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Global Trends Report 2009

3419_WTM_GLOBAL_TRENDS_REPORT_v2_WTM_GLOBAL_REPORTS 28/10/2009 10:10

Foreword

Euromonitor International is delighted to partner again with World Travel Market, the premier global event for the travel industry, which is celebrating its 30th year.

This past year has shown us how quickly things change as the world still reels from the global financial crisis that brought the travel industry to its knees. Despite these difficulties, the 2009 Euromonitor International and WTM Global Trends Report aims to spot opportunities, innovation and proactive measures to help reverse the slump in demand and to kick-start the recovery. In North America the recession has created a new consumer group, the “funemployed” who are cash poor, time rich and seek to make the most of rock bottom prices. Innovation is also alive and well in the UK with a hip, urban concept - pop-up hotels - providing operators greater cost efficiencies which help the regeneration of deprived areas. In Asia, golf tourism proves that the “lipstick effect” is prevalent in the travel industry, with Asians unwilling to forgo their golfing in times of recession, even creating a golf fashion craze.

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Around the World in 4 Days


Female-only accommodation is also up and coming in the Middle East, a culturally sensitive concept that has international appeal. Rebranding is the name of the game in Latin America, aiming to further its luxury credentials while Africa benefits from the “Obama Effect” boosting roots tourism. In Europe, the democratisation of luxury is on the cards, with leading operators on the cusp of rolling out concierge travel services to the masses. In the current bleak climate, such bold steps are critical to maintain a competitive edge in the rebound.

Caroline Bremner Global Travel and Tourism Manager Euromonitor International

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Through the looking glass The global financial crisis is taking its toll on the travel industry - falling expenditure, lack of credit and rising unemployment caused a slump in confidence and demand. With forecasts far worse than anticipated, global arrivals are expected to decline by -8%, hotels -16% and air sales -14%, going from boom to bust. Recognising tourism as a revenue and employment generator, governments implemented tourism stimulus packages to varying degrees of success. APD hikes in the UK stand out as a drag on future recovery, whereas other countries waived visas, increased connectivity, reduced VAT and offered tax incentives to name but a few. Companies took drastic measures to gain cost efficiencies from cutting capacity, staff redundancies, restructuring, investment in online, M&As to strategic alliances. Faced with volatile oil prices and fuel hedging costs, airlines fell massively into the red. IATA forecasts losses to reach US$11 billion in 2009. Consumers responded by shunning luxury and trading down. The lipstick effect – clinging to life’s small luxuries - was apparent with spas and golf tourism continuing to be popular. A new era of austerity has emerged in the face of unemployment and mass public debt. 2009 marked a revival in some traditional concepts, eg glamping, staycations and also new product development such as “nano breaks”. The threat of swine flu cast a grim shadow. In Mexico, occupancy rates halved during the peak of the pandemic. Hotels offered discounts ranging from 10% to 60% and “flu-free” guarantees.

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Fears in business travel All aspects of the travel and tourism industry suffered with business travel revenues down globally -40% in the 12 months to July 2009 compared to the previous 12 months, according to IATA. British Airways talked of a “fight for survival”. Airlines continued to downsize, consolidate and pursue strategic alliances. Airlines such as JAL even turned to government for a bailout. Low cost carriers suffered but only fell by -2% compared to -16% for scheduled in value sales. Ryanair carried a record 63 million passengers, closing hubs and buying distressed aircraft. The expected demise of Slovakian LCC, SkyEurope, demonstrates inefficiencies even in the LCC business model and the difficulty in securing credit for small to medium companies. Hotels are a lag industry and trail economic recovery. Hotels held off discounting as long as possible, however price discounting was inevitable as occupancy rates continued to decline. STR Global shows revPAR declines varied from -19% for the Americas, -16% for Africa/Middle East to Asia and Europe around -29% for year to date August 2009. Madrid witnessed revPAR declines of up to -40%. Tourism in Spain suffered falling visitor numbers and weak domestic demand with unemployment close to 20%. Global chains took the rare step of selective discounting, such as Marriott’s Global Rate Break. Hotels with a diversified brand portfolio including budget brands helped mitigate trading down by consumers and businesses, but overall H1 2009 results were poor.

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Creativity in adversity Economic growth has turned positive with signs of a V-shaped recovery. A full tourism recovery to pre-crisis levels is not expected until 2013, with emerging economies set to lead the world out of recession. Demand will be inhibited by low consumer confidence, rising job losses and burgeoning public debt, ultimately leading to higher taxes. Consumers are expected to embrace thrift for the long term and operators need to adapt. The 2009 Global Trends Report highlights new consumer groups, changing expectations, new concepts and reviving old formats. Innovation in pop-up hotels and rolling out luxury to the masses reveals the need to rip up the rule book. With the UN Climate Change Conference in December, the onus is on the travel industry to put sustainability at its heart to survive. Airlines are now engaged, marking a step in the right direction. Being ahead of the curve on carbon emissions is a smart way to engage with the new, rational consumer.

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2008 2009 2010 2011 2012

Global Travel and Tourism: % Growth Indicators 2008-2012

GDP Arrivals Hotels Air

Source: IMF, Euromonitor International Note: Arrivals in volume, rest in value

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North America: Funemployment on the rise

UK: Pop-up hotels

Europe: Concierge travel services

Middle East: Female-only accommodation

Africa: The Obama effect

Asia: Teeing off with golf tourism

Latin America: Re-branding as a luxury destination

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North America – Funemployment on the Rise As the Great Recession pushes unemployment rates to historic highs, jobless embrace their situation by becoming “funemployed” - those who are unemployed but use their free time to pursue their interests. Once cash rich and time poor, the funemployed are cash poor and time rich, making travelling an enticing option. Tempted by unprecedented travel deals, this segment has a ‘now or never’ attitude towards travelling.

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Signs of optimism amidst bleakness Within a year, the unemployment rate almost doubled in the US to reach 9% - much higher when counting those who stopped looking for work or taken part-time jobs. Long unemployment is offset by optimists embracing new-found free time. Most have severance packages to cushion the blow. More than half of those unemployed in North America are under the age of 35, mainly single, without children or a mortgage. Some companies enlarge the funemployed pool with unpaid/paid sabbaticals. In Canada, Deloitte launched international development fellowships in January 2009. Participants receive a stipend and are guaranteed a job upon return. US law firms offer partial salaries for those who take time off and stipends for newly-hired graduates to delay their start date. Source: Euromonitor International

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Signs of optimism amidst bleakness

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a job upon return. Participants receive a stipend and are guaranteed development fellowships in January 2009. In Canada, Deloitte launched international with unpaid/paid sabbaticals. Some companies enlarge the funemployed pool without children or a mortgage.

Participants receive a stipend and are guaranteed development fellowships in January 2009. In Canada, Deloitte launched international with unpaid/paid sabbaticals. Some companies enlarge the funemployed pool without children or a mortgage.

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Hiatus holidays with prices not to be missed The dramatic drop in demand for travel has led to widespread discounting. Prices in 2009 are on average 20-30% lower than in 2008. Special promotions often provide even more significant discounts such as Marriott’s Global Rack Rate Break and Starwood’s 50% discount. Some industry players are specifically targeting the funemployed to tempt them into hiatus holidays despite their uncertain financial future, provided they have proof of job loss. Intrepid Travel offers the “Laid Off? Take Off!” promotion giving the unemployed a 15% discount on holiday packages up to 31 December 2009. Customers find experiential travel packages less expensive than staying at home due to the lower costs of living in destinations such as South Africa and Egypt. A collection of luxury villas, Recreo Costa Rica promoted its “Layoff Layback” plan, offering a free night if booking a four-night stay. In the US, Squaw Valley ski resort reduced ski lift tickets 62% to furloughed California state employees providing pay stub/state ID.

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Obama inspires a call to service Grim employment prospects drove people to consider:

International volunteer opportunities Contributions to local communities Improving their job prospects upon return Experience a new culture

President Obama promoted volunteering during his campaign and called on Americans to give back to their communities. The President and the First Lady created “United We Serve” with the Corporation for National and Community Service to encourage volunteerism and create new voluntary bodies. During September 2008, the Peace Corps received 16% more applications than in 2007 and saw a 44% increase in applications from 50+ year olds. The majority of organisations require volunteers to cover costs. Some organisations including government programme, Volunteers for Prosperity, help volunteers to find grants to offset costs.

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“The “Laid Off? Take Off!” promotion is bittersweet, but people are able to travel to gain perspective, experience different cultures and focus on their job search upon their return.”

Tiffany Richards, President, Intrepid Travel USA

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Opportunities for insight into future trends Bartering with the funemployed allows small travel companies to improve their services by hosting laid off travellers. Low budget destinations like Colombia, Peru and Ecuador will benefit. Marketing to the funemployed in the offseason may be a means of increasing occupancy rates all year round. They also serve as a target for extended trips, world cruises and long haul airline tickets. The funemployed provide an opportunity for the travel industry to expand its own talent pool. As the funemployed rejoin the workforce, companies will need to offer sabbaticals, not only to promote loyalty, but to also give employees the opportunity to develop their skills. Career breaks will become more commonplace as workers take retirement early, offering travel players the chance to partner up with employers to offer tailor-made solutions. Laura Rich of Recessionwire.com sees the recession as resetting values as people re-evaluate spending habits and careers. The funemployed offer the travel industry the opportunity to understand these consumer shifts to prepare for the future impact of high unemployment rates.

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Source: Euromonitor International

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Source: Euromonitor International Source: Euromonitor International

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Future outlook – re-evaluation of priorities Despite signs of stabilisation, North America expects to see declines in real GDP growth of 2.6% in 2009. Unemployment is expected to peak in 2010 before slowly declining. However, it is expected to remain at historic levels in the next five years. This will keep the average duration of unemployment high as well as cause the pool of funemployed to grow in the short term. After 2010, it is expected the employed population will return to growth and reach its 2008 level in 2013. Demand for travel will rebound around that time. Recessionwire states long stints of unemployment will drain resources and lead to fewer travelling. Businesses and consumers are to remain price sensitive and cautious about their travel choices with conscientious consumerism prevailing. Budget players in hostels, hotels and campsites were upgrading their facilities and design prior to the economic crisis as a means to offer affordable luxury to ever-demanding consumers. It is likely that renovated budget players will benefit in the long term as both employed and unemployed travellers stick to their cost-conscious travel habits after the economic recovery.

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UK: Pop-up hotels






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UK – Pop-up hotels The global economic crisis has badly affected the UK economy, forecast to contract by 4% in 2009. Credit crunch decimated consumer confidence and expenditure is falling, marking a shift towards more competitively-priced hotels. With foreclosures up and the housing market down, pop-up hotels offer affordable and unique experiences.

Pop-up design provide innovative and mobile structures, flexible room design and environment-friendly attributes. A temporary structure enhances dilapidated urban areas, boosting tourism growth, sustainability and competitiveness. Temporary hotels are pre-built units, incorporated into a steel frame which can be easily demolished. Construction time is reduced by almost 50% compared to traditional methods as well as minimising noise, waste and hassle. Pop-up hotels are also portable transforming them into ideal choice for festivals, sports and outdoor events. They can also be reused as separate units to house families in impoverished areas.

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Pop-up craze is popular Other industries lead the pop-up charge with gusto, taking root in unconventional places - warehouses, empty rooms and rundown houses. Examples include retailing (http://www.guerrilla-store.com), restaurants (www.themoveablerestaurant.squarespace.com), cinema (www.cinema41.golfstromen.nl) and art (www.picturesonwalls.com). Pop-up restaurants in private homes is growing strong, with celebrity chefs that welcome guests into their homes at a price, for example, Jo Wood. Chefs, Anton Mosimann, Stevie Parle, launched pop-up restaurants in London. The concept is expected to be popular with generation Y, baby boomers, “transumers”, younger consumer groups and environmentalists. -5

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Forecast Domestic Tourism in the UK 2008-2013

domestic business domestic leisure business % growth leisure % growth


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Pop-up pioneers M-house and M-hotel (www.m-hotel.org) is the brainchild of M-hotel Creative Director, Tim Pyne. The hotel structure consists of individual units included in a steel construction building, tailored towards corporate customers for rent up to 3 months. The first unit to be based in Hoxton, London is due to open in late 2009.

Travelodge (www.travelodge.co.uk) opened its first modular hotel in Uxbridge in August 2008. Built from steel containers constructed and fitted in China, Travelodge plans to build nearly 40 hotels per year by 2020 - half are expected to be modular. Standard pricing will apply at £29 or less per room.

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Pop-up goes international Elquidomos (www.elquidomos.cl) (Chile) is a pop-up hotel comprising geodesic domes specialising in astronomy, at an average rate of £60 per day. Each dome is based on a platform which has a bathroom, small living room and a raised bed area. Such pop-up concepts in long-haul destinations will benefit from the resurgence in camping amongst price-sensitive UK travellers.

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“Over time more modular solutions will be coming to the market” Paul Harvey, Managing Director, International & Development, Travelodge

“The M-hotel is intended to use land on a superficially temporary basis, because one of the problems we always have particularly in a crowded country as the UK is that people sit on land waiting for the land value to go up. The M-hotel concept can explore the opportunities to construct hotels in underdeveloped areas. The design permits for those structures to be easily dismantled, moved and relocated around the world”.

Tim Pyne, Creative Director of M-house and M-hotel

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Opportunities - from urban edge to socially responsible As green tourism demand increases, the appeal of temporary hotels will grow. Modular base, cargo container and prefabricated hotels will be sustainable alternatives for work, rest and play. Due to vacant commercial outlets reaching unprecedented levels, the Meanwhile Project (www.meanwhile.org.uk) set up in April 2009 aims to prevent high street decline. Pop-up hotels help transform unused buildings into community art venues, providing a dual function of hotel and art meeting place. Guerrilla-style graffiti hotels can accommodate the young generation and art lovers in general, leaving a lasting legacy for the wider community. Re-use projects can provide not only great benefits to communities through the transformation of old structures, but also by creating original and innovative hotel structures.

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Future outlook – urban regeneration Temporary hotels are expected to change the face of UK travel by attracting a larger customer base with their affordable pricing and sustainable living. The concept is expected to bring about long-term change in hotel construction and development. Pop-up hotels create an opportunity for operators to maximise operational efficiency and increase revenues but also support regeneration. Their temporary status allows businesses to reinvent themselves with less investment. This may help boost affordable accommodation in the UK and stimulate growth in rural areas where standard hotels are not planned or permitted. Lower income regions with rising unemployment - West Midlands, North East and Yorkshire – would reap benefits from pop-up developments.

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2008 2009 2010 2011 2012 2013

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Forecast Urban vs Rural Population in the UK 2008-2013

urban population rural population Source: Euromonitor International

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UK: Pop-up hotels






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Europe - Concierge Travel Services: from Luxury to Mass Concierge travel services in Europe are currently targeted at wealthy travellers offering affluent consumers a value-added service by organising holidays customised to their personal tastes. Concierge travel services provide advice and support before, during and after the trip. This personalised concierge service is on the verge of going mainstream providing the means to boost customer satisfaction and loyalty, as well as margins.

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Luxury for the masses Traditionally concierge travel services were limited to luxury travellers, but this is now set to change with travel operators exploring the mass market. Despite the global financial crisis crippling Europe, this move is being driven by consumer preferences, a fast-moving competitive environment and new technology. Mass tourists are demanding more personalised services as they become accustomed to finding more travel options online and need guidance on how to build a tailored trip. European travel demand goes beyond sun, sea and city to encompass rewarding and authentic experiences giving rise to experiential travel. A harsh competitive environment, falling demand, capacity cuts, trading down, and rife discounting have all led to an increasingly important role for internet bookings. The offer of concierge services to the mid market will allow travel industry players to differentiate their products by adding value. Technology enables travel players to provide personalised concierge services to mass tourists at affordable costs through faster communication along the supply chain.

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Three Stage Offer of Concierge Travel Services

Stage Concierge Travel Service Benefit to the Consumer

Before Asks about customers’ general interests, travel preferences and past experiences Chooses the best destination

Provides helpful and updated information about the chosen destination received from the travel operator’s local contacts

Allows insight into the best places, events and experiences to make the holiday more rewarding

Provides information about personalised services concerning customer interests available at the destination and makes bookings Gains prior knowledge and saves time

During Offers support to travellers in case of emergency, e.g. theft or flight cancellations Peace of mind regarding safety and security

Helps with further requests and required bookings of events, attractions, restaurants, etc

Frees up time to maximise enjoyment of destination

After Follows up on customer satisfaction to increase customer loyalty and improve CRM

Engages in development of personalised service

Receives feedback in order to start promoting future trips Future loyalty benefits, e.g. discounts and enjoys a ready prepared, tailor-made option

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0 5 10 15 20 25 30 35 40 45 50

Emergency/crisis abroad

Find and purchase present/flowers

Emergency/crisis at home

Charter service

News information

Find hospitality and event tickets

Help with business travel

Find and book holiday

Find and book restaurant

Concierge Services Usage by Type 2008 (% Share of Requests)

Source: White Concierge 27



Customisation taken to its logical conclusion Kuoni (www.kuoni-group.com) holds a 1% value share of Western Europe’s travel retail market and offers customised services through its Kuoni Concierge service. Kuoni Concierge customers enjoy a tailor-made holiday including the reservation of events, shows, restaurants and a personal shopper service at their destination. The local contacts provided help consumers enjoy a more authentic travel experience. These include experts in theatre, arts, yoga, sports, local history, etc and at destination. Kuoni Concierge customers are currently only in the high income bracket but also encompass average earners with a high budget for a special occasion, especially honeymooners. The company is about to offer its services to all its customers by end 2010 for a fee estimated to be EUR20-25 per person - an attractive price to ensure a fast adoption rate. The roll out of concierge travel services to the masses is driven by the need to add value for mid market, bolstering competitiveness and gaining cost efficiencies. According to Kuoni Italia, of concierge travel services requested by customers, 74% was for advice on the destination, 12% for tickets, 9% for restaurant bookings and 5% for event bookings.

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“Today people are overwhelmed by information on travel and tourism services and need more guidance from someone they can trust. Concierge travel services will play an increasingly important role in helping them make intelligent choices based on their individual needs”

Andrea Mueller, Communications Manager, Kuoni Switzerland

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Virgin Holidays sets a precedent WTM Global Trends Report expects that concierge travel services in Europe will expand in the next five years to embrace a much larger customer group, including the mass-market. Such expansion of concierge travel services to the masses is already taking place in UK. Virgin Holidays (www.virginholidays.co.uk) targets customers beyond luxury travellers via its Virgin Holidays Concierge service. Such services offered free to all is an industry first. By contacting all customers interested prior to their trip, the company helps travellers create a tailor-made holiday including the reservation of tours, events and dinners. Operators in Continental Europe are on the cusp of following suit such as Kuoni.

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Opportunities – mass appeal is a no-brainer Concierge travel services open the possibility for travel retailers to offer personalised services for packaged/budget holidays. This provides companies with a competitive edge in a crisis. Concierge services are useful in creating flexible travel services, complemented with services according to customer preferences. They offer all travel retailers the chance to generate higher volumes and improve margins. Online travel agents such as lastminute.com already offer lifestyle bookings (tickets, restaurants etc). Concierge services would allow them to enhance their online offer with personal contact for insight.

Future outlook – into the mainstream WTM Global Trends Report expects concierge travel services to reach a significant dimension within the mainstream travel retail offer, going beyond affluent travellers. Personalised advice to build the trip according to customer preferences will be offered on the phone by travel consultants based either in the company head office or at the destination. Such services will initially be offered for a small fee, and in its next generation for free whereby greater levels of exclusivity will come at a price. Growth will be inextricably linked to that of experiential travel in the quest for an authentic experience. New technology will offer a wider audience via mobile internet devices and m-commerce.

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UK: Pop-up hotels






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Middle East - Female-only accommodation With an increasing young population living in the Middle East, travel and tourism operators are striving to identify innovative concepts that are in harmony with the region’s culture. Female-only accommodation is relevant, especially in Muslim countries, for demographic, religious and cultural reasons. Exclusively female-only accommodation is a recent trend, spearheaded in 2007 by a group of entrepreneurs in Saudi Arabia, when they opened the first female-only hotel in the region.

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Culturally-sensitive concept within Islamic law Female-only accommodation offers growth opportunities in the Middle East due to the large female population with an interest in travel thanks to NTO and travel operator activity. Despite the crisis, the region is still a hotspot for tourism. GDP growth for the MENA region is expected to be 3.9% in 2009, which will help it decline modestly by -2% in terms of inbound arrivals in 2009. Saudi Arabia has 30 million domestic tourists per year and has invested US$40 billion in infrastructure. The domestic tourism market in Saudi Arabia is significant as Saudi women are more likely to travel within the Kingdom than abroad due to the restrictions on travel for women. In many Muslim countries, it is risky for women to travel alone and frowned at by Arab society. This motivated the opening of the Luthan Hotel & Spa, the first female-only hotel in Saudi Arabia. Saudi Arabia is one of the most conservative countries in the world and women have limited freedoms preventing them from speaking to or meeting male friends in public as well as driving cars. Islamic laws require “Maharam”, meaning a male escort, which places restrictions on travel for women. Female-only lodging therefore makes travel possible without a mandatory male escort. With the year 2009 marking 30 years since the Islamic Revolution, the recent unrest in Iran also illustrates that conservatism continues to prevail, hence the need for such female-only products. Egypt, Iran and Saudi Arabia represent key target markets for female-only concepts, where women accounted for almost half of the total population in 2008.

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Population Split by Male/Female in Select Countries 2008

Female Population Male Population

Source: Euromonitor International 35



All-inclusive appeal Female-only accommodation should not be considered solely in terms of culture and religion for Arab and Muslim women only, but also for non-Muslims alike. Western women are likely to feel more comfortable staying at women-only hotels, given the widespread negative perceptions of women travelling alone in the Middle East. Such facilities are most convenient for Western businesswomen and journalists who often travel and feel safer at female-only hotels. Rising interest among Westerners about the Middle East and the need for a more “global” edge to appeal to a wider audience will be critical to the concept’s future development.

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Tailored to female tastes Female-only accommodation takes its roots from female-only hotel floors. The Chopard Floor at the Jumeirah Emirates Towers in Dubai (UAE) provides a female-only staff and rooms catered to women including Chopard branded bathing products. Dubai launched women-only buses to encourage women to use public transport when travelling alone. Luthan Hotel & Spa was the first entirely female-only hotel in the region, run by women, reporting 50% occupancy post opening. Its clientele comprises non-Saudi businesswomen and Saudi leisure guests. Luthan was built upon the belief that full-service spas should offer residential options. The facility plans to expand its model once it has reached its optimum in its home city, Riyadh. Across the Muslim world, travel agencies such as Responsible Travel promote female-only tours and beaches such as La Femme (near Cairo) and Yashmak both in Egypt.

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“Worldwide women are seeking the additional privacy in public spaces from the beaches of Italy, to trains in Brazil, to taxis in Bombay, ‘women-only’ options are being increasingly created to satisfy demand. Depending on the quantum of female traffic to a particular city, hoteliers may consider floors or alternatively properties dedicated to women only.”

Lorraine Couthino, Executive Director, Luthan Hotel & Spa

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Opportunities - ready for export Female-only accommodation falls under a wide spectrum of women-only travel services already available in the Middle East. Many opportunities exist to promote female-only accommodation as part of an overarching travel experience. The concept may also be considered as a pillar in the general promotion of the region. The legal implications of women travelling alone in the region are advantageous to the trend; although laws imposing a male escort are likely to be relaxed, it will remain a cultural taboo in the long term. Euromonitor International believes that the concept can also be exported to many countries, not just Saudi Arabia. Other conservative markets such as Iran and Egypt offer strong potential demand. It is important to link health and wellness to women-only hotels as these can be marketed as spas and health centres with a lodging option. This makes the concept easier to sell by broadening its appeal. Markets developing their medical tourism potential include Jordan, Lebanon and Saudi Arabia. Potential female patients will be a key target for female-only accommodation. Female-only accommodation may diversify in Oman, Yemen, Jordan and Syria into backpacking and adventure tourism, gaining in popularity with regional travellers and Westerners alike.

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Future Outlook – marketing is key Female-only accommodation is likely to pick up in the future and the trend will take the form of more women-only floors at new hotels, and potentially exclusively new female-only hotels. On a global scale, women are seeking additional privacy in public places and this will be a major driver behind the development of women-only hotels in different cities across the Middle East. This type of accommodation will have to develop a selling proposition that appeals to both Western and Middle Eastern women by marrying their cultural relevance with their safety, security and comfort.

Threats to Women-only Hotels Action

Controversial concept criticised for being a sign of “regression” rather than progress

Communication and marketing to play a key role in establishing the correct positioning, promoting freedom to travel alone even in Saudi Arabia and Iran

Disapproval by conservative factions as promoting lesbianism

Travel players to help encourage increased openness to women’s liberties by supporting such concepts

Avoid misconception that it is cultural or religion-specific

Communicate message to all women about the importance of travelling in comfort and safety in the region

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UK: Pop-up hotels






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The Obama effect boosts visitors to Africa President Obama’s recent visit to Ghana put Africa under the international tourism spotlight, opening up the potential for an African tourism revival amongst Africans living abroad. Roots tourism is still largely unknown to many core markets and can provide a huge boost to economic prosperity in Africa and to its local communities.

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DNA of roots tourism Despite the global crisis, Africa enjoyed one of the world’s highest growth for inbound arrivals of 3% in 2008, fuelled by government tourism investment and improved quality standards. Air traffic from the US to Africa increased by 33% during the first five months of 2009 according to the Office of Travel and Tourism Industries - one of the fastest growing outbound destinations for the US. The popularity of DNA testing to identify ancestral origin helped increase travel to Africa. There are more than 2,000 genealogy companies in the US, with 35,000 DNA tests performed since 2002 by African Americans. Cultural tourism has become increasingly popular. A great number of heritage attractions connected with the Transatlantic Slave Trade are in West African countries such as Ghana, Gambia and Senegal. An asset to the promotion of roots tourism is the increasing political stability in countries such as Ghana. The country was the first to welcome President Obama on his first official trip to Africa. The internet has raised awareness of Africa and helped make the region more accessible. The expansion of package holiday itineraries to include countries such as Gambia has opened up a wider audience. Obama’s election to the President of the United States has resulted in a surge of popularity for Kenya especially amongst African Americans wishing to visit his ancestral village Kogelo where his grandmother still lives.

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US Air Traffic Overseas 2009

Passengers '000 % growth 2008/2009

Source: Office of Travel and Tourism Industries, Euromonitor International 44



Discrete target market with potential The US is Africa’s biggest source market where 41 million African Americans reside, growing in population by over 1% year-on-year and enjoying an average income of US$32,000. The average African American traveller to Africa is from the 45+ age group. They like travelling in groups, enjoy festivals and cultural events, spending on average between 10-12 days. Generation Y accounts for 31% of the African American Diaspora, amounting to over 12.7 million people. As America’s first family, the Obama’s are the most influential role model for them. The general perception of Africa held by people of African origin is changing as they become more inquisitive about their heritage, however, a negative image is perpetuated by the media. Africans’ view of African Americans is also changing following the election of the first US President of African origin and growing awareness of African American celebrities that champion good causes.

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Diaspora on the agenda Many agencies now offer Obama packages such as the President Obama Africa Roots Tour by Africa Travel Waves (Kenya) where visitors visit his ancestral home and learn about the Luo people. In October 2009, Tanzania hosted the Fifth International African Diaspora Heritage Trail (ADHT) Conference and launched Tanzania’s new “The Ivory and Slave Route” in Tanzania and East Africa. African NTOs have thrown their support behind roots tourism; key events include Black History Month, Juneteenth, PANAFEST (Ghana), Emancipation Day and Africa’s Golden Gateway Project. Ghana was also the first African country to host the United Nations World Tourism Day in September 2009 with the central theme, “Tourism Celebrating Diversity”.

Company Products Countries Covered Spector Travel (USA) Africa roots tourism Benin, Ghana, Senegal,

Gambia, Cote d'Ivoire

Derby Tours (Ghana) Slave Route Tour of major trade sites (18 days) Benin, Togo, Ghana, Burkina Faso, Mali

West African Adventures (Senegal)

Cultural and Roots Programme (10 days). Major sights on the tour include Goree Island, Jufureh and James Island in the Gambia Senegal, Gambia

Gambia Tours (Gambia) Family-run Roots Tour, offering day-trips aboard cruise ships, including visitsto Gambia's main slave sites, prison islands, Kunta Kinte's village Gambia

46



“The host communities should reposition themselves by providing goods and services to African American tourists. Local tour operators and retailers will benefit from working closer with their American counterparts, such as the Convention & Visitors Bureau, and other associations to create awareness and promote their products and services directly to the African American market.”

Charlotte Haymore, President, TPOC (Travel Professionals of Color)

47



Opportunities for engagement Roots tourism enables Africa to re-brand itself by changing perceptions and projecting a positive image of the

continent. With Barack Obama as an ideal role model, there is no better time to do this. Those tracing their ancestry are more likely to get involved with local communities, through personal commitment

and investment. Roots tourism can be maximised by positioning Africa in an appropriate way to people of African origin. Diaspora visitors want authentic and healing experiences. Heritage tour organisers should provide more than

historical slavery tours by providing visitors with direct engagement with the community. Budget camping safaris will be popular with African American Generation Y travellers. There is a need for cooperation between African countries to provide multi-destination itineraries. NGOs need to work closely with NTOs and travel companies to develop itineraries for roots tourists. A “3H Tour” (Heritage, History and Help) would be an innovative product, with NGOs linking tourists up with

communities in exchange for a share of tour operators’ revenue.

48



Future outlook – Obama to head boom Euromonitor International estimated that 42 million international tourists will visit Africa by the end of 2010 with a potential roots tourism boom contributing to that. As the first US president of African origin, Obama’s influence has spread further to Europe and Latin America, which are the two largest markets of African Diaspora outside the US. Roots tourism will make a significant impact, bringing income generation for local communities and governments, improved infrastructure and increased standards of living. The long-term sustainability of cultural heritage tourism is essential for the development of roots tourism to preserve the region’s natural assets. All eyes will be on President Obama when he eventually will return to his father’s homeland to see how far roots tourism can transform the African travel and tourism industry.

49




UK: Pop-up hotels






50



Asia tees off with golf tourism Asians are crazy about golf and the recession has done little to curb their enthusiasm. Asian destinations are looking for ways to attract golfers whether regionally or internationally who tend to be high-spenders. The spread of golf in Asia also indicates a rising standard of living as well as a lifestyle and status that consumers aspire to.

51

Number of International Standard Golf Courses in Asia 2009 Country NumberJapan 2,500China 310Thailand 260South Korea 251Malaysia 189Indonesia 125Philippines 70Singapore 20Vietnam 18Laos 4Cambodia 4




Golf as an income generator Golf and related property development are enjoying government support especially in Southeast Asia . Countries with underdeveloped tourism infrastructure - Cambodia, Laos and Vietnam - are targeting golf visitors. Malaysia and Thailand lead the pack where the sport is bundled with resort, adventure and eco-tourism. Cross-industry cooperation has helped lure golfers from Japan, South Korea, Singapore and China through packages and marketing campaigns. Firefly, a Malaysian LCC launched a new golf membership card in collaboration with Advantage Golfing Solution (AGS), offering unlimited rounds at discounted rates in golf resorts on its network.

Thailand targets die-hard golfers Golf tourism in Thailand is estimated to be worth US$800 million in 2009, with 260 courses growing 10% per annum, outperforming the travel industry, with arrivals contracting by 15% in Q1 2009. Tourist Authority of Thailand (TAT) partnered with luxury hotels and golf clubs to launch the “Golf in a Kingdom” campaign in 2009 (www.golfinakingdom.com), specialising in custom itineraries. The Thai campaign goes beyond intra-regional to lure North Americans and Europeans, offering comparable quality at a fraction of the price. A day’s golf at Thailand’s top clubs costs US$100-180.

52



Female celebrity golfers drive revival Japan has 2,500 golf courses, with an estimated one in 10 Japanese playing regularly because of the drop in course fees in the wake of the previous economic crash in the 1990s. The sport has seen a revival due to younger stars, namely Miho Koga, Momoko Ueda and Ai Miyazato who have generated interest among urban, upper middle-class Japanese women. Golf is considered a low impact, lifestyle sport. Golf clubs attract women with ladies-only packages and a chance to socialise. Many clubs offer ladies-only courses and free golf clinics. Accordia Golf Co Ltd is Japan’s largest golf course operator with 123 owned courses and plans to spend US$163 million buying10 new courses per year according to Reuters.

Golf fashion craze Golf is so popular that a new fashion is emerging in Japan, with websites such as Golf Digest Women-style offering advice on the sport and golf fashion tips (www.golfdigest.co.jp). Sanrio’s Hello Kitty character appeared on putters, drivers, golf balls and other accessories. Mic Golf also launched new Fit 39 Nail golfing gloves in 2008, designed to show off manicures.

53



China – sport of the rich Rapid economic growth in China has created a new elite class jumpstarting golf demand. China ranked fifth in the world with more than 300 golf courses and hundreds more in the pipeline. Shenzhen is even home to the world’s largest golf club, Mission Hills Golf Club. The majority of China’s golf courses are luxury resorts. Golf membership is designated as luxury by the government with a 23% consumption sales tax, 18% higher than other sports. This month (November 2009), the World Golf Championships take place in Shanghai with discounted tickets. Golfer Yang Yong-eun helped raise awareness of the sport as the first Asian born winner of the PGA Championship, which he won in 2009.

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54

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Southeast Asian Golf Trail The Southeast Asian Golf Trail is fast becoming the most popular and affordable way to enjoy golf in Asia. Introduced in 2009 by Golfasian (www.golfasian.com), the trail combines premier courses in Thailand, Vietnam and Cambodia at a low cost. Participating golf courses include Montgomerie Links Vietnam, Colin Montgomerie’s only golf course in Asia.

Laos off the beaten track Laos is a new, cheaper destination for golfers offering four major golf resorts with a rustic appeal. The Laos side of the Mekong River is undergoing a mass development project. It will house a golf course, casino, several hotels, duty-free zone and be connected to Southern China by a new highway.

Obstacles in Vietnam Vietnam won the "Undiscovered Golf Destination of the Year" by the International Association of Golf Travel Operators (IAGTO), however the country faces setbacks. There are 144 golf projects under construction, with only 18 operational. Complex planning procedures, public discontent, poor infrastructure and corruption mean projects take 10 years to finish. The government supported the Ho Chi Minh golf trail in 2007, in partnership with Golfasian, Exotissimo Travel, Mandarin Media and Budget Car Rental, and is targeting business travellers.

55



“The growing popularity of golf tourism in spite of the global financial crisis shows that the “Lipstick Effect” is also happening in the travel and tourism industry whereby consumers are unwilling to forgo life’s small luxuries in times of hardship.”

Caroline Bremner, Global Travel and Tourism Manager, Euromonitor International

56



Opportunities - health benefits for healthy profits With real GDP growth in Asia Pacific expected to slow to 0.5% in 2009, the cost of playing golf will be a major hindrance. Lower membership fees, incentives and bundled tours will help pique demand. Golf clubs and resorts should explore partnerships with airlines and tour operators for improved cross-industry and cross-border cooperation. Women continue to offer an untapped resource in Japan with great potential for health/wellness alliances. The 2009 WGC-HSBC Championships precedes the 2010 World Expo and presents a unique opportunity to promote golf in Shanghai and beyond. To promote golf in Vietnam during its infancy, it is important to target domestic visitors and local players.

Future outlook - hole in one Growth in world-class golf courses, celebrities and international tournaments point to a dynamic future for golf tourism in Asia. The region is expected to lure back regional golfers who may have chosen Western locations, as well as Western golfers, with exceptionally low prices on premium courses. Cambodia will showcase its credentials at the International Golf Travel Market conference in November 2009.

57




UK: Pop-up hotels






58



Latin America re-brands as a luxury destination While luxury travel suffers globally due to the economic crisis, Latin America is investing in luxury infrastructure to appeal to local and international travellers after the crisis is over. Often perceived as a low-cost destination with limited high-end infrastructure, Latin America is preparing to steal share from North America, Europe and Asia Pacific.

59



Government action to capture luxury travellers Wealthy travellers spend eight times more than average tourists, according to Core Brazil, but account for only 3% of travellers. Pre-crisis, players embarked on transforming Latin America into a luxury destination and will continue with investment plans in preparation for the recovery. EMBRATUR and Brazilian Luxury Travel Association (BLTA) signed a cooperation agreement to promote Brazilian luxury destinations in the US, Italy, France, Portugal, Germany and UK in July 2009 EMBRATUR wants more visitors spending US$20,000 per trip compared to the average US$2,500. In Mexico, US$3.6 million will be invested in states like Guanajuato to build luxury infrastructure including high end hotels eg Rosewood Hotels and Resorts and the revitalisation of its historic centre. PromPeru actively pursues luxury travellers promoting the region’s exoticism and exclusive services such as taking a luxury cruise in the Amazon and travelling to Machu Picchu in a luxury train. Trade shows such as the International Luxury Travel Market (ILTM) will help NTOs promote their sophisticated luxury offer.

60



Latin America as a source of wealth The World Wealth Report reveals that wealthy Latin Americans are the least impacted by the global crisis, registering the smallest fall of -6% in 2008 compared to the global average of -20%. North America, Europe, Asia Pacific registered heavy losses in the High Net Worth Individuals (HNWI) indicator. Brazil, the largest by HNWI in Latin America, saw wealth decline by 8%. Although negative real GDP growth of -2.5% is forecast in 2009, some bright spots remain. Peru and Panama are expected to grow by 3.5% and 3% respectively. Brazil is on the verge of exiting the recession.

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50

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61



Luxury pipeline development Hotels continue to pursue luxury strategies in Latin America, especially as the region weathers the economic crisis well. Low penetration of global luxury brands in Latin America illustrates the potential for growth where only 8% of hotel outlets are part of a hotel chain. In April 2009, Four Seasons announced plans to open three hotels in Brazil by 2012 including Rio de Janeiro and São Paulo. Total investment is expected to reach US$450 million. Five Brazilian luxury hotels made the top of Condé Nast’s luxury hotels list in Latin America – Hotel Unique, Pousada Maravilha, Kiaroa Eco-Luxury Resort, Ponta dos Ganchos and Kurotel. AMResorts opened two Secrets Resort & Spas in the Mayan Riveria in August 2008, offering “unlimited-luxury exclusive for adults”, both all-inclusive resorts. Colombia, Peru, Panama and Argentina are seeing aggressive investments in the luxury segment. Argentina is set to open five five-star hotels in the next two years, adding 500 rooms to its hotel supply.

62



“With a population of nearly 376 million people, South America has very few international brands. The cost of construction, land and labour are significantly lower than in North America and Europe, therefore requiring less investment for setting up new businesses.

The luxury boom is already happening in some areas and the result will be noticed in about five years from now when the region will be booming with new properties being launched and demand driven this way as never before.”

Nicolas Klenner Peluffo, President - Brazilian Luxury Tourism Association (BLTA)

63



Expanding the luxury target market The global crisis caused travel declines to Latin America from the US, France, Italy, UK and Germany. In 2008/09 Brazil and Mexico increased air links with Middle Eastern countries through Emirates. In March 2009, Brazil and Argentina joined together to attract South Koreans, Japanese and Chinese travellers. Direct flights from South Korea to Brazil were also launched in 2009. By 2013, China is likely to surpass France, Italy and UK in the number of high-earning households. In 2008, 36,766 Chinese arrived in Brazil by air. In August 2009 Singapore and Peru signed an open skies agreement. Singapore also expanded its bi-lateral agreements with Colombia and Ecuador.


64

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Opportunities - from luxury to eco-luxe A large number of Latin American hotels, airlines and travel retailers will seek to embrace luxury tourism practices, boost overall competition and enhance service levels. The region will benefit from “eco-luxe” where the desire for natural overlaps with the desire for luxury. Future developments with eco appeal include the Kiaroa Eco-Luxury Resort in Brazil. Ecological regions such as the Amazon and Patagonia will stand out to environment-friendly luxury travellers. Increased air links with Asia Pacific and the Middle East will be crucial to demand for luxury, given their growing levels of disposable income and affluence. Brazil’s hosting of the 2014 Football World Cup and the 2016 Olympic Games will be a key growth catalyst.

Future outlook - challenges ahead Repositioning as a luxury destination will be a major challenge for Latin America. The region will need to improve its infrastructure quickly and offer flawless levels of service. Short term there will be a decline in luxury travel globally, however, Latin America is well-positioned to gain share due to its new infrastructure, must-see tourist attractions and promotional strategies. Luxury travel among Latin Americans remains strong, spurring intra-regional and domestic demand.

65



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