Developing Leader for Change & Innovation in Tourism

28th June 2010

Future Industry Trends, Creative Thinking and Innovation

Tom Baum PhD

University of Strathclyde, Glasgow

INTRODUCTIONS……

Youse (as we say in Glasgow) are …….

……. and me

30 years in tourism as practitioner, academic, researcher and teacher

Currently Professor in the Strathclyde Business School, top-rated in Scotland and top 10 in the UK

On-site experience in over 30 countries Special research and development interest in

HR/ work in tourism and in……..

Greatly influenced by….

Tourism and small island communities

Particular dynamics of tourism in an island context

The appeal of islands Issues of access and supply psychological,

economic, logistical Competitive barriers Cultural distinctiveness Jurisdictional independence

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Key Concepts and Learning in this Module

Understanding future trends and developments in international tourism

Harnessing strategic planning tools as a means of maximising the benefits of this understanding

Planning and implementing creative/ innovative strategies and solutions in order to enhance business competitiveness

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Programme Overview

SESSION 1Tourism – a future scan: utilizing the tools

SESSION 2Finding and applying creative/ innovative solutions

Thinking about the future….. And learning from the past

The Future

The future is inherently unpredictable– The purpose of planning is not to

predict the future but to increase the possibility space for the organisation

The future is co-created– We are neither passive victims of forces

beyond our control nor masters of our destiny

Wind the clock back 10, even 20, years …..What we DID NOT know

List a few ideas/ things/ ways of doing things that have entered our lives over the last 10 years….

IF you are old enough, do the same for 20 years ago…….

Maybe…..

Economy

Conflictand

terror

Customersand

competition

The unexpected

New frontiers

Technology

Resources

Climateand

environment

Tourism:

The future

ANNUAL REPORT

TEN IMPORTANT WORLD TOURISM ISSUES

2011

David L. Edgell Sr., PhD

Professor of Tourism, East Carolina University

Ex-US Department of Commerce responsible for Travel and Tourism

1. Repercussions from the global economic slowdown on tourism

2.  Continuous concern for safety and security with respect to tourism

3.  Significance of sustainability in the development and management of tourism

4.  Effect on tourism from natural and manmade disasters

5.  Growth in the use of electronic and other technologies in tourism

6. Impact on tourism with the introduction of new destinations

7. Importance of fuel costs on tourism

8. Influence of mega events on tourism

9. Using strategic tourism policy and planning tools for communities and nations

10.Recognition of increased tourism activity in the East Asia and Pacific Region

Interpreting these in the Maltese context?

Your main themes: Access routes and options, all year round Fuel price impacting on access Market dependence on UK – need to develop

new markets (Far East) Develop internal, domestic markets Need to develop higher spend niches

Creation of a year round destination – address seasonality

Need to upgrade product and focus on quality

Dealing with change and new challenges Maximizing Impact Monitoring performance Managing Information Utilise social networks to best effect

Climate change impacts – source markets and at home

Rising sea levels Worldwide recession and lower spending

visitors Understanding the tourists of 2015 and 2020

– Gen Y New competing markets – Libya Increasingly demanding customers

Development of ecotourism options – issue of awareness?

Future of traditional distribution models – travel agents/ tour operators – who will we be dealing with?

Growth in demand for marine tourism

What is required is a strategic approach to the identification and analysis of future trends……

The organisation The business ecosystem

The future

Increasing awareness

Scenarios(Imagining the future)

Strategic options(Exploring our future possibilities)

Co-evolution(Discovering our place & relationships)

The Goal:To increase awareness about the organisation, its environment and the future.

The Goal:To increase awareness about the organisation, its environment and the future.

Malta’s tourism Culture

– What are the patterns of thinking & behaviour which characterise tourism in Malta?

– Is change needed?

Competencies– What is tourism in Malta distinctively good at?– Do these give competitive advantage?– What needs to be developed?

Your organisation or area of responsibility Culture

– What are the patterns of thinking & behaviour which characterise your organisation or area of responsibility?

– Is change needed?

Competencies– What is your organisation or area of responsibility

distinctively good at?– Do these give competitive advantage?– What needs to be developed?

The environmentThe environmentThe environmentThe environment

International lawInternational lawInternational lawInternational law

GovernmentGovernmentssGovernmentGovernmentss

Standards bodiesStandards bodiesStandards bodiesStandards bodies

StakeholdersStakeholdersStakeholdersStakeholders

Supplier’s Supplier’s supplierssuppliersSupplier’s Supplier’s supplierssuppliers

Customer’s Customer’s customerscustomers

Customer’s Customer’s customerscustomers

New entrantsNew entrantsNew entrantsNew entrants

CustomersCustomersCustomersCustomersSuppliersSuppliersSuppliersSuppliers

CompetitorsCompetitorsCompetitorsCompetitors

SubstitutesSubstitutesSubstitutesSubstitutes

Malta/ Malta/ OrganisationOrganisation

Malta/ Malta/ OrganisationOrganisation

An Ecosystem for Malta or your organisation

Mapping the ecosystem PEST (Political, Economic, Socio-cultural. Technological)

plus E - Environmental

Customers Markets Competitors – who are your main

competitors? Business or Destination analysis?

Competition or coopetition? Porter’s Five Forces

Strategic options“Our future possibilities”

Key strategic issues– What are the real areas which affect our business?– (E.g. service, channel, market)

Formulate key decision areas– Where do decisions need to be made?

Create clusters of options– Discover coherent strategies– Check against distinctive competencies

Scenario PLANNING“Imagining the future”

Identify key driving forces Choose most uncertain/most

significant Develop alternatives ‘Flesh out’ with narrative

Planning is not about…

Planning is not about predicting the future Planning is not about writing a detailed

road map into the future Planning is not about a few people writing

a vision statement & then getting ‘buy-in’ from everyone else

EU Project

Comprehensive sectoral analysis of

emerging competencies and economic

activities in the European Union

Potential of drivers of change New lifestyles and consumer trends (eg. concerns

about health, climate, environment, convenience etc.)

Food prices Economic development and globalisation ICT and digitalisation Strengthened legislation on food safety Food technologies: Preparation, cooling and storing The ageing population Climate changes

Classification of drivers

CERTAIN UNCERTAIN

IMPORTANT

LESS IMPORTANT

• Economic development and globalisation

• New lifestyles and consumer trends (eg. concerns about health and environment, convenience etc.)

• Food prices• Strengthened legislation on food safety

• Food technologies: Preparation, cooling and storing

• The ageing population

• ICT and digitalisation

• Climate changes (actual climate changes will not influence the sector much until 2020. In the long run climate changes might result in dramatic changes in the sector)

Main drivers of change Main/most important drivers of change

– The ageing population of Europe

– New lifestyles and consumer demands

– Increased use of ICT and the Internet

– General economic development and Internationalisation

Driver: an ageing population

Consumers will be older in the future and older tourists require more specialised services, among others due to disabilities.

An ageing population means an ageing workforce. This is important in the sector, since its workforce today consists mostly of young workers.

When it comes to catering and canteens the ageing population will mean a potential growth in their integrated services, which increasingly include elderly care.

Driver: new lifestyles Customers are becoming more and more

enlightened and demanding when it comes to health, climate, environment and politics

For restaurants, cafés and bars healthy menus and traceability of foodstuff – as an example - becomes more important and require staff to be knowledgeable in that aspect

For hotels it means giving its customers a full-time experience including for example spas and professional health-guiding

Within catering, snacking increases while simultaneously diminishing the demand for

traditional ‘heavy’ lunches

Driver: Increased use of ICT

For the customers it means greater possibilities in finding Hotels and restaurants and catering establishments online, and the ability to be pickier.

For the companies it means greater possibilities to market themselves and to receive customers from areas far beyond the neighbourhood.

In the coming years, supply chains and administration will increasingly be handled online.

The increased use of ICT and the internet has had, and still has, a great impact on the

Hotels and restaurants sector.

Driver: general economic development

Economic development

When people have more money they tend to spend more on travelling and dining out. Also, their demands for quality and uniqueness rise.

An economic recession, on the other hand, will result in decreased demand and a higher focus on price and value for money.

Internationalisation

Internationalisation means increased opportunities for attracting new customers from outside Europe but also growing competition.

Internationalisation means a growing dominance of big cooperations and international brands and chains in the sector.

The general economic situation is of utmost importance for the Hotels and restaurants sector, which is often highly dependent on the tourism

economy.

SWOT analysisStrengths

Non-substitutable: People will never stop travel or eat. An open sector: The sector creates job opportunities for young people and for women. Also, people with limited education can get the opportunity to a career. It is a global industry with highly international markets Due to its labour intensive and customer close nature it cannot be exported or outsourced It is a flexible industry which relatively easy handles changes.

Opportunities

The ageing population could be a boost for the catering sub-sector. Changes in the gender structures, more women entering the labour market means less time to cook at home. The trend of higher demands on quality could add value to the sector. Concerns for climate and health are also trends potentially adding value to products and services. Increased globalisation leading to more international travellers and tourists especially from emerging economies. Being increasingly on the move we need more snacking and take away

Weaknesses

High dependency on tourists, which are highly sensitive to political events. High seasonal dependency for most parts of the sector. Tend to be reactive instead of proactive Low productivity: Low profit margins and low added value Low levels of skills and educations among employees Reluctance to invest in its employees e.g. training, education, working conditions etc Perceived to be a low status employment sector Low barrier sector- many star ups and failures pressing profit margins (50-60% of all start ups ends as failures after 3 years)

Threats

The black market is a threat to working conditions, and to the sector’s competitiveness when it comes to recruiting skilled staff. The lack of sufficiently skilled personnel jeopardises the quality of the sector. With the climate threat, long distance travelling might decrease. An ageing population makes it even harder to recruit labour The educational system is ageing and might risk the quality of the sector.There is a trend to invest less in food for employees. Terrorism and political unrest

Questions for discussions General comments: Do you agree on the drivers

identified as being the main drivers of change?

What is the major threat as well as the major opportunity for the main sub-sectors of tourism in Malta (hotels, travel services, attractions) in the coming years?

What is the major threat as well as the major opportunity for YOUR BUSINESS in the coming years?

Crossing drivers of change

Puritanism

Consumers will develop a more

puritan and spiritual approach to

consumption. The personal

responsibility concerning for

example health, environment, climate and fair trade is taken very serious. Saving

before spending becomes more

important.

Economic recession and nationalism

A recession will influence the society for the next 10-12 years. It will result in

increased nationalism and regionalism where regions and nations turn their

back to global cooperation concentrating on their own lack of resources.

Economic growth and globalisation

The ongoing economic crisis is just a minor and short economic slow down.

With such a positive economic development increased globalisation

will follow.Escapism

Consumption is typically driven by the ‘faster, better, bigger’

ideology. Climate problems for example

are not seen as a personal responsibility

´. The escapists are concerned about health and the

fairness of the world but tend to escape via

wellness and traditional luxury.

The four scenarios

Economic recession and nationalism

Continued economic growth and globalisation

Scenario 1

The Marco Polo

Scenario

Scenario 2

The Sunny Beach

Scenario

Puritanism

Scenario 3

The Body Shop

Scenario

Scenario 4

The Asceticism Scenario

Escapism

Characteristics of the four

Economic recession and nationalism

Continued economic growth and globalisation

Escapism Puritanism

The Marco Polo Scenario

• High individualisation • Some specialisation possibilities • Polarisation of the market• High growth in inbound tourism• Wellness and traditional luxury

The Body Shop Scenario

• High individualisation• Many specialisation possibilities • Segmentation of the market• Healthy lifestyle and holidays• Goodness: volunteering, fair trade, organic food, etc.

The Sunny Beach Scenario

• Mass produce, economies of scale • Highly price driven market • Conformity• Comfort – but no luxury• Regionalisation of travelling

The Ascetism Scenario

• Basic living – simple holidaying• ‘Close-to-home’ tourism• Experiences: healthy, sustainable and cheap• Food: vegetarian, organic, local produce, simple

The Marco Polo Scenario

The Body Shop Scenario

The Sunny Beach Scenario

The Ascetism Scenario

The Marco Polo Scenario The Body Shop ScenarioThe Sunny Beach Scenario The Ascetism Scenario

Malta’s future?

What needs to be done?

How would you and your business cope with each of these?

Strategic tools to enable us to more effective analyse and respond to external change in hospitality and tourism – here we’ve used

A. PEST

B. SWOT

What is PEST Analysis?

This analysis is essential for an organization before beginning its marketing process

Consists of internal environment and external environment

SUMMARY

Political/ Legal Economic Socio-cultural

Technological

Environmental regulations and

protection

Economic growth Income distribution Government research spending

Tax policies Interest rates & monetary policies

Demographics, Population growth

rates, Age distribution

Industry focus on technological effort

International trade regulations and

restrictions

Government spending

Labor / social mobility

New inventions and development

Contract enforcement lawConsumer protection

Unemployment policy Lifestyle changes Rate of technology transfer

Employment laws Taxation Work/career and leisure attitudes

Entrepreneurial spirit

Life cycle and speed of

technological obsolescence

Government organization / attitude

Exchange rates Education Energy use and costs

Competition regulation Inflation rates Fashion, hypes (Changes in) Information Technology

Political Stability Stage of the business cycle

Health consciousness & welfare, feelings on

safety

(Changes in) Internet

Safety regulations Consumer confidence Living conditions (Changes in) Mobile Technology

Role of PEST

Helps assess the market including competitors from the stand point of a particular business or from a destination perspective.

PEST is relevant for any type of business or

destination whether large, small & medium.

S.W.O.T. Analysis

Strengths

Opportunities

Weakness

Threats

Factors Internal to Organization

Factors External to Organization

SWOT

A SWOT analysis generates information that is helpful in matching an organization or group’s goals, programs, and capacities to the social environment in which it operates.

Factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T).

It is an instrument within strategic planning. When combined with dialogue it is a participatory

process

Simple Rules for SWOT Analysis

Be realistic about the strengths and weaknesses of your organization or group.

Distinguish between where your organization is today, and where it could be in the future

Be specific: Avoid gray areas. Always analyze in relation to your core mission. Keep your SWOT short and simple. Avoid

complexity and over analysis Empower SWOT with a logical conceptual

framework.

Future of Travel – Dr Patrick Dixon

http://www.youtube.com/watch?v=L1C1chw1I4U

Applying Dixon to Malta

To the destination?

To your business?

Thank You!

Discussion

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