By Shehana Dain

Cinnamon Hotels & Resorts marked the occasion of ‘World Tourism Day 2015’ with the first-ever ‘Future of Tourism & Responsible Travel for Driving Revenue’ Summit.

The event was held on 28 September at the Cinnamon Lakeside Colombo. The summit featured global experts exploring future tourism trends as well as responsible travel practices for driving revenue. The event brought together imminent personalities of the industry, including 300 CEOs, Managing Directors and Managers.

“When looking at the future of tourism it’s very important to look at the four mega trends. The first is demographic change which refers to a population that constitutes of a higher percentage of elderly people and fewer young people. This is a global phenomenon and can be found in emerging markets. This affects tourism as well,” explained the curator for the first session ITB Berlin Scientific Director Prof. Dr. Roland Conrady on his opening remarks.

“The second is dynamic shift which is more focused towards the Asian region, so it should be noted that it favours Sri Lanka. The third is de-carbonisation; that is key elements involved in reducing carbon elements by converting to renewable energy and adapting to green tourism. The travel industry is deeply affected here due to high fuel consumption; however unlike other industries, the tourism industry needs to keep natural resources intact. The final aspect according to him is digitisation. “We are witnessing the fourth era of the industry revolution. The rise of the internet has placed technology as a number one factor for the future of companies. The tourism industry should transform and adapt to digitisation,” Conrady added.

The long day began with a keynote address by a home grown Nobel Prize winner who is also the Intergovernmental panel on Climate Change Vice President Mohan Munasinghe. He spoke on ‘How sustainable is our future?’

Munasinghe touched the environmental crisis which has lead to the global dilemma of climate change. This has been a result of malpractices of businesses which operate with the short term financial motive.

In his speech he urged the Government to place the tourism industry as the cornerstone to push sustainability development to the community adapting sustainomics.

“The tourism industry should make decision makers see sustainable tourism as a key element of integral nation development strategy.”

“Tourism and simultaneously the economic landscape in Sri Lanka today are booming. However rapid financial growth in the world has lead to multiple threats globally, which undermines sustainable development efforts and poverty alleviation. If as a community and an industry financial prosperity could be achieved without disturbing the balance in the world that is called real development,” he noted.

The rich is getting richer and the poor is getting poorer

Munasinghe stressed that inequality is one of the key dilemmas the world has to face. Quoting IMF’s Christine Lagarde he stated that 85 richest people in the world control the wealth of 30% of the bottom line of the world which is 3.5 billion individuals. According to him the crowding of the rich has positioned the poor in a very vulnerable situation.

“With our experience with the global financial crisis we saw that Governments bailed out big banks by funding them by $ 1.75 trillion and the same Governments will chip in a few billions or millions for matters relating to humanity. Yet these banks still haven’t come out of the crisis.”

“This affected the developing countries as one million jobs were lost. Governments went on to become bankrupt. This is a clear example to show that the finance pillar can be a real bubble, but I still feel the world hasn’t learnt enough from the 2008 crackdown. The rich walk over 100 million of the world population who are poor and jobless, in order for them to get richer.”

How tourism can contribute to sustainability

Elaborating on how tourism as an industry can contribute to eradicate actions against humanity, Munasinghe highlighted that the responsibility isn’t focused only upon the business organisation; both ends of the industry should actively participate in the cause.

“How can we do this?” he asked.”Hoteliers can contribute to humanity aspects by undertaking CSR projects. By this I do not mean situations where some funds are shifted from one place to another. It can be done by being responsible for your actions to the community, considering wider social responsibilities. Consumers and other industry stakeholders should get on with an integrated external engagement.”

He further noted that the industry can follow current financial trends and conform to sustainability accounting standards taking a triple bottom line approach.

“Tourism unlike many other industries is closely related to nature. There’s an intrinsic value which goes together; today the tourist is well aware and demands responsible tourism. If the stakeholders do not understand this, it would definitely lead to their downfall,” he added.

He further stated that today when it comes to product or service it’s beyond the material aspect. The 21st century consumer values the goodness concept which can be used as a part of nation branding. The satisfaction that customers gain enjoying the beauty aspect cannot be matched by any amount of printed materiality.

 

Sustainomics beyond economics

Munasinghe highlighted that the tourism industry in order to survive in the long run should harmonise with the sustainable development triangle.

“Unethical social values lead to economic mal development which subsequently leads to unsustainable development. Therefore the tourism industry should transcend typical stakeholder participation to catalyse the business, civil society and Government interactions to strengthen local, national and global governance.”

Citing an example he noted that one of the very effective areas the industry can look at is focusing on the hot spots of a value chain, where carbon emissions are the highest.

“Look at water management, energy consumption, kitchen management and raw material usage. If you take a single hotel there’s multiple processes that need this evaluation.”

“While we can increase our forex earnings, increase infrastructure development and contribute to employment generation and the local economy it’s clear that one does not see there’s a major leakage out of the host country, price hikes and even burying of local SMEs.” Citing statistics he stated that the dependents on tourism has increased from 375,000 to 1.5 million and this itself shows the impact tourism has as a whole on the community. The ripple affect ultimately affects us all; even the unborn infant has a part to play and a part to expect from the industry. Social capital development, proper education and awareness of communities will significantly reduce the harm to the environment and aid sustainable development.

The budget tourist; the future traveller

Kicking off the second presentation EuroMonitor International Senior Analyst Shabori Das noted that according to research carried out by EuroMonitor the future tourist will very closely monitor value for money when choosing tourist destinations. “What we have found at EuroMonitor shows that while tourist arrivals are bound to grow by 3.5%- 4% in the next five years simultaneously GDP growth, inbound receipts and inbound arrivals are all growing, while the average spend for a tourist will decrease. This clearly shows that people will be travelling but they will be expecting value for money or rather budget options.”

“There’s a bright light to the Asia pacific as that’s the region which will be fastest growing region in tourism arrivals in the next five years which will be closely followed by Middle Eastern and African regions. This shows that tourists are looking for exotic locations to travel at a lesser cost.”

The Indian and American factor

She then stressed the fact how important India is for the Sri Lanka to grow as a tourist destination. Inbound tourists country wise China takes the lead with a big gap as it offers the whole package with multicultural experiences. India comes 11th in the list and Sri Lanka is positioned as the 21st, she stated.

“What’s interesting is that inbound tourists who come to China travel to neighbouring countries such as Malaysia, Hong Kong and Thailand. This provided the traveller the perfect combination of budget travel with exotic location. Sri Lanka stands at a very good position for strong growth because India and Sri Lanka are very close in the geographical aspect and any traveller who’s coming to India can easily come to Sri Lanka. Also growth potential is very high.”

Das then took India, Maldives and Sri Lanka for a comparative study; India due to the geographic positioning and Maldives due to the same product offering. “In our research we found that these three countries generally cater to the same European countries but what’s interesting is USA is one of India’s main source markets. Sri Lanka as well as Maldives should target the USA as their next possible source market.”

Driver for tourism growth

Das touched points which drive the tourism industry and subsequently advised which strategies stakeholders should take.

“We observed from 2010 to 2014 that airlines were the most dominant form of travelling globally. Most of us will argue that yes it’s obviously the case because airlines have high connectivity. However one of the key reasons we found is that airlines are popular not just because of connectivity but also lack of time. This was the case in all seven regions globally. Moreover in Eastern Europe, western Europe and Asia Pacific you can still see rails and cruise have a significant part to play as well.” The next thing the research firm had analysed was that 75% of the tourists travel for leisure purposes.

“Within that 75% relaxation – sun, beach and water was the most sought out destination. Sri Lanka stands at a very good position here. If Sri Lanka markets itself in a proper manner they can achieve better ROI.”

Be alert mid-priced hotels!

Stressing the vulnerable situation mid-priced hotels face Das said: “In 2014 we observed that out of the five geographies which are UK, China, USA, India and Germany, the concept of luxury and budget accommodation witnessed the strongest growth. The reason why I chose these regions is because they are common as source markets of Sri Lanka and Maldives.”

“Mid price hotels are still quite popular in USA, Germany and UK as well, however not so much in India and China where budget hotels constitute a lot in the industry. Furthermore it’s expected that luxury and budget in the next five years are going to squeeze out mid-priced. One of the trends that we observed is that either travellers are going and spending immense amounts of money for luxury and quality service or else they go for budget accommodation. In between mid-priced falls in neither category hence any of the companies looking at mid price should be re-evaluating their business models and target the growing budget and luxury accommodation.

Evolution of travel booking

“One of the consumer surveys that we do showed that the foremost method for any sort of travel booking is the internet; we Google almost everything. One of the key things that we focused is how international travellers are booking their flights and accommodation and any other travel activity. Now in India and China we observed that more than 50% traveller bookings were done by mobile travel channel.”

According to her mobile travel apps have become extremely common around the globe however the scenario in Sri Lanka is quite different as the use of mobile travel app usage in here is negligible.

“Any company in this industry needs to look at mobile travel sale. This is a section that can no longer be ignored by any economy which is planning to become a tourist capital.”

The Alpha traveller

The new traveller will be known as the ‘Alpha traveller’ Das revealed which is the generation, born after 2010. According to EuroMonitor in 2030 one billion new people will be travelling and most of them will be alpha travellers.

“One of the key things for them will be connectivity in both online and offline methods; another aspect any company should look into is social media to stay relevant and be very visible in social media. They will also be extremely responsible in their travel practices as well, which will result the alpha traveller to be extremely sustainable,” Das opined.

She further noted that tech giant’s entrance to the leisure sector was another trend that was growing. Citing examples she stated that Amazon destinations which was launched in April 2015, Google travel tools and tripadvisor’s instant booking feature which evolved from a review website are very popular among users today.

The world in 2025

TrendOne Head of Strategy Rene Massatti shared his insight highlighting that the tourism industry like any other industry will be exposed to aggressive tech-advancements. “This will involve robotic technology in the industry where tour guides, hotel assistants even kitchen staff will be replaced by robots,” Massatti added.

“With change happening so fast in today’s world it seems almost impossible to predict what the world will look like 10 years from now. Still there are some game-changing trends that can be already identified today which have a huge impact potential for next years. Most of these trends will have an enormous impact on how we communicate and how companies and brands build and offer their services to consumers. The technology will involve smart everything, attention economy, snatch size media, virtual reality, artificial reality and emotional intelligence.

He commented that companies cannot just stick to traditional promotions today. “Highly personalised promotions have to be done. Data capacity increases in huge amounts every 10 minutes, companies should coordinate this data and technology to drive their marketing tools to cater to the modern consumer.” “Some of these methods are very cheap while some require immense amount of resources but deliver good results. A company should design their business models in a relevant manner.”

Don’t import ideas; be original!

Taking the stage after lunch was Swiss Hospitality Solutions AG Partner Wilhelm K. Weber who was also the curator for the second session. He emphasised the significance of home-grown investments and business ideas.

“For me as a Swiss national it’s all about a country’s home grown ideas; that’s how we grew as a country. What I have to say is, keep the importing of ideas to a minimum. Your country has all the resources; you don’t need to fill the top management with expats. You know your country more than anyone else,” Weber highlighted.

“With big international players coming in there’s a big risk for a country to be overrun by them because some of these powerful hotel chains will expect local Governments to build the infrastructure that is from tax payer money and this would cripple the Government funds.” Citing an example he said that in countries like Egypt powerful foreign players have come in and taken full control of their tourism industry.

He went on to say that the primary after-effect that can occur from such transactions is the obstruction of entrepreneurship that stems within the country which can affect the sustainability balance immensely in the long run.

Tomorrow’s tourist

Taking the stage after Wilhelm was the only Professional Futurologist specialising in travel and tourism Dr. Ian Yeoman. He shared his thoughts on the mentality of the future tourist and how to cater to them.

“More wealth creates more avenues to travel and explore new destinations whereas decreased wealth returns us to basics. Rising income has been the main driving force to create the demanding well informed traveller today.”

“Today the world is full of money which has lead to a global deflation which has made life difficult to hotels and airlines. However this has lead to asset inflation,” Yeoman added.

He went on to say that today the meaning of luxury is changing where luxury us no longer accessible only for the wealthy few. Under the new trends emerging markets have high demand for luxury items.

“Today the consumer is willing to desert once favoured company, when even a slightest bit disappointed,” he highlighted.

Destination branding

There has been quite a buzz regarding the branding aspect of the country to promote the tourism industry. The Author and Advisor for National, Regional and City Branding Dr. Robert Grover shared his expertise relating to this topic.

“The most important thing is when people make opinions about places; what matters most is the opinion about the place. What builds image is reality not what you say in the mainstream media.

“When it comes to city branding and nation branding, we want to stand out; we want a unique positioning for our country for what it is and the global community to recognise it. The problem now is that all these countries and their branding image all look the same.” He stressed the fact that places are not products even though there’s a misconception regarding it and there are even some experts who write about it. “Places are not products. It’s the environment in which people live and which economic processes take place and places always offer multiple products.” Citing an example he said, “Even the recent project that I heard of ‘Cinnamon Life’ that’s not one product. That place offers products like leisure product, tourism product, and retail investment product and a shopping product. Even there we have multiple products.”

Destination branding nonsense

Taking the summit by surprise Grover said that destination branding is nonsense. “I don’t think it’s worth because it’s based on the argument that through a big mass media campaign which is homogenous and one sided and people think that it’s going to help the image of our country. It won’t, tourism is one of the products a country will offer and to spend millions of dollars on one campaign with nice images is not going to help the industry.”

“I’m not saying that such methods haven’t brought in tourists but it’s not branding its destination marketing. This is what most countries should think about today. We continue to do tourism advertising which is fine but when it comes to branding the majority think the only way is mass media. We hope and we think that will create an image for us but it doesn’t,” he added.

The sharing economy: Transforming tourism

The sharing economy is a business model built on decentralised networks and ‘access over ownership’ powered by new technologies. This is affecting many sectors of today’s global economy, including tourism. World Economic Forum Advisor on Shared Economy April Rinne went in depth to explain how it will affect the local tourism industry.

Rinne went on to say: “A recent report by PWC report says that sharing economy businesses is getting very big and very fast. In 2013 $ 3.5 billion was invested and in 2014 it staggered to more than $ 10 billion and it will keel on growing, it’s estimated that today sharing economy companies are worth more than 100 billion by 2025 the sharing economy is expected to generate $ 335 billion. What’s amazing fact is all these will are with invisible infrastructure and zero inventories which it definitely supports the sustainability concept.”

Citing the globally successful company Airbnb, she stated that the company has managed to increase its accommodation capacity in 2014 within two weeks than what the Hilton hotel chain did all year, also how the company managed to increase accommodation in six years which the conventional hotels industry could do in 93 years and all this was done via the sharing economy.

“The sharing economy affects almost all stakeholders in the tourism industry. It builds communities economically and socially. There are lot of home sharing and property sharing websites worldwide. The future traveller wants to connect with communities and that’s a plus point. If this can be applied to the Sri Lankan tourism industry so many will participate and benefit economically.”

Responsible product innovation for tomorrow’s traveller

Taking the stage for the final presentation was the University Of Colombo Department Of Zoology Former Head Prof. Sarath Kotagama, who spoke of the gravity of climate change. “We are spending earth’s natural capital putting such strain on natural functions on earth that the ability of the planet to sustain the ecosystems for the future generations can no longer be taken for granted, almost a billion go hungry every day and 20 people die of hunger each day,” he said

“Despite all this travel for holidays and other forms of leisure account for just over half of all international tourists that’s 52% of 568 million, why is this?” he asked.

“Today’s traveller is demanding adventures products that can be hazardous to the individual and the public. The tourism industry is expected to cater to these needs and come up with innovations from nature. We have ample eco-tourism assets why don’t we utilise them, to build a tourism product. The industry should look into it while makings sure the environment is unharmed.” While highlighting the importance of interpretation as a communication method to attract tourist Kotagama went on to say, “Tourism despite its saying has often excluded people. The future is inclusion and this becomes a major part of responsible tourism. The emergence of eco-tourism is evidence for the new breed of that philosophies inclusion of people as partners and not just recipients of benefits.”

 

Pix by Upul Abayasekara