ICAN 2015 ANTALYA, TURKEY 20 Oct 2015 NEW UNDERSTANDINGS AND APPROACHES IN AIRLINE AND TOURISM BUSINESS MÁRCIO FAVILLA UNWTO Executive Director
Tourism Towards 2030
Continued growth of demand
million 1,800 1,600 1,400 Actual Trend vs. Tourism Towards 2030 Int l arrivals reach 1.4 bn in 2020 and 1.8 bn in 2030 International Tourist Arrivals Trend 1995-2010 Tourism Towards 2030 projection Actual 1995-2014* 1.4 bn 1.8 bn 1,200 1,000 1,133 mn 800 600 400 527 mn 200 0 1995 2000 2005 2010 2015 2020 2025 2030 Source: World Tourism Organization (UNWTO)
Continued growth of demand From advanced markets established markets still far from saturated, however growth potential is comparatively moderate growth both from: increase of participation, but tourism is already available for broad part of society increased frequency: more frequent but shorter stays From emerging markets still huge potential for growth to exploit from current travellers but above all from new emerging middle classes sizable populations currently still only take part in international tourism very limitedly economic growth in many emerging economies resulting in increasing disposable incomes a good share of this increase will be spent on tourism (domestic as well as international)
Growth in international tourism will continue but at a more moderate pace International tourism, World International Tourist Arrivals, % change over previous year 12 10 8 6 4 2 3 1 9 4 3 9 7 6 7 9 3 4 4 6 5 3 4 8 3 10 6 6 7 2 7 Average growth 2010-2030 3.3% a year 2010-2020 3.8% a year 2020-2030 2.9% a year 0 0 0 0 0-2 -2-4 -4-6 1980/'79 1985/'84 1990/'89 1995/'94 2000/'99 2005/'04 2010/'09 2015/'14 2020/'19 2025/'24 2030/'29 source: World Tourism Organization (UNWTO)
International tourist arrivals to increase by 43 million a year on average International tourism, World International Tourist Arrivals, absolute change over previous year, million 80 70 Average increase 2010-2030 43 million a year 60 49 45 45 56 58 2010-2020 42 mn a year 2020-2030 45 mn a year 40 20 0 8 0 0 4 25 13 10 30 27 22 28-2 39 15 21 20 33 26 16 22-1 20 20-20 -11-40 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030-35 source: World Tourism Organization (UNWTO)
Asia and the Pacific, the Middle East Africa 3% 1980 and Africa to increase their shares Middle East Americas 3% 23% Asia and the Pacific 8% Americas 16% 2010 Middle East 6% Asia and the Pacific 22% Europe 63% Africa 5% Americas 14% 2030 Asia and the Pacific 30% Middle East 8% Europe 51% Africa 7% Europe 41%
Asia and the Pacific to be the outbound region to grow the most Outbound tourism by region of origin International Tourist Arrivals generated, million 900 800 1980 1995 2010 2030 832 700 600 500 541 509 400 300 200 100 0 6 308 265 204 160 169 110 90 71 88 81 12 30 25 37 6 10 Africa Americas Asia and the Pacific Europe Middle East
Connectivity
Connectivity Transport and tourism are closely interconnected Infrastructure development Technological development and improvement Air transport liberalisation New mega hubs Low-cost airlines Interconnectivity of means High-speed rail Facilitation: entry formalities, visas
Courtesy of Boeing
weeks Cost of transport has remarkedly decreased 125 130 Wages vs airfares time taken to earn the lowest Sydney-London return airfare 100 75 50 25 21 5 3.5 2.7 1.9 1.7 0 1945 1965 1985 1995 2000 2005 2009 source: Qantas, page 40 of www.qantas.com.au/infodetail/about/factfiles.pdf
Visa facilitation: UNWTO jointly with partners has worked closely with stakeholders to move agenda forward Various reports to analyse the issue and make policy recommendations For more information and download of reports, see http://rcm.unwto.org/en/content/facilitation-tourist-travel
Diversification
Diversification Tourism development, like society and economy overall, is characterised by ever increasing diversification and sophistication of destinations of source markets of products of segments tap emerging markets China boom shift from products and service to experience need for upgrade and regeneration of existing offer develop products, markets, segments that complement current ones also intensified competition
Emerging economies to surpass advanced destinations by 2020 Inbound tourism, advanced and emerging economies International Tourist Arrivals, million 1,250 1,000 emerging economies 750 500 advanced economies 250 0 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 source: World Tourism Organization (UNWTO)
Diversification Rank 1950 Share 1970 Share 1990 Share 2014 Share 1 United States Italy France France 2 Canada Canada United States United States 3 Italy 71% France 43% Spain 39% Spain 29% 4 France Spain Italy China 5 Switzerland United States Austria Italy 6 Ireland Austria Mexico Turkey 7 Austria Germany Germany Germany 8 Spain 17% Switzerland 22% United Kingdom 18% United Kingdom 15% 9 Germany Yugoslavia Canada Russian Federation 10 United Kingdom United Kingdom China Mexico 11 Norway Hungary Greece Hong Kong (China) 12 Argentina Czechoslovakia Portugal Malaysia 13 Mexico 9% Belgium 10% Switzerland 9% Austria 11% 14 Netherlands Bulgaria Yugoslav SFR Thailand 15 Denmark Romania Malaysia Greece Others 3% Others 25% Others 34% Others 45% Total 25 million 166 million 436 million 1133 million Source: World Tourism Organization (WTO) (Data as collected by UNWTO August 2015)
China became number 1 outbound market in 2012 and strong growth continues World and regions: Outbound Tourism International Tourism Expenditure (US$ billion) 180 160 China 140 120 United States 100 Germany 80 60 40 20 United Kingdom Russian Federation France Canada Italy Australia Brazil 0 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
High potential outbound markets International Tourism Expenditure: increase 2007-2014* (US$ billion) 140 130 120 110 100 90 80 70 60 50 135 International Tourism Expenditure: between 2007 and 2014 total up by 293 billion (US$ 362 bn), from 644 bn (US$ 883 bn) in 2007 to 937 bn (US$ 1,245 bn) in 2014 (current terms) in spite of 2008/09 crisis Average growth rate in real terms: +2.7% a year 40 30 20 10-10 -20 China Russian Federation United States 30.0 22.5 17.4 10.5 9.9 9.5 9.1 9.0 7.4 7.1 6.9 6.9 6.7 6.5 6.4 6.4 6.1 6.0 4.9 4.7 4.0 2.8 2.8 2.0 1.8 1.8 1.5 1.5 1.5 1.4 1.4 1.3 1.3 1.2 1.1 1.1 1.0 Brazil Singapore Australia France Germany Canada Qatar Hong Kong (China) Norway Philippines Malaysia Switzerland Untd Arab Emirates India Belgium Sweden Taiwan (pr. of China) Kuwait Saudi Arabia Colombia Indonesia Netherlands Thailand Ukraine Korea, Republic of Denmark Czech Rep Argentina Turkey Finland Lebanon Mexico Italy Poland New Zealand Japan -7.2-13.8 United Kingdom 0 Source: World Tourism Organization (UNWTO)
Disruption
Disruption Business is continuously evolving thanks to: New ideas R+D (C+I) Innovation Entrepreneurship (low capital and technical barriers) Economic and social changes Technological changes Changing customers behaviours Not only technology but also business models, design, service, etc.
Resulting in: Disruption Offering new products Offering better service Enhancing experience Use of economies of scale Decreasing costs Increase labour productivity / value added Sources of market growth Inclusiveness, open up for new customers Enables more frequent trip taking
Disruption Market concentration Tourism sector still strongly characterised by fragmentation Lower concentration of its industries as compared to others (e.g. automobiles, oil, computers, micro processors, beverages, etc.) From highest to lowest: GDSs, online booking engines, cruise lines, airlines, car rentals, TO/travel agencies, hotels, restaurants, attractions Traditionally very few big worldwide players, but some new ones have appeared, e.g. Expedia, Booking, TripAdvisor, etc. Within industries also strong diversity in size and model, e.g. in hotels a few large companies owning properties, or with management contracts, franchises, and a large number of medium and small-sized companies Asymmetry in power, e.g. OTAs versus hoteliers Change of balance of power between Operators Consumers Intermediaries
Disruption Some (recent) game changers Airline alliances (One World, Star Alliance, Sky Team) Low-cost carriers (RyanAir, AirAsia, easyjet, Gol, ) Online direct booking: OTA Online Travel Agencies Non-traditional operators Mega hubs in the Middle East (UAE, Qatar), Turkey All-inclusive resorts Cruise lines Vertical integration (TO, TA, airline, resort, attraction, ) Internet and social media
Disruption A connected world, a connected customer Internet, social media, mobile technology (apps, GPS, etc.) single biggest change in past decades Sharing economy: internet and social media to share opinions, reviews, etc. Increase of choice and transparency for customers oops my clients talk back valuable feedback, need to be responsive pecking order: if you do things right, you can charge a better price it gets harder if you want to sell a lousy product to an ignorant customer reputation management / positioning / branding / loyalty building even more important Platform economy: internet as intermediary B2B, B2C but also C2C Increasingly platform use for transactions between private persons, offering for instance goods and services in auctions (ebay); accommodation (airbnb); transport services (Uber, Lyft and blablacar); dining at home (eatwith and eatfeastly).
Adaptation Disruption Issue not new, but internet makes transactions far easier In most cases need to recognise it is an economic transaction Might not fit into some existing rules, but necessarily illegal (??) Different traditions and regulation, for instance private rental long established practice in many coastal and mountain destinations, e.g. zimmer frei Maintain level playing field Take inefficiencies out Review existing rules and adjust if needed But do not overdo it
Sustainable Development Goals 8.9 by 2030 devise and implement policies to promote sustainable tourism which creates jobs, promotes local culture and products 12.b develop and implement tools to monitor sustainable development impacts for sustainable tourism which creates jobs, promotes local culture and products 14.7 by 2030 increase the economic benefits to SIDS and LDCs from the sustainable use of marine resources, including through sustainable management of fisheries, aquaculture and tourism
MEASURE TO MANAGE UNWTO Network of Observatories (INSTO) http://sdt.unwto.org/content/international-network-sustainable-tourismobservatories-insto
MEASURE MANAGE IMPROVE Measurement Analysis Policy/Strategy Formulation Implementation and Monitoring Evaluation
Measuring for impact at destinations: Exploring existing and new approaches Environmental Economic Socio-cultural UNWTO Network of Observatories (INSTO)
Round-up
Round-up in one page Tourism Towards 2030 shows that there is still a great potential for further expansion in coming decades Emerging as well as established destinations can benefit from this trend and opportunities, provided they have the adequate conditions and policies with regard to business environment, infrastructure, facilitation, marketing and human resources Along with opportunities, challenges also arise in maximising social and economic benefits and minimising negative impacts Long-term tourism growth pattern: more moderate, sustainable and inclusive
Thank you very much for your attention! Márcio Favilla World Tourism Organization (UNWTO) www.unwto.org