In Growing Tourism Market, Travelers’ Needs Diverge

IESE and Cornell host 3rd International Tourism Summit

21/05/2013

As the global tourism market grows, new technologies are helping companies connect with consumers who are seeking increasingly diverse travel experiences, said speakers at the Third International Tourism Summit, held on IESE’s Barcelona campus on May 17.

Organized jointly by IESE and the Cornell University School of Hotel Administration, the event featured speakers from around the world who addressed topics such the impact of booking platforms on the hotel industry; the rise of markets such as China and Russia; and increasingly varied consumer groups.

Organizations providing support for the summit, which carried the theme "Emerging Trends in the Tourism Industry," were BCG, Exceltur, La Vanguardia, THR and IESE's Balearic Islands Alumni Chapter.

In the opening session, IESE’s Dean Jordi Canals stressed the importance of the tourism industry in fostering cultural integration in Europe, as well as creating employment in a stagnant economy.

"If there’s an industry that can offer real job creation over the long term, it’s tourism," Canals said, who was followed by Marian Muro, director-general of tourism in the Regional Government of Catalonia. She described the region’s internationalization strategy and its focus on experiential travel, with a broader range of destinations.

"Tourism creates a global experience that allows humanity to discoverer its commonality," said Steve Carvell, associate dean for academic affairs, Cornell University School of Hotel Administration. Tourism is the single largest industry in the world and can also play a role in fostering world peace and forging agreements on key global issues, he said. "So it’s a key component of globalization for the future."

Private-Public Sector Partnerships

Increasing competition from other global destinations has chipped away at the U.S. travel industry over the past decade, said Isabel Hill, director of the Office of Travel and Tourism Industries of the U.S. Department of Commerce, in the first panel discussion, moderated by IESE Prof. Juan Roure, the summit’s academic director.

"The world has changed around us," said Hill, who explained how the Obama administration, as part of a plan to increase exports, has made boosting the U.S. tourism industry a priority. As a result of the plan, tourism grew 2.7 percent in 2012, outpacing growth of the U.S. economy as a whole, she said.

But collaborative leadership between the public and private sector is critical for continued growth, she said, and companies must see themselves as part of the policy process.

Addressing the industry in Spain, José Luis Zoreda, CEO of Exceltur, said the industry had experienced a downturn of 3.2 percent in the first three months of the year and that the Spanish tourism market has traditionally been divided equally between domestic tourism and foreign arrivals.

Compounding problems for companies in Spain are higher taxes, particularly airport taxes. A key challenge facing firms is just not just dealing with lower demand, but repositioning Spain’s tourism sector so that it has greater competitive advantage, he said.

The future of the tourism industry will be driven by the lifestyles and preferences of millennials, said Patricio Ramos, partner and managing Director, BCG Spain, who addressed how to align strategy to the future needs of travelers. A desire for speed, the latest technology and environmental sustainability will top the agenda of this demographic group.

Eulogio Bordas, president of THR International Tourism Advisors, described the "great turbulence" in traditional markets, as customers search for different kinds of experiences.

"At the end of the day, they are looking for a kind of happiness," he said, and to be competitive, companies should identify and focus on a specific segment, rather than try to be all things to all consumers. Partnerships, such as the one between the National Geographic Channel and Australia Tourism, can help companies create exciting new value propositions for travelers, he said.

A view from the top

In a session focused on the top management viewpoint, Raúl González Rodríguez , CEO, Barceló Group and president of the IESE Alumni Chapter in Balearic Islands, said that while business has dropped in markets such as Spain and Italy, markets continue to flourish.

"I am very optimistic about the future," said González Rodríguez, whose hotels in the Caribbean are attracting an increasingly diversified group of consumers from Latin American countries such as Colombia and Venezuela. The Russian market, however, is the most important group in the Caribbean for his company.

Christian A. Boyens, general manager of the Ritz Paris, described the challenges he has faced in closing the hotel until 2014 to carry out a major refurbishment project. The new Ritz Paris will feature all the luxury features of the former hotel, he said, but with many "hidden" high-tech elements to appeal to tech-savvy clientele.

Key Emitting Markets

IESE Prof. Pablo Foncillas, who moderated the next session, said global tourism is "alive and well," and will grow significantly over the next five years due to the proliferation of networked consumers.

Demand is rising for short breaks of around two to four days, as well as new forms of traveling, said Manuel Butler, general director, Tourspain and president of the European Travel Commission. By 2030, 82 percent of tourist arrivals generated in Europe will remain in Europe, he said, and the leading target group will be LOHAS, the acronym for "lifestyle of health and sustainability."

Julio Rodríguez Contreras, CCO, Vueling, said his company has aspired to maintain a low cost base, while moving into the domain of traditional airlines. By offering three fare levels, Vueling is meeting the needs of varied consumer segments, which include both business and leisure passengers, he said. A drop in domestic market has been compensated for by European travel, which has remained stable for both inbound and outbound travel, he said. Travelers from Germany, Russia and China are currently key target groups for Vueling, he said.

Growing consumption and technology are driving the Chinese travel industry today, Jun Zeng, general manager of LVMAMA, China’s leading ticket-booking firm for scenic spots. As Chinese income rises, the time Chinese consumers spend traveling will also expand, he said.

"This presents great potential for the next five years," he said, describing other trends such as the rise of independent travelers (as opposed to those going through travel agencies); growth in the number of outbound tourists to foreign destinations and increasing travel to Europe.

"China’s economy is more and more driven by consumption. Consumption has replaced investment as the biggest engine to the increase of China’s GDP," he said. Mobile apps will also play a role, with about 18 percent of consumers using mobile apps for travel booking.

A Mobile World

In a session moderated by Prof. Rohit Verma of the Cornell School of Hotel Administration, R. J. Friedlander, CEO of ReviewPro, noted that 40 percent of people now say they socialize more online that they do in the real world. Friedlander, whose firm provides customer intelligence for hotels, provided a list of best practices, including responding to tweets within 15 minutes to serve guests before, during and after their stay.

"Don't forget brand personality when communicating on mobile," advised Jimmy Nordback of Golden Gekko, whose company provides mobile solutions for companies in 30 countries. Tim Unwin, executive vice president of Rate Gain, explained how Big Data can help set prices and indicate positioning, although information has to be transformed into action otherwise it is useless.

In the next session, Joan Vilà, Managing Director, TUI Travel Accommodation & Destination, gave an account of how his company has grown since 2002 to offer a wide range of services including cruise handling, accommodation wholesales and OTAs.

"Healthy ambition" was an essential ingredient for his team, as the company grew and internationalized, he said. Vilà advised firms to go beyond focusing on a specific market and branch out to other geographic regions and consumer groups.

Game-Changing Models

Alison Copus, vice president marketing for TripAdvisor, explained that at least 80 percent of the company’s activity comes from consumers. The site currently engages with 200 million users a month and features 2.5 million business listings.

"Basically, we are always chasing the consumer around the world because it’s having good relationships with them that gives us something to sell," she said, during the session moderated by Prof. Chris Anderson of the Cornell University School of Hotel Administration. TripAdvisor’s newly redesigned mobile app will come preloaded on the Samsung Galaxy S4, allowing the platform to piggy back on Samsung’s growth.

Hotel Tonight offers consumers a quick way to book a room at the last minute, while giving hotel owners a chance to fill vacancies through an algorithm that allows them to compete for a top slot on the app, explained Heather Leisman, the company’s managing director EMEA. It is the first hotel booking platform to be built entirely for mobile "from the ground up," she said.

Miguel Moyà, the summit’s final speaker, provided an overview of Google Hotel Finder and its mapping feature, noting that the company had no intention of entering the booking business. He showed videos that gave participants a glimpse of how the newly-launched Google Wallet and Google Glass products function in real life. While Google Wallet facilitates online and in-store shopping, Google Glass provides voice-controlled, hands-free data via a lightweight headset.

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