the US alone.. A 1996 survey showed that 60% of the households with incomes of $35,000 or more have at least one PC, and 38% have data or fax modems. About one quarter (24%) used on line services, up from 16% in 1994. Surveys of these users show that travel will be one of the most important interactive services that responds to their needs. |
| Educational material | 72% |
| Research before purchasing | 60 |
| Video on demand | 55 |
| Travel Reservations/Information | 54 |
| 39 | |
| Sports statistics/information | 31 |
| TV home shopping | 27 |
| Another strong tie-in between computer ownership and travel is found
in a recent survey of the readers of Conde Nast Traveler that showed that
70% had a home computer. Of those, 70% had a modem and 50% a CD-ROM. As
early as 1992, in the US, reference books such as encyclopedias and dictionaries
on CD-ROM outsold the paper versions. In 1995, the percentage of adults
who have used CD-ROM jumped to 36% from 9% in 1994. These new technologies
with sophisticated database management systems provide the tools to respond
to individual preferences and stimulate purchases of tourism products.
Strategic Implications for the Tourism Industry
© 1998 Economics Research Associates - All rights reserved |
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