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Socio-economic shifts demand dynamic responses from travel industry

by Mariette du Toit-Helmbold on 07.08.2013

Over the past 60 years, the tourism sector has grown to become a pillar of the global economy, driven by political co-operation, social change and far-reaching advances in technology.

More recently we’ve seen how global growth has lost momentum across the developing world, and analysts believe that the global economy (and therefore the tourism industry) will never reach the same growth levels it experienced during 2007/8.

The USA, for instance, will experience gross domestic product growth of 2% to 2.5% for the foreseeable future, compared to growth of more than 3% in the past. And even China, the global economic power that it is, has slowed. Instead of GDP in excess of 12%, the metric is now below 8%.

The monumental shift in the global economy is having a dramatic impact on the travel industry. Some of the joy has been taken out of living and travel because of political, environmental, social and financial challenges. Despite all of this travel remains a priority, a desperately needed respite, and people are seeking to “put the joy back into living and travelling”.

The quest for travel is no longer centred on mindless consumption; most consumers, especially from South Africa’s established tourism markets, now want a simple, sustainable, and self-sufficient life. People hunger for community and yearn to get involved with causes larger than themselves. They want to engage in more meaningful conversations and relationships. They want to get off the bus, linger and get lost in the hearts and homes of the places they visit. 

There is an increased need for personalisation, with travellers demanding centre place in the planning and buying of their next trip. Destinations and companies that provide flexibility, personalised information at the touch of a button and people-centred authentic experiences are the ones that will stand out from the crowd in the next two years. A surge in last-minute, impulse-driven bookings, shorter stays and more frequent trips closer to home demand that the industry becomes more flexible – reviewing their booking and cancellation policies, and investing in digital marketing and communication solutions.

IPK International (a leading global consulting group responsible for the publication of World Travel Monitor®, the world’s largest international tourism market study with more than 500 000 participants) anticipates a 3% worldwide growth in tourism for 2013. They also predict further division in the tourism world, with 7% growth in tourism demand in Asia’s emerging markets, moderate growth of 2% for Europe and 0% growth for North America. Social media will gain even more relevance for tourism, with 14% of outbound European travellers using it as a source of travel information.

Mobile saw a dramatic increase during 2012, with 75% of the world's population now having access to a mobile phone. Sixteen million Americans booked trips via mobile in 2012, a 33% increase on the previous year. Adults now spend more media time on mobile than newspapers and magazines combined.

With the rise of new mega-cities in developing countries and urban tourism accounting for 80% of the world’s travellers, there was strong growth in city trips, increasing with 13% in 2012. Non-Euro countries are booming with Russia leading the pack, large source markets are stagnating, with France showing no growth and Germany and the UK only 1% growth. Crisis countries like Spain, Portugal and Greece are weakening further, with negative growth.

Continuous innovation has to become part of the fundamental DNA of the destinations and tourism companies that will ultimately survive. Companies and destinations constantly have to rethink their strategies, keep innovating and take some risks in order to gain ground on their competition.

Perhaps the biggest hurdle in the global macro-economic recovery is consumer confidence. Violence and political unrest dominating the headlines in popular destinations like Egypt, Greece and South Africa has led to travellers staying away in droves. Travellers from around the world are much less likely to travel if they lack confidence in the social, political and economic foundations of the destinations they want to visit. This is significant for South Africa, at a time when the country has seen a burst of negative international publicity around violence and labour unrest. In an industry where perceptions are determining factors for decision-making to travel or not, it is important to understand and counter-address economic, political and social stability and its effect on inbound tourism.

I believe that 2013 and 2014 should be years in which tourism (and its affiliate public and private partners) bunkers down to put some serious strategy into action – a long-term vision for the decade and beyond. The support of our national, provincial and local governments is pivotal for the success of tourism. Tourism should not only be concerned with attracting visitors to our shores, but more importantly be recognised and used effectively as a vehicle to improve the lives of the people who live here.

Tourism will only weather the storms of global financial, political and environmental uncertainty, if it is to appeal to a number of different markets through well-packaged, quality-driven tourism propositions in several source markets, new markets and within our own domestic market.

As a destination, South Africa has to be future-fit to ensure our relevance and effectiveness in a world that has changed forever. We need to build on our reputation as a destination that is responsible, sustainable and offers non-generic, authentic, people-centred experiences.

Importantly, we have to position tourism as a major economic engine and a viable career for inspiring young leaders – the kind of leaders we need to guide us through tumultuous change to a brighter and more sustainable future.

After all, nostalgia is the worst business model and we should never waste the opportunity that comes with a crisis.