The metamorphosis of travel and tourism

How much mass tourism can squeeze on an island?

In the short span of a generation, travel and tourism has gone through a sweeping evolution with everything becoming easier, faster with fewer intermediaries. Wheels on our baggage, paperless travel, booking a room on your smartphone while walking in the lobby of that hotel, bringing your own lunch aboard, etc. a multitude of seemingly small changes that together have created a new dynamic causing a metamorphosis in the industry.

The flow of tourism no longer originates exclusively from developed countries as emerging countries, historically only exotic destinations, became significant generating markets in the last decade. The emergence of low cost carriers and online travel services have sent traditional travel agents the way of video stores. Tourism is now a two-way street anyone can use, mostly, without the middleman. There is still good business to be had for the middleman with groups, MICE and highly specialized experiences, but in a different role of coordination rather than information and booking. Destinations and operators, once dependent upon travel agents in generating markets to bring them customers, are now reaching customers directly and taking bookings without intermediaries.

While some complain about airlines now charging for baggage, seats, drinks, meals or speedy lane, others see the opportunity to only pay for what they want. On an overnight trip two-hours away, most travelers only need a carry-on and can survive without airline food. For these travelers, it is an option to buy less that was not available a generation ago.

At the top end, luxury travel is also being redefined with airlines transforming their business class from what was previously merely a premium economy class to what is becoming hardly distinguishable from first class, with Emirates for example even including chauffeur-driven door to door airport transfer, a service that was not even provided to first class passengers in the not so distant past.

Specialty markets are going through sweeping changes as well, that marketing does not always seems to catch up with. Weddings and honeymoons, for example, have become a fast growing market in later years, but that market has shifted where the growth does not come from the traditional markets, where demand is declining as their newlyweds are typically internet savvy and seldom looking to spend a lazy week at a resort pool or spa. The growth comes from the same emerging countries that are currently fueling global tourism, where newlyweds remain more traditional and seek the honeymoon packages previously popular with the western markets. The resorts are indeed seeing more honeymooners, but now they are Brazilian, Russian, Indian or Chinese, the BRIC countries. Yet, the ads for honeymoons are still featuring predominantly western couples enjoying lavish, but very western cuisine!

Moving toward a segregated model?

It is not inconceivable to see travel and tourism moving toward a segregated model completely separating luxury away from economy across the entire spectrum of logistics, accommodation and services. Airports are becoming increasingly segregated with even immigration, once the common point where everyone was equal, now separated with express or fast lanes for premium travelers and even dedicated terminal facilities. There are already airports predominantly serving different classes of travelers, like London City Airport which has no LCC (Low Cost Carriers), except for Flybe operating some domestic routes, while Luton and Stansted serve the LCC market. British Airways offers a business class only service between London City Airport and New York where every step of the way is configured exclusively for this class of travelers. In Thailand, Koh Samui is an upscale tourism destination with one of the most beautiful airports in Asia, but if you are on a budget and fly AirAsia, you will land in Surat Thani, three hours away by bus and ferry.

The concept of luxury resorts has gradually expended to that of luxury destinations designed to serve primarily, or even exclusively on some islands, a specific clientele. The cost of access, the class of accommodation and restaurants or the type of leisure activities offered create an economic segregation even if access is otherwise unrestricted.

The economic segregation model is unique to the travel and tourism industry. It is not found in other sectors like luxury retail where designer stores are usually located at prestigious locations and airport duty-free areas, but remain nevertheless very public where anyone can enter and browse without restrictions unlike that of airline lounges, gated resorts or private islands.

This gradual polarization of the market brings up an interesting question about the future of legacy airlines. As they focus increasingly on the business and luxury classes they are relinquishing the economy class to the LCC. Recent changes to the frequent flyer programs of major US airlines where the value of rewards at the lowest level is further reduced while conversely increased at the premium level confirms their diminishing interest for the economy class market. A hint of the future may be found with Boeing where their next new plane to replace the 757 is to fit in between the 737 and the 787 and which could be just the right size and range for legacy carriers operating with limited or eliminated economy class. Or may be at London Heathrow where the new Terminal 2 is dedicated to Star Alliance airlines. Being that most Star Alliance airlines are legacy carriers, could Terminal 2 become the first premium-only major airport terminal five or ten years from now?