Time Travel

Trends in Tourism

Travel, for leisure or business, is often a reliable pointer to changing customs and trends in lifestyle. Tracking travel trends enables not only the travel industry itself but a much wider variety of businesses and governmental authorities to see where we, as populations, are going – in all sorts of senses.

A Global Distribution System is a reservation tool that travel agents use when making an air, hotel, car or other travel service booking. GDSs power not only the content of ‘traditional’ travel agency platforms, but also provide pricing, availability and reservation functionality to many online travel agencies. There are four GDSs – Sabre, World Span, Galileo and the biggest of them all, Amadeus, which has nearly 8,000 staff in 195 countries (with headquarters in Spain), a global market share approaching 40 per cent and turnover of some 2.9 billion euros ($4.3 billion).

The reach and status of Amadeus has given it an unrivalled ability to track trends in travel and recently the company crunched some of its data to come up with a forecast of what 2050 is going to look like in Asia Pacific. It detailed seven individual national markets and one of those was Australia. The results show that some cultural and commercial shifts are going to be necessary if Australia is going to run with the pack in the Asian Century.

Stats from the Asia Development Bank confirm that by 2050, Asia’s per capita income is likely to rise by a factor of six in purchasing power parity (PPP) to equal Europe and other developed markets. Over the next two decades, up to three billion Asians are set to enter the ranks of the global middle class, with enormous implications for the global economy way beyond ‘just’ travel. As Amadeus’ Director of Asia Pacific Operations David Brett says, “geopolitical and social forces are shaping new trade and business practices that differ from the often centrally-planned and protected economies that exist in much of the region.”

Four major individual trends will shape the next 20 years, according to the Amadeus report: fragmentation of the travel market into ever-increasing niches; breaking down of barriers to travel within the Asia Pacific region; technology, infrastructure and behaviours in the Asia Pacific region will leapfrog ahead of those elsewhere; and growth will concentrate particularly at the upper and lower ends of the travel market. In the last five years, Australia’s share of international arrivals from Asia Pacific destinations has declined from 1.98 to 1.78 per cent, impacted by Australia’s relatively high costs, uncompetitive exchange rate (now in the process of correcting itself, of course), visa restrictions and lack of capacity. Amadeus says Australia needs to better understand “how the face of the Asia Pacific traveller is changing” in order for its travel ecosystem “to be better prepared for the opportunities”.

Many of Australia’s main markets for inbound travel – such as the UK, USA, Japan and Korea – have witnessed declining visitor numbers over the past decade, with the slack yet to be taken up by emerging markets such as India, China and Indonesia. But there are reasons to remain optimistic. The first of the aforementioned trends is the so-called ‘Me Effect’ – larger numbers of smaller niches, especially seniors, female travellers, SMEs and VFRs. Visiting Friends and Relatives is a big business: VFR travellers already account for 17 per cent of Chinese visitors to Australia – the fastest growing segment of the inbound Chinese market. India is now the largest source of permanent migrants to Australia, and this creates a spurt in demand for VFR travel – already 33 per cent of Indian visitors to Australia are travelling for VFR reasons. VFR is also increasingly important for outbound travellers from Australia and Amadeus’ research indicated that 34 per cent of Australian leisure travellers quote VFR as the main reason for travel.

In Australia the number of over 65s will increase by 76 per cent from just under 4 million in 2011 to almost 7 million by 2030, says the report, “creating a huge growth in the number of senior travellers. Conversely the working age population (20-65) will increase by just 12 per cent, limiting growth in both leisure and business travel among this age group. Travel providers and intermediaries will need to increasingly cater for the needs of the senior traveller.”

A further niche is the small business traveller – travel by small business employees and the self-employed in Australia is already more widespread than in other countries in the region, “reflecting Australia’s relatively dispersed domestic market and the consequent need for small business employees and the self-employed to travel to meet customers and business partners. However, our research showed the majority of small business and self-employed travellers express the desire to travel more often in future and this will therefore continue to be a growth market.”

Amadeus predicts that small business travellers and the self-employed will account for a greater number of business travellers both inbound and outbound from Australia over the next two decades. Small businesses in Australia are increasingly likely to do business in Asia – both in finding new markets and in seeking suppliers and business partners. And conversely, despite its relatively small domestic market and isolation, trade liberalisation is likely to drive travel to Australia by small business travellers from across the region.

Australia already has more female business travellers than the average nation and this trend will continue. The female traveller presents opportunities for travel providers in Australia to gain market share by adapting their offering to the individual needs of women travellers – not just women-only floors and female friendly restaurants, but also in how they reach the female traveller. Amadeus says, “Women use different processes to men to make travel decisions – for example greater reliance on peer recommendations or advice – so responding to this will be critical for travel providers to win over this growing segment of travellers.”

Restrictive visa policies remain a major impediment for many travellers to Australia. Some 12 per cent of Indian and 7 per cent of Chinese business travellers cite difficulties in obtaining a visa as the main impediment to business travel. Visa issues are also a significant issue for many Australian business travellers. But economic integration will drive a huge increase in traveller numbers, especially from the emerging economies. “Put simply, many more people will both have a need to travel, and will be able to travel,” reports Amadeus. “As economic growth and the increasing integration of the region break down the financial and regulatory barriers to travel, we anticipate significant increases in travel to and from the emerging economies.”

Australian resource companies are expected to increasingly investigate new markets such as Papua New Guinea, Mongolia, and Burma. In all three of these countries inbound arrivals from Australia are growing rapidly from a small base – 9 per cent in Papua New Guinea and 11 per cent in Burma. Amadeus sounds a clear warning: “With increasing travel to these developing markets, Australian companies will need to place a greater focus on their duty of care – their responsibility to ensure the safety and well-being of their employees when travelling to countries or regions that may be less secure than more traditional business travel destinations. Almost half of Australian businesses have no specific code of practice that informs employees what they must do if their health, safety or security is threatened, and only 46 per cent of employees say that their employer provided information and communication specific to contingency plans that would cover unexpected eventualities. Many organisations in Australia, particularly small-to-medium businesses, are not providing employees with details such as travel insurance or emergency points of contact when on business travel.”

In terms of technology, Asia Pacific’s investment in high-speed rail infrastructure is enabling it to leapfrog Europe (and the US). It has effectively killed off domestic air travel in Korea and Taiwan, and will have a significant impact in China. This trend is unlikely to appear in Australia. But one opportunity we can grasp is the staggering growth potential of the emerging middle classes. Asia Pacific accounted for only 23 per cent of global middle class consumption and 28 per cent of its population in 2009, but by 2030 will account for 59 per cent and 66 per cent respectively. Every year between now and 2030, more than 100 million people will enter the middle class in Asia Pacific, with enormous consequences for travel in the region. By 2030 China and India will dominate both in terms of traveller numbers in the region and in total expenditure. To catch the potential of these markets, travel providers will need to adapt their offerings for these growing sources of travellers – for example by making hotels “Indian and Chinese-friendly”.

It is evident that the changes in mindset and infrastructure that will be needed by the travel industry extend to business in general. This is about more than just providing eateries where women feel comfortable, or menus that an individual from China can understand. David Brett emphasises that, “These changes will have a fundamental impact on Australia across many aspects of its economic, cultural and social lives.”

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

October 19, 2018, 6:24 AM AEDT