Future Tense is essential listening for those interested in exploring the social, cultural, political and economic fault lines arising from rapid change. The weekly half-hour program/podcast takes a critical look at new technologies, new approaches and new ways of thinking. From politics to media to environmental sustainability, nothing is outside its brief. Future Tense explores the issues and provides critical analysis, offering an insight into how our world is changing and how we in turn are learning to adapt.
We take a look at future directions in tourism ahead of a major international conference on the issue. Guests are: Tony Charters Principal & Convenor Tourism Futures, Tony Charters and Associates, Dr Auliana Poon Managing Director, Tourism Intelligence and Professor Ian Yeoman Victoria University (NZ)
Antony Funnell: We tend to take tourism for granted; certainly in Australia we do. It’s hard to imagine a time when it wasn't an important part of our economy and our culture.
But it’s an industry which, internationally as well as domestically, is undergoing rapid change. Today we'll focus on just two aspects: who'll be the tourist of the future and how they'll decide which destinations to visit and which holidays to take.
Now in looking at the future of tourism, it's instructive to remind ourselves of the near past, of the industry's phenomenal growth.
Tony Charters: In the early ‘70s, I remember a comparison being done that a flight to London was the equivalent of a Holden car, the cost of a flight was the same as a car. So in the ‘70s and '80s we saw the industry in Australia move from very much a low-key, leisure holiday market and then of course hotels, business hotels in the cities to this much stronger leisure component. The Gold Coast probably kicked that off in a big way, with multi-rise developments, apartments in the late ‘60s and early ‘70s. It’s interesting to note that going back 25 years ago, there was not a single five-star hotel anywhere in Queensland. There was no pontoons on the reef, there was no fast-cats on the reef. So it's all happened in 25 years, and I think 1985 might have been the first five-star hotel in Brisbane, in about ‘88 in Cairns.
So the industry has gone down this leisure path really in a quarter of a century. It’s all happened in that time frame, and it grew very quickly in the late ‘80s off the back of a lot of Japanese investment, and then it’s really the new dimension has come through over the last five to seven years, has been the whole discount aviation perspective and that's changed complexion again very strongly and as Australia's economy has become more successful, people have more disposable income, cheaper access to international travel, that’s seen a major shift from people looking to leisure holidays within their own country and rather than a big holiday to Gold Coast or Sydney or Melbourne, it’s now the big annual holiday overseas, and that's increasingly becoming the norm, that people look for an annual overseas long holiday rather than a local Australian holiday.
Antony Funnell: Tony Charters there, giving us an historic context.
And by the way, he’s the convenor of next week's international Tourism Futures conference in Brisbane. There's a link on our site.
So the past 25 years have seen phenomenal growth but what are the predictions for the next 20 or so? Professor Ian Yeoman describes himself as a ‘specialist futurist’ in travel and tourism at Victoria University in New Zealand. He sees continuing exponential growth. But the future of international tourism, he says, won't be dominated by affluent westerners.
Ian Yeoman: I think if you looked back to 1950 when statistics were first recorded, 25-million people took an international holiday. In 2009, it’s more than 900-million people have taken an international holiday. So you see as the world has got richer it has done more travel, and the forecasts by the year 2030 at 1.9-billion people will be taking an international holiday. So you’re seeing exponential growth. And a lot of that exponential growth will come from developing countries and those middle classes in those countries, as they gain wealth, they will do international tourism. And fundamentally you’re talking about the Asia-Pacific economies of Asia and China. As long as consumers have wealth, their identity is all about travelling tourism and that's what's driving that exponential growth across the world over the next decades.
Antony Funnell: And I presume that if there is a change in focus in terms of the people who are becoming tourists, if they’re removed toward the developing world, particularly China and India, as you say, there’s also going to be a change in terms of the popular destinations.
Ian Yeoman: Well you go through a transformational process. It’s all about inter-regional travel, before you have intercontinental travel. So what we’re seeing today is, look at the Chinese traveller, they’re travelling within China itself, and that Asia Pacific region, but once they become a lot more wealthier, they accumulate the same tastes that the Western consumer has and they want to do more long-haul travel. So hence they’ll cross continents to places like Africa and to places like Europe. It’s just that transformation you have in society, and by 2030, 2040, it will become the norm for a Chinese tourists to travel to Australia or travel to Europe, and the barriers will be coming down.
Auliana Poon: So there we have completely new emerging markets. The Brazilians, the Russians, the Indians and the Chinese for example.
These new markets are experiencing tremendous growth and they're growing faster than the older economies, and we expect a number of different travel options coming from them. However, these new markets are not looking for the same old things that the older markets have looked for. For example, sun, sand and sea were the key drivers of the old tourism, from the old destinations.
But these new travellers, as you know the Chinese and the Indians don’t lie in the sun and sunbathe necessarily. So they're looking for other ‘S’s. They're looking to shop, they’re looking for status and they're looking for sight-seeing for example. So destinations that are looking to target these markets must do things differently. In other words, we cannot roll out the same old products and services that the older destinations like Germany, Italy, France, UK, USA wanted. They want something different, and they want to be treated differently as well. And consider also there are cultural differences: the food, the religion, all of these are differences that destinations, certainly like Australia, must seriously take into accounts in attracting these new travellers.
Antony Funnell: Now catering to that difference, that’s going to be quite difficult for a lot of established tourism markets around the world, isn’t it?
Auliana Poon: It’s a challenge, but it’s not an insurmountable challenge, but the first fact or the first thing that you have to do is to really understand that there is a difference, and that one needs to do things differently. Too often we roll out the same old product and expect to be successful. But a little bit of patience a little bit of care and understanding who these travellers are, what are they looking for and what will make them happy and satisfied, will go a very long way.
Antony Funnell: Will there be a difference in future in the amount of time that your average world traveller is spending on holiday, is spending as a tourist?
Auliana Poon: There are a number of ways of looking at it. Whether we like it or not, eventually the Chinese will have to take more holidays and they’ll have to catch up. So on the one hand we will see changes in travel patterns and more leisure time for some of the markets. For example, in Singapore and places like that, you still work on a Saturday, but eventually they will have more free time. But what’s interesting though is that whereas the older markets like Germany and the UK have traditionally spent a very long summer holiday or a long winter holiday, you find these holidays being split up into so many different short breaks or breaks away you see. So that it may appear as though you have less time, but really what’s happening is many more trips for shorter durations, and that seems to be one of the facts of the travel tourism sector now.
And of course that has implications for destinations because obviously, if you travel for shorter times on any one particular holiday trip, it means that you would not go as far away for example. So that destinations close to the main generating markets are going to benefit substantially. And in Europe, for example, one of the fascinating things is the emergence of the Eastern European states. So you have your Croatia or Poland, Czechoslovakia and all of these countries are coming up and they’re becoming very hip weekend destinations or long break destinations. So that, you know, people in London or travellers in London and elsewhere ‘We’ll just pop over to these destinations for a quick, fascinating break away’ you see. So that that has become a part of the travel menu. So instead of one long holiday and maybe a short break you have like four short breaks and maybe a main holiday. So it's the structure of the way in which travellers travel that's all for changing.
Antony Funnell: The Economist magazine estimates that within the next decade the three airlines run by the Gulf States of Dubai Qatar and Abu Dhabi will be carrying almost 200-million passengers a year.
And one of their key strategies is to target the largely forgotten tourists of Africa and Asia, servicing the growth that Auliana Poon and Ian Yeoman just talked about.
Elsewhere in the world, discount airways are also continuing to open up holiday opportunities for those who would otherwise lack the funds to fly, not just those who appreciate cheaper flights.
In June this year, one carrier, AirAsia, was offering return flights from London to Melbourne for just $AU240.
So for travellers and for tourism and related industries, that all sounds good, but is it sustainable? Every sky, of course, has its clouds.
Tony Charters: Certainly the aviation industry has a lot of challenges with the fluctuating oil price, the depressed economies of the Western world at the moment, and that does create a challenge. From an Australian perspective we've had a lot of opportunity opened up by that; we've had great deals going where airlines have repositioned into this region, and so we've got access to the cheapest flying we’ve ever had. But in the longer term, there’s a number of fronts where aviation is going to be challenged. One is the fuel side of things, and I guess we’ll see a lot of money spent on technology to develop synthetic or biofuels. There's going to be greater cost to travel, but when you put it into perspective, if you look at the cost of air travel say 30 years ago, it was significantly more expensive than it is today. It’s more affordable today than it ever has been, but there are going to be challenges for the industry, particularly on the environmental front, and some areas where the carbon taxes that are applied, it’s going to become a much more expensive proposition.
Ian Yeoman: Well it’s all about perception. At the moment, climate change has no impact on consumers and travel, it’s not even on their radar, it’s something that’s on political agendas, but consumers of world travel, the only way you'll bar consumers from not travelling is if you put the cost up exponentially. And the bigger threat to climate change in terms of stopping tourist travel is more about oil and its price.
So at the moment, climate change has no impact upon tourism. Today’s consumer very much has what we call a fluid identity: on one hand, they say they're very concerned about the environment, and for example, they will take a 3-week eco tourism holiday in Africa, something very ethical, something very authentic and experience are very basic. But that consumer at the same time is very comfortable having had a hedonistic vacation in Las Vegas, and they like to do lots of things and they like variety and they're very comfortable with that. So overall, the consumer in today's research is not concerned about the environment, although they say that they are, and that commentary also varies from consumer segment to consumer segment.
Tony Charters:If you look at the whole array of rating schemes that are out there from very informal ones, from a group who might be on Facebook who are talking about holidays they’ve had and so you’ve got this word of mouth or I’ve sort of started calling it word of mouse, you know, you've got this situation where people are electronically giving their first-hand experiences to potentially many thousands of people as it sort of exponentially goes out through those networks. So that personal recommendation is going out much wider than it ever used to, and it’s always been a rule of marketing that word of mouth is the strongest form of recommendation, the strongest form of marketing, and so if you can marshal that electronically through social networks, you have an amazing tool.
So that’s a rapidly growing area, but it can also bite you back the other way if you’ve got a product that’s not up to scratch, and people start talking it down, then that can do you a lot of damage very quickly and there’s been examples of that: restaurants have been closed down overnight almost because of strong electronic social networking forums working against a product. So yes, this is going to have a major impact on the way we do business and also the networks that are forming are going down to very specific niches, you know, they’re getting quite specific an interest, as they can afford to do when you’ve got a global market that you’re linking up with rather than a local market.
Antony Funnell: So are we seeing a greater emphasis from the major tourism players in trying to cater to those numerous niche markets, if you like?
Tony Charters: Yes, there is. And if you look at the way large operations are now working, they’re looking at all the array of social networking opportunities, the whole electronic world is an opportunity they have to jump on. They can’t just stick with traditional distribution points and media. So they are looking at how they can get down into specific niche markets, they’re looking at how they can use social networking from a business sense, and to a large extent businesses are still exploring how they can get a business advantage out of some of these social networks, because it’s not completely clear yet as people are sort of - well the thing is evolving anyway, but people are still trying to get a handle on how they can get a business advantage out of things like Twitter and so on. But it is washing through the industry, and it’s something that business cannot ignore. If they work on the old system continuing on, they will be out of business in probably ten years.
Auliana Poon: All tourism was driven very much by the suppliers. You produce the hotel or you build a hotel and you expect travellers to come to it. More and more it’s the customers who are deciding. Technology is driving this investment on the supply side because it is the technology that allows suppliers to really cater to individual needs of customers. That technology and the system now allows people to mix and match their holiday. In other words, the role of the tour operator is now being carried out by the technology. So you can literally, mix and match your holiday package exactly and individually as you want it without being penalised. Because in the past in the mass tourism, you really could not travel outside of the package or outside of the date of travel or anything like that, because it would be horrendously expensive, and you’d know in those days you’d have to buy a whole new ticket if you flew to Australia and decided ‘Boy this is so great I want to spend another week’. You literally had to buy a whole new holiday to make a single day change.
So now it’s completely flexible and it’s really really incredible and fantastic. And of course the main challenge of course is the distribution side, the channel of distribution. How does the customer find you? How did they get to you? And how did they pay for the travel and all of those things, because literally, the market is really global. A customer can find out anything about any destination at any time they want, and they can’t fool the customers any more, literally. So those distribution factors are obviously very critical because no one expected about 20 years ago that Microsoft would really have become a tour operator, I mean the experience I mean all of the Thomas Cooks and so, I don’t think they have imagined that a competitor would actually come from outside of the industry. So the entire industry is shifting, it’s changing, and new ways of creating wealth are being generated.
Dr Auliana Poon: Now if you want more on future directions for tourism, take a look at our site, there’s a link there to recent research from the Sustainable Tourism Co-operative Research Centre which supports the growing importance of social media in people's decisions about the holidays they take.
And you’ll also find a link to the recent Australia Talks program on tourism as well.