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Companies Urged To Get In On The Act Now


Newly rich are a tourism time-bomb

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Apr 20, 2008

International travel is no longer the exclusive province of the rich. Over the next several decades, hundreds of millions of new entrants to the middle class will want not only the things — but also the experiences — that money can buy.

Indian call centre employees, Russian engineers, Chinese middle managers and Brazilian salesmen are scouring the web for deals on trips. They want to see Paris from the Eiffel Tower, relax in the Maldives and play blackjack in Las Vegas. According to the UN World Tourism Organisation, international tourist visits are expected to double by 2020, from roughly 800 million in 2008 to 1.6 billion.

However, only so many people can visit a particular building or beach in a given year. Where will all the other tourists go? This skyrocketing demand for travel will lead to a “scarcity of place” and to three probable market responses:

First, most tourism-related prices, such as hotel room rates in popular cities, will continue to escalate as demand outstrips supply. Grey markets for scarce tickets to sporting and entertainment events will expand. A new type of scalper may emerge, offering hotel rooms, air travel and even museum passes — at whatever price the market will bear.

In addition, governments and institutions may seek to control demand by imposing heavy surcharges on travel to the most popular places or by requiring costly visas for access to them. That’s already starting to happen. For example, the government of Ecuador, concerned about the effect of increasing tourism on the fragile Galapagos Islands ecosystem, is discussing doubling the park’s entrance fee and further restricting the number of visitors.

Second, rationing — and the resulting waiting lists — will become commonplace. Some groups, for example, are already calling for limits on traffic to ecologically sensitive destinations, such as the Inca ruins at Peru’s Machu Picchu. As rationing becomes more prevalent, the very existence of waiting lists will, paradoxically, spur demand. Many will get in the queue just to secure the option of visiting rationed destinations, even if they don’t use their spot. The value of a place in line — any line — will give rise to a variety of business opportunities, legitimate and otherwise.

Finally, jaw-dropping prices and decades-long waiting lists will prompt the creation and the expansion of destinations in both developed and developing economies. The Chinese, for example, are developing Hawaii-like Hainan island and Macao, a gaming paradise on China’s southern coast.

Companies and governments are also creating facsimiles of popular destinations. The Eiffel Tower, for example, can be seen in Las Vegas and at Disney’s Epcot Centre, not just in Paris. Venice’s canals can be enjoyed in Macao and the prehistoric cave paintings in Lascaux, France, are available for inspection in a meticulously reproduced duplicate 200 metres away from the real thing.

As the scarcity of places grows, many companies will find opportunities to profit by meeting new levels of demand for authentic — and unauthentic — experiences. However, they will also have to jockey for space in this increasingly crowded, mobile world.

As costly as it is to operate in hot spots like London, New York and Tokyo, some companies will always need access to talent and clients in key locations and will have little choice but to compete with tourists for the cities’ limited resources. Businesses should secure their places now. With new centres of economic power emerging, companies should also establish themselves in rising metropolises such as Beijing, Rio de Janeiro, Moscow and Abu Dhabi, where prices on prime real estate will surely climb as demand outpaces availability.

thetimes.co.za

Newly rich are a tourism time-bomb



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