8 Jun, 2001

Major Issues Facing Travel & Tourism In The New Millennium

Imtiaz Muqbil

The former Deputy Managing Director of the Australian Tourist Commission  offers his thoughts upon completion of a term at the ATC that spearheaded Australia’s tourism promotion campaign built around the 2000 Olympics.

by Bill Calderwood, Deputy Managing Director (outgoing), Australian Tourist Commission.

Bill Calderwood has informed the Australian Tourism Commission of his decision to resign from the agency as of July. He, and former Managing Director John Morse were widely recognised as one of the best teams ever seen by an Asia-Pacific national tourism organisation and spearheaded many of the creative campaigns and strategies that gave Australia a shining global profile. In this exclusive write-up for Travel Impact Newswire, he reflects on his days with the ATC and where he sees the industry going next.

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Major issues Facing Travel & Tourism In The New Millennium

1. Economic Health of Asia Pacific and Source Markets

The major challenge is maintaining adequate levels of promotional investment and arrivals growth at a time when the world economies are experiencing some uncertainty.

What could be the implications of falling consumer confidence with the spectre of falling share markets, increased unemployment, and a recession mentality becoming endemic? Arrivals would drop, as would the length of stay, with short haul destinations growing at the expense of the medium to long haul. No surprises there, we have seen it all before. The danger is that the industry resorts to short-term strategies, which will work against them in the long-term.

New infrastructure investments would be put on hold; new product developments would be shelved as tried and trusted commodity product gets preference, in an atmosphere of “lets stick to basics.” Price would become the dominant tool to attract customers, rather than service or experience.

The long term impact would be a delay in achieving adequate yield levels, or getting new product into the market to encourage repeat business, or cater for the increased demand which the growth projections promise. The industry needs to take a long term view of its future and worth, and resist the temptation of going for the short term fix which only exacerbates the problem of profitless volume.

YIELD, IT HAS TO BECOME THE NEW MEASUREMENT OF SUCCESS.

The days of measuring our success on numbers, is out of date. We need to apply a new realism and sophistication to what it is that is really important and worth being excited about. We are not successful if we create profitless volume, and become more excited about the numbers than the dollars. Our success will come from increased conversion; increased yield, more repeat visitation, and development of new growth consumer segments. We don’t want to be a high volume, low margin business.

The Japanese market is a very good example of the changes we face and the way we need to alter our strategies, expectations and measures of success. In the past we were all narrowly focussed on the YOLs, Honeymooners, and the numbers. Now we are focussed on the better yielding segments of ‘Jukenen’ and ‘EFTS’. The success in the future will not come from numbers but from repeat business, more yield, and increased length of stay. It’s time to focus on that new paradigm.

2. Sustaining Effective Marketing Campaigns In An Environment Of Declining Resource.

Everyone is faced with this dilemma of declining resources. The smart operators are seeking new alliance partners, embracing the opportunity the new technology can offer, and adopting new business models.

2a. More co-operation between regional partners and NTO’s

We need to finally walk the talk in terms of regional co-operation, between NTO’s. There has been much good intent in the past but, little concrete action. The sooner that each of us realise that our prime competition in the Asia Pacific region, is not each other, but the other regions of the world, the better we will all be. If you consider that 27% of all European travellers to Australia have a stopover in Singapore, then it is in the interest of both the Singaporean and Australian authoriti e s to mount joint campaigns to attract even more of the lucrative European travellers down under and on the way through.

There are many more examples of this type of destination interdependence, which we need to address and promote. Joint research, joint trade shows, sharing of market intelligence and benchmarking are easy areas of joint co-operation and we are already seeing some of this through such forums as PATA, and APEC. We need more co-operation, and the courage to extend it to consumer marketing campaigns of real substance.

Also we need to get away from the “old thinking” that Australia is not really part of Asia and so should be excluded from these initiatives. While Australia may not be culturally part of Asia, the geographic realities tell us something different, especially in the minds of Europeans.

2b. The role of technology in the new marketing age.

Using the new technology to improve the cost efficiency of information services and marketing effectiveness is essential for future marketing success. The Internet will be central to future marketing success.

In fact, in can be claimed that the Net is the greatest new marketing tool since TV. In the 50’s it was all about mass marketing, and TV was the revolution, which drove it. In the new millennium, it will be all about targeted marketing and, the net will be the tool, which drives it.

A key role for NTO’s will be to provide cost effective new marketing tools for the industry to use. New tools such as enhanced web sites, and sophisticated databases, which will satisfy, even the most information hungry consumer. The web will increasingly be recognised as an effective means by which we can all reach more consumers, in more countries, with more information, quicker and cheaper.

The reality is, if we did not have this new option we would be faced with the old method of delivering information, with unsustainable paper, staff, and telephone costs, which would paralyse our ability to undertake many other critical programmes. So in summary the web will take product to more people, in more countries, in a much more targeted fashion, and more cost effectively.

2c. The times they are a’changing: The new business paradigm

In a changing environment there will be major changes in the way we do business. What are they, and what is driving the need for this change?

The ATC of the past put a few ads on air, brought in some journos, ran some telephone help-lines, put on some trade shows and waited next to the fax machine for the monthly arrivals data with the calculator poised. That was typical of the approach to business in the eighties and nineties. This approach is no longer relevant or effective. Our advertising approach is changing. In the years ahead, the advertising approach will be fundamentally different.

Mass marketing campaigns are dead.

The future advertising strategy will be all about targeted marketing and presenting experiences not icons. The experience will drive our brand positioning in the years ahead. The days of NTO’s or other major players taking out large-scale consumer advertising campaigns on its own are also coming to an end. Firstly, very few organisations will be able to afford them on their own. Everyone will need to work more with partners, both from within the travel industry and from outside, because this i s a more cost effective way of doing business.

But secondly, and perhaps more importantly, the strategy of mass marketing is not always the most effective now days. We can more effectively target the consumer with a combination of the new technology, in the web and data casting on TV.

It is no longer about mass advertising it is about targeted communication where we match the product to the consumer segments. The new technology and the growing sophistication of the traveller help us do this. We need to ensure that we as an industry provides the new experiences, which the consumer is demanding, and rely less on the old, and in some cases tired, product offerings. No one can become complacent there is simply too much competition out there.

Trade shows the be-all and end-all?

Trade shows, trade missions and trade education are always going to be a part of the marketing mix for tourism operators. But the range, focus and structure of them will need to change. Trade shows will also need to evolve to a more targeted approach.

The Global Trade Show review undertaken by the ATC over the past 12 months highlighted the need for change in the trade show strategy and is the blueprint for some dramatic and brave new initiatives. The major initiative flowing from the Global Trade Show Review has been the modularisation of ATE – four days for the Western Hemisphere and three days for the Eastern Hemisphere.

These changes are designed to help our industry more effectively target the key buyers, and eliminate waste. Early results indicate the success of these changes. But ATE is just one part of the GTSR. There has also been changes to the ATC approach to TABS, ITB, Dreamtime, JAM, and OZTALK in NZ to name a few. It is all about evolving to ensure better value, and more targeted messages.

3. Barriers to access and growth

The industry needs to be vigilant to ensure that changes to air services, visas, or taxes do not become significant barriers to access and growth.

3a. Airline alliances: A godsend or a necessary evil?

The airline alliances reflect the economic pragmatism of the airlines. They culminate in codeshare services, common service delivery, reduced price competition, and increasing hub strategies that sees the major ports gain international market share at the expense of smaller regional ports.

To some they are a godsend in that they help to maintain services and access to the destinations. To others they are a necessary evil which do not always reflect the preference of consumers. Of course we all need to recognise that the airlines need to make some tough commercial decisions, if they are to have any long-term future. One thing that has to be recognised however by the airlines is that it may be easier for other parts of the tourism industry to come to terms with these strategies if there was more consultation.

None of us can make decisions in isolation without some impact on the other sectors of the industry, which are interrelated.

3b. Will governments appreciate the economic benefit of tourism, and invest accordingly, or will they continue to see tourists merely as a prime opportunity for tax raising?

Tourism is the fastest growing industry in most Asia Pacific economies. It is a real good news story when it comes to export sales, job creation, especially for the youth of our nations, and the development of all regional areas. Add to this the impact it has on investment creation, and cultural exchange, and you realise it is not only about good news but it is more about the economic development, and stability of many nations.

Yet there is a temptation to find new tax imposts on travellers, and the danger is that the combined weight of different taxes finally limits the affordability of travel, with consequent reductions in frequency, duration, or spend. To assume that travel is totally price inelastic is a major mistake, and the rot may set in with reduced numbers and yield before Governments realise it.

4. Sustainable tourism and killing the golden goose

4a. The drive for numbers.

We spoke about the measure of success needing to be based on yield rather than numbers. We are all aware however that yield is a factor of numbers and spend, and there is no simple solution which can help us find the right balance between the two determinants.

Much of the appeal of many destinations comes from the natural wonders, whether it be the Barrier Reef, Uluru (Ayers Rock), or the Taj Mahal. Yet the success of these attractions also threatens them. Failure to preserve them will rob future generations of the experience which is their attraction.

So what is the answer? We need to take stock of the visitor projections and introduce now, visitor quotas to ensure that we can sustain the quality of experience for the future. Otherwise we will all have to resort to visiting Las Vegas, to see the man made imitations. That really would be a sad day.

4b. Delivering expectations

Who was it that said, “Price is long forgotten after the experience is remembered?”. Without the quality experience tourism is not sustainable. The challenge having established an expectation through the myriad of marketing messages we deliver to entice, is to ensure we do not disappoint.

Unfortunately there are so many ways in which we risk disappointment. Poor quality service; itineraries which include excessive shopping; attractions whose natural beauty suffers from visual and environmental pollution; the destruction of indigenous culture through creeping globalisation.

We need to take some tough decisions now to avoid further mistakes of this ilk.

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About The Author:

Having joined the ATC in 1995 after five years as head of the Australian travel agency group Traveland, Bill Calderwood helped transform the ATC from a group of independent regional teams into a committed global team with shared values and business practices. He introduced and directed the new global strategic planning approach, which included a major refocus of Information Technology to maximise both its marketing and business applications.

In the wake of the Asian economic crisis, he initiated the recovery strategy for this critical geographical region, especially Japan, that saw the development of new consumer segments and emerging markets. Hard negotiations with the two major global airline alliances led to a 95% increase in investment by them in ATC marketing campaigns since 1999. Mr Calderwood also initiated the strategic review of ATC operations in IT, Human Resources, global trade shows, and industry relationships. A new g l obal advertising agreement was negotiated, resulting in a substantial reduction in fee structures.

One of his key achievements was the formulation of strategic alliances with state tourism bodies and industry segments, e.g. MICE, which led to a new marketing alliance with the business tourism sector, and a new special purpose company with the states to create an Australian tourism database for international distribution. Mr Calderwood also represented the ATC on various industry bodies including the APEC tourism committee and PATA.