THE GLOBAL TRAVEL INDUSTRY'S FABULOUS 60 YEAR JOURNEY
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An exciting and profitable journey lies ahead for travel agents

4/27/2020

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PictureCesenatico in Romagna, food and wine history port and beach - empty in spring and autumn
Maybe your opportunity of a lifetime … and what if this were only the beginning?


The travel industry started its boom in the 1960s because of four big, game-changing, global opportunities:



  • The cheapness of flying - lots of planes, low operating costs: cheap tax-free fuel, low landing and handling fees
  • Low-cost accommodation and services in warm, colourful resorts, largely due to massive infrastructure hand-outs from governments and development banks
  • A market that was desperate to experience something DIFFERENT
  • Cash upfront!
The industry has managed to preserve all this for a long time now. But these particular opportunities are over, at least for the next few years, so what opportunities do we have now? Governments may give...
  • Tax breaks and subsidies for airlines, cruise companies and domestic accommodation that survives?
  • Hand-outs for mega-tourism enterprises including WTTC members?
  • Startup company soft loans?
  • Many more massive soft loans from development banks like TUI's $2bn from KfW and KLM/Air France's $10bn
All sticking plaster solutions that will only have a temporary effect until a) the money runs out and b) the massive debts have to be repaid.
After this disaster, paradoxically - as with the aftermath of the 2007/8 financial crash "soft" issues will probably fall down to the bottom of the political food chain, like:
  • Sustainable development
  • Climate change
  • Human rights
  • Refugees
So all these time-bombs will still be waiting in the wings.
Travel agents, however have a big  and sustainable opportunity NOW - and the key to unlocking your opportunity is your speed in following the market, identifying and fulfilling its needs IMMEDIATELY.
These needs will be:
  • Value
  • Real safety
  • Uncrowds
  • Security
The mega organisations are stuck in their ruts. They can't move or change quickly. Cruise itineraries are set, airline schedules too. Same with the big OTAs - their focus is expansion. Real change challenges them. It costs not only money.
So, if you are not chained to your assets, your systems, your MO or your market, for you change is a real opportunity. You can move quickly and independently to capture your goal.
What ARE these opportunities?
  • Because the general public will be wary of crowded places they will likely shun air and cruise travel for a while yet. This, plus the necessity to make profit, pay back loans, deal with lower occupancy rates and load factors will increase prices. So help them to find different ways of travelling!
  • Destinations that are different and previously unknown will become more saleable and there are thousands - you know they are not crowded, plus you could know them better than any other agent if you research. You can also impress your clients with your unique knowledge and your unique offer! Remember - the bulge mass tourism of the last few years meant that 99.9% of tourists went to 0.01% of destinations - just think what an opportunity that represents.
  • Slow travel - once upon a time getting there was an exciting and romantic part of the holiday. Make it so again! And extend the length of stay. Train travel can be romantic too if you choose the right train. Car travel also. And stop en route, why not? Set some special eating spots. Make it unique to your particular clients. Help them to chill out. Help them to enjoy holistically and safely.
  • Your relationship with your client needs to be strong before, during and after their trip. The days will be gone when you are just a middle stop delivering a commodity. Your own imprint needs to be apparent on each bit of their arrangement. To deliver all that will be a journey for you too - an exciting and different journey. But you won't be without friends. There will be plenty of uncrowded destinations that would just love to deal with you; plenty of experience operators that would like your business; plenty of guides that really prefer small numbers rather than massive groups.
  • Plus plenty of finance available for startups with new ideas for a new situation.

So move now, research, research, research and you'll carve out a truly MASSIVE lucrative and sustainable niche for yourself.
Valere

Valere is CEO of Best of Romagna and author of 'You Lucky People' the story of travel - the world's most delightful and devastating industry. Find out more about it HERE




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Let's prepare to profit from the clock being set back now!

4/20/2020

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Picture
 The international tourism industry going back to the future will hold opportunities galore for those that want and can see them.

The world of tourism is about to change again, for better or worse - it's up to us.

Over the centuries tourism has grown quite slowly, based mostly on domestic and regional markets with a very few overseas and international visitors.

The international tourist numbers only went into overdrive in the 1960s and then into hyperdrive in the 2000s because of three factors -
  1. Feather-bedding of the airline industry after WW2 (including huge tax breaks) to empower globalisation
  2. Easy access to ultracheap finance for big accommodation providers
  3. Cash machine OTAs getting between the market and the suppliers to drive down prices, drive up numbers and get profits with no commitment.
But all this is about to transform fundamentally.

Why will these three factors not be available now to bring the travel and tourism industry back to top gear quickly?

Clearly we are heading for a massive recession/depression like the one last seen after the carnage that was WW2. Although many people will want to travel internationally only the relatively wealthy will be able to afford it.

Picture

Let's say it's like 1947- the last time the world had to get back to prosperity from such a devastating setback. It took years - even with wholehearted commitment and financing from the USA and their cooperation with the UN - definitely not a given today.

 So that must mean a very reduced marketplace for travel and tourism.
OK, we all know that life will strive to get back to a near-normal upward curve when the pandemic is over. But what does this near-normal mean for the travel and tourism industry?

It will not be business as usual again for any years. Why?
First during this traumatic period of lockdowns the marketplace has changed. A recent survey in the UK indicated that people are already thinking very differently. We are all enjoying clean air, enjoying more fulfilling relationships with our habitat. This period of radical re-calibration will certainly mean a paradigm shift for the market - the millions of customers whose tastes we seek to fulfil.

And we are seeing a growing awareness of human activity - flying in particular - as a major factor in climate change. Already "Flight Shame" was one of the industry's major trends. The current situation will only make it more powerful.

Picture
Secondly there is certainly likely to be some fear of flying added to a fear of crowds. Why, after all, would EasyJet take out all the middle seats in its planes to avoid physical contamination? What does this all mean for iconic, once-crowded destinations too?

Uncrowdedness in hotels, restaurants, planes, destinations? High occupancy = low prices, right? The net effect is that prices are sure to increase - further reducing the size of the market.

The supply side is pretty challenged too. We are looking at a current situation where almost all travel industry companies - airlines, travel companies, DMCs, accommodation providers and OTAs - are technically, if not practically, insolvent.

It's easy to see that the river of cash has dried up, leaving them all exposed. Travel companies and airlines haven't even got the cash to pay back customers' pre-payments. They are offering vouchers instead of money.

My own quick sum would indicate that at least $3-$5 trillion will be taken out of the global tourism economy in 2020, more if this pandemic goes on much longer. Plus at least $1 trillion is currently outstanding in client refunds globally. Take TUI - my belief is that the $1.9 billion they borrowed from the German government was pretty much all swallowed up in refunds (to the customers they couldn't fob off with credit notes or vouchers). My reckoning indicates that their total client liabilities are in the region of $4 billion.

And the credit vouchers that travel organisations are desperate to give away instead of cash? What happens when these hit their P&L accounts in 2021?

The only - time-tested way out of this massive borrowing is a vast reduction in capacity. Better load factors on fewer flights, better occupancy rates in fewer rooms. A gradual climb-back to profitability and slow growth.

Picture
Personally I'd like to think that millions of clients would make the conscious decision to travel more responsibly and sustainably - but it hasn't happened in over 30 years… now it looks like there will be no option. There will certainly be fewer mass air tourists per annum for years to come.

This sudden dramatic transformation opens the door to a number of new opportunities including the following:


  • Slow Tourism
  • The Experience Economy
  • Virtual Tourism
  • Distressed assets
  • Commercial destination management
Over the next weeks I will examine these potential opportunities in much more depth.

Once upon a time travel was not only full of opportunities - it was truly beautiful and exciting too. Now it could be again...

Valere Tjolle
Valere is the author of 'You Lucky People' the story of travel - the world's most delightful and devastating industry. Find out more about it HERE

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What it's going to be like in 2021 and 2022

4/8/2020

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Only a few months into the Coronavirus crisis and some things about our future are becoming remarkably clear writes Valere Tjolle

As ever the future will be dictated by the market and you can be absolutely sure that the market is frightened. Treble frightened - frightened by governments, frightened by the internet and news and finally frightened by Coronavirus itself.

Too frightened to travel in 2021? Probably not, but most people won't want to stray far from home for a long time, maybe years.

So that means that the first destinations to benefit will be those close to source tourism markets. Probably those that can be reached by car.

And there will be another reason that medium and long-haul destinations will suffer. What will happen to the airline industry? It will certainly be hit by two sides - the market and the city. So far airlines have grown on cheaply-purchased planes, taxation feather bedding using their unique position, and high load factors. Probably they can say goodbye go all that. So to survive they will have to cut their services and overheads and consequently increase their prices. None of this will please their business clients who are probably already looking at virtual meetings rather than expensive, dangerous ones.

Accommodation? Will life ever get back to boisterous normal? Not in the foreseeable future. All the big brands are asset light and already live on tiny margins. The owners of their properties will reduce their dependence on tourism so that means wholesale disposals. As far as B&B's are concerned it's a bit easier - maybe people could actually live in them for a change. That would reduce the cost of housing!

And cruises. Well, no doubt the big cruise companies will disinfect their ships and play on the fact that their passengers will explore the world from a 'safe' environment. But is that not an oxymoron? And how would their customers enjoy the social distancing necessary on their 'Holiday of a Lifetime'. That's not to mention the prices which would have to change.

OK, so the WTTC calls for massive government assistance to 'save' the industry. I'm guessing that even they don't know how massive that could be. Now that the tide of money has gone out the black mountain ranges of debt rear their ugly heads. It looks like NOBODY - tour operator, travel agent, airline, hotel group, OTA, whoever - can actually even pay back their clients deposits. To save the industry would cost trillions. No government would see it in its interest to do that.

Let's be quite frank 2021 doesn't look like 2008. Then the market had the willingness but not the cash. Moreover the transportation providers and the accommodation was ready to rock.

2021 will see not only an unwillingness to travel and a cash poor market but also a transport and accommodation industry that is decimated.

So more like 1945 rather than 2008?

And who will be the survivors ready to take advantage of the situation? Those who have been extra prudent and those who have a strong local and regional marketplace. These will be the seeds from which a new travel and tourism industry will be built.

A new industry?

Yes. The reason that it has all gone belly-up is simple. The travel and tourism industry as it was could not be sustainable in any sense of the word.

Now the real meaning of 'sustainable' is revealed - and, long term it will be the real saviour of the industry - for visitors, destination communities and those organisations like airlines and travel organisations that bring them together.

Sustainable tourism - economically sustainable, culturally sustainable, socially sustainable, and environmentally sustainable will strengthen the industry.

Never have been the words "Good places to live: good places to visit" been more appropriate.
These are the words that will encapsulate the 2021+ opportunity and appeal to potential visitors:
  • uncrowded,
  • safe,
  • unspoiled,
  • new

Do these describe yesterday's 0.01% of iconic destinations that attracted 99% of the world's tourists?
Or the 99.9% of destinations - virgin tourism places - that currently attract just 1% of global tourists?
Those 99.9% are the safe and secure sustainable destination opportunities of the next decade.

And the markets? Local, regional, drive-in at least for the next two years.

And two final things - first, obviously, at the moment more and more people are turning to the internet for entertainment - and, in particular, gaming. Last month alone saw a 75% increase in web-based gaming activity. This is likely to surge into a tourism-based gaming activity - in other words the first step into virtual tourism - possibly the safest, most sustainable, most uncrowded tourism activity of all!

Secondly. Don't think that, although there are no tourists, the business of tourism has stopped. Every single destination management and marketing organisation - from country tourism organisations to global tourism financiers like the World Bank - are working harder than ever to get the very best, the strongest most sustainable destinations possible.

Want to join up to the new tourism? There are millions of opportunities available now in the Experience Economy.

Valere Tjolle
Valere is the author of 'You Lucky People' the story of travel - the world's most delightful and devastating industry. Find out more about it HERE

 


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    Author

    Valere Tjolle is the travel and tourism insider. An entrepreneur, consultant, developer and journalist, he has been in at the beginning of almost every tourism development for the last sixty years. There is no one better placed to expose the seedy side of tourism nor its enormous opportunities to unite people across the globe.

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Tourism in the 2020s – will it delight or devastate the human race?
New book starts at the beginning and predicts the next 60 years of tourism.

 
 
In 1960 did we believe that an international travel industry would increase from just 25 million passengers a year to 1.5 billion?
 
Did we believe that the economic opportunities promoted by dictator Franco’s government would sweep the world, promoted by the World Bank?
 
Did we believe that travel would become both a friend and a foe to many destinations and that it would help to threaten our Earth’s ecosystems, cultures, economies, society as a whole?
 
If we didn’t believe all that then, what do we believe now?
 
You Lucky People sets out the past, the present and a future for tourism - all very irreverently!
 
Could global tourism be totally subject to Chinese demands, could it become entirely virtual, could it be so hampered by world disturbances, diseases, violence in destinations and other curses that it could change its nature dramatically. Could it actually be stopped because of its environmental and social damage?
 
Or ... could it be managed harmoniously and effectively by local destinations and marketed by really responsible business entrepreneurs so that its great benefits could be available to many more millions?
 
The author, Valère Tjolle, has been in the travel industry for almost all of these last 60 years. His story is that of real experience in the industry all over the world, and in-depth understandings and involvements with all the innovations and transformations over that period.
 
It was his annual Sustainable Tourism Report that pointed to the growth potential of the ‘Sharing Economy’ and tipped every other major development; his Greenwash Report that rated companies and activities according to their actual sustainability performance; his Global Top 100 Sustainable Destinations that picked out the real destination winners
 
From the ‘Mom and Pop’ businesses of the 50s through the devil-may-care entrepreneurs of the last decades of the 20th century to the massively powerful tech businesses of today - the real story of the travel industry is pithily portrayed with humour and realism.
 
‘You Lucky People’ is not an academic history of the industry - it is a warts-and-all story of a deep insider’s experience at the heart of the industry.
 
Come for the ride! See it here:

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