Travel Industry Trends and Predictions 2004
This article collects our thoughts about new trends in the
travel industry and tourism markets, especially with regard to
sustainable tourism. This is not meant to be an exhaustive list,
and is quite general. These trends are included as an overview,
a synthesis of our readings and experience, and should not be
taken as results of our formal research. They are based in part
upon the research results of other organizations. We plan to
update and refine these thoughts throughout the year. If you
have comments or questions, or you are interested in Leave
Home's travel marketing consulting services, please visit
www.Leave-Home.com or contact the author directly. Overview
Leave Home sees significant realignments in tourism decision
patterns and roles within the industry, as a result of global
economic, political, and social changes and the impact of new
communications technologies. As in some other sectors of
society, these technologies appear to be encourage a greater
decentralization of distribution, greater individual access to
choice and information, and a realignment of roles for tourism
intermediaries. We recognize major opportunities for tourism
industry participants who provide value as "experts", respond to
demand for individualized service, fulfill higher level needs
and aspirations of tourists ("fulfillment",
"self-actualization", "individuality"), and remain flexible and
responsive to change. We find sustainable tourism projects and
products especially well poised to take advantage of these
changes, to provide unique value to tourists, and to spread the
benefits of responsible tourism to new areas and a wider segment
of the host populations. Tourism, global security and the
economic picture
Overall, tourism expenditures and international arrivals began
recovering in the last half of 2003 and appear to be continuing
this trend in 2004. The World Tourism Organization (WTO)
organized a panel of 180 tourism experts, whose survey results
about the promise of 2004 in terms of tourism industry recovery
are markedly optimistic. Continued global instability should
give caution to long-term prognostication, however.
The WTO reported a 2% drop in worldwide international tourism
receipts (in inflation-adjusted, weighted local currencies) in
2003. Major factors in this decline were the continuing results
of the September 11, 2001 attacks in the USA, the Asian SARS
outbreak, the Bali bombing, the war in Iraq, and global economic
recession. Northeast Asia, Southeast Asia, and Oceania fared the
worst, with North America, Africa, and Europe also showing
losses. The Carribean, Central and South America, and the Middle
East (!), showed gains during 2003. These findings are included
in the WTO's second trimester 2004 Barometer publication (An
excerpt is freely available from their website at
http://www.world-tourism.org/market_research/facts/barometer.htm.
The full first trimester edition is available for free
download, as well).
Security and economic concerns are still significant factors
affecting travel decisions; globally and across demographic
sectors. Continued currency value realignment (particularly the
reduced value of the US dollar against the Euro) will continue
to shape consumer and industry spending decisions. Tourists,
overall, are not curtailing their travel, so much as spending
less (tourism receipts have decreased more than have the number
of international arrivals), and staying closer to home. This has
led to an increase in regional and local tourism. Regional
budget airline growth is also fueling this trend (The continued
viability of their business models remains to be seen, however).
Major new outbound markets are developing in China, India,
Russia and other ex-Soviet countries, and to a lesser extent,
the Middle East, as a result of economic and social changes in
these countries. The Asian markets among these are tending to
produce mostly regional travel demand, which should help Asian
tourism rebound from losses in previous years. New pressures and
new roles
The global security and economic situation remains volatile, and
rapid technological innovation looks to remain the norm. Wider
availability of new communications technologies will change
tourism markets in ways we have not yet imagined. Flexibility,
diversification, and decentralization seem certain to become
more important for the survival and success of tourism
organizations and tourism-based economies.
Internet travel purchases (now the largest amount of all online
purchases) and airline competition have led to a downward
pressure on prices and slimmer profit margins for tour
operators, travel agents, and throughout much of the industry;
in general, leading to necessary realignments within the
industry.
More competing tourism products, decreased customer loyalty, and
increases in last-minute booking present challenges to tourism
organizations. They will need to work harder to differentiate
their products and services, help tourists sort through the
"information clutter", engender trust and loyalty, and maintain
stable revenue flows.
Smart marketers appear capable of countering the above trends
and displacing price's centrality in purchase decisions for some
types of travel products. More sophisticated uses of these new
communication technologies, such as Internet-enabled customer
relationship management tools and email marketing campaigns,
would allow for more selective marketing and distribution
strategies to attract highly desirable tourists.
Internet and other new communications tools are displacing some
tourism intermediaries and redefining the roles of others.
Tourism product suppliers are less reliant on traditional
distribution intermediaries, and consumers are more willing to
make their own travel arrangements. The WTO notes that the
current emphasis on regional travel is also producing less group
travel and more individual travel (people feel more confident to
make their own arrangements, when the destinations are more
familiar).
Trust is more than ever a central concern for travel purchasers.
By nature, the product cannot be tried before purchase, and
businesses on the Web must still overcome a healthy skepticism
about the trustworthiness of the companies and offers they
discover online. Speedy decision-making is also important, as
the most frequent travelers are often also the most pressed for
time; particularly as the number of competing tourism choices
threatens to overwhelm their ability to choose.
There is an important opportunity for "experts" to support
decision-making about tourism purchases. Agents and
intermediaries which add real value with their specialist
expertise and personal service will remain relevant and
successfully navigate the shifting roles in travel distribution.
New demand and opportunities for sustainable tourism
Even the smallest operators, like community-based tourism
groups, can generate their own demand. Where distributors remain
necessary, they can negotiate distribution from a position of
greater strength, and reduce price pressure on their tourism
products.
While price pressures and competition have characterized most
parts of the industry, there has been sustained or increased
demand for luxury accommodations, tours, and other travel
packages. The trends are not mutually exclusive within one set
of purchase decisions: "Luxury travelers" may choose budget
transportation, expensive accommodations, and adventure tours
(which might previously have been seen as incongruous choices).
More consumer access to information, better product
customization, and more attention to demand-led marketing are
both revealing and producing more complex travel purchase
habits. The "package holiday" approach to tourism products may
be on its way out. An increase (2-3% from 1993-2003) in tour
customizations may be related to this trend toward
individualization.
Active travelers have not been deterred by security concerns,
but have also traveled more regionally. Self-identified "active
travelers" intend to increase travel expenditures over the next
few years. According to the World Tourism Organization, "active
travelers" rate available activities higher than destination in
terms of importance to their purchase decisions.
Eco-tourism, nature tourism, hard adventure, soft adventure,
sports tourism, and health tourism count among the top growth
sectors. For example, the World Tourism Organization estimates
that the market for nature tourism is increasing at 6 times the
rate of tourism overall.
There appears to be evidence for a "self-actualization" dividend
(if not a "green dividend") for tourism sales. There are signs
of increasing interest in travel for reasons of personal growth,
assertion of individuality, human connection, and "authentic
experience", among segments of major outbound markets. These
segments overlap markets for "luxury experience" and new,
"exotic", "individual" consumer goods. These travelers appear
more flexible about price ("price elastic"), when they can be
convinced that an experience offers significant additional value
(in terms of the interests listed above).
These consumer and lifestyle groups have been called "Cultural
Creatives" in the USA; "New Authentics", "Style-Lifers" and
"Neo-consumers" in Europe (the groups and findings represented
by these terms are not totally interchangeable, but appear to
overlap more than not on characteristics important to tourism
decisions). As an example of these groups' significance: the
original research done about "Cultural Creatives" showed they
represent 25% of the adult U.S. population at the time of the
study