A short history of tourism through words

The guides really dressed up back then!

A good way to check the popularity of something is to count how often people talk about it or write about it, sort of like the trending hashtags on Twitter. If you want to see the trending over several decades, way before the Internet, then the best place to look for words would be in books! Google has indexed over 5 millions books going back a couple centuries and they have a really cool application called “Ngram” which lets you plot the frequency of usage of a word over a long period of time. To better grasp the concept, try the words “war” and “peace”, or “internet”, the graphs will be very obvious to understand.

Tourism to grow with income inequality

It may be uncomfortable to acknowledge, but tourism destinations’ competitiveness will depend increasingly upon the choice they make to cater to either the luxury or the economy market. Remaining open to every budget will become increasingly difficult to meet the expectations of both ends of the market as income inequality enlarges the divide between classes. The higher end of the market expects more exclusiveness and distinction while the lower end of the market requires accessibility and affordability. While the concept is hardly new as the hospitality industry has always separated economic and social classes through distinct properties, what is new is the propagation to airlines and terminal facilities which are becoming increasingly segregated along the same economic divide as driven by market demand. The FSC (Full Service Carriers) are moving up market as the LCC (Low Cost Carriers) focus almost exclusively on the economy segment. Terminals and even entire airports are now built or reconfigured to serve either the economy or the luxury class exclusively.

Will the legacy carriers be the next designer brands?

Air traffic has doubled every 15 years and it is expected to continue at the same exponential rate of growth over the next decade. However in economy class over the last 10 years, the legacy carriers have inexorably lost market share in the short-haul market to the LCC (Low Cost Carriers) who are now taking on the legacy carriers on the long-haul market as well. On the other hand, upper classes have largely remained the realm of the legacy carriers with most of them earning over half their revenue from upper class customers while the economy class with 75% to 80% of the seats and about half the space capacity generates less than half, in some cases as little as a third of the revenue. It is also reasonable to assume that, given the market conditions and the marginal profitability of legacy carriers, the economy class is sustained by the more profitable upper class.

Are Chinese tourists spending more or less?

Siam Paragon, Bangkok

Singapore reports lower-spending Chinese tourists [1] while Korea reports soaring numbers from them [2], overtaking Thailand, currently on a decline, as their top destination [3]. These seemingly conflicting headlines reflects the evolution of Chinese tourists abroad: they are not the “same” tourists, they are different groups and different generations each affecting changes in different directions. Last week’s article, "Where is the Chinese tourists' money going?" explains how Chinese tourists fall into three key groups where the tourists to Singapore reflect the receding tide of “Hedonists” while the soaring numbers to Korea comprise the rising tide of the “Wenyi” and in Thailand the growth of the “Traditionalists” has been affected by both the end of zero-cost tours and their uneasiness about pictures of unrest.

Where is the Chinese tourists' money going?

The Wenyi tribe?

Looking past the media hype and the glittering headlines, it is fascinating to find out who, in the tourism industry, benefits the most today and who will tomorrow. No question that Chinese tourists are big shoppers of luxury goods, but do they also spend lavishly in the other sectors of the tourism industry and in other locations than their top 5 or 10 favorite destinations? That is where the anecdotal nature of the media stories fails to match with factual numbers. The numbers are up there, they are big and growing, but the media stories obscure the real picture of where most of that money goes.

Legacy airlines in upheaval: Keep or ditch the economy class?

AirAsia in Thailand

Conventional wisdom says that the LCC (Low Cost Carrier) model only works for short-haul flights and cannot compete with the legacy carriers for the long-haul business. But most legacy carriers know full well that it is only a matter of time until they are challenged by the LCC on the long-haul. Already AirAsia X and Norwegian are demonstrating that conventional wisdom is wrong and that the LCC model is not limited to the short-haul business. Lufthansa is toying with the idea of creating a long-haul LCC to South-East Asia and India in addition to its regional Eurowings and its low-cost Germanwings. With Norwegian now offering low-cost service to Bangkok from northern Europe, it is obvious that Lufthansa would stand to lose some of their economy business to Norwegian.

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.

Income inequality and the travel class divide

There is an unmistakable correlation between the growing income inequality in society and the increasing gap in economy and luxury classes in both airlines and hotels. It should be no surprise being that tourism depends mostly on the disposable income that is most sensitive to income disparity.

On one hand, we have the extraordinary growth of LCC (Low Cost Carriers), the shrinking seats in the now spartan economy class of legacy carriers, the emergence of branded very low cost accommodation like Tune hotels (built on the AirAsia operating model) while on the other hand the airlines upper classes are getting more spacious, with better and bigger seats, with more amenities and services and 5-star hotels up their offering, refurbish to more lavish rooms and more services.