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Jean – Claude Baumgarten Tourism has to manage its unprecedented growth

Jean – Claude Baumgarten, President of the World Travel & Tourism Council analyzes in TravelDailyNews the barriers that troubles industry today as well as the future of travel & tourism.

TravelDailyNews: What issues are still questioning whether Travel & Tourism industry is ready for the growth that is currently experiencing?

Jean – Claude Baumgarten: That’s exactly the theme of our Summit next year in Lisbon. The theme of the Summit is breaking barriers – managing growth. We see new markets to come in, mature markets generating more trips, all that contributes to the growth of tourism and travel industry to a 4,6% per year for the next 10 years. And the question is “are we ready for it?” Definitely there are some barriers to this growth. One barrier is infrastructure. We have realized that there is not a strong awareness in the world except from some countries of course, regarding the importance to plan in long term in order to accommodate the growth of travel and tourism. Not only in transportation but also in infrastructure because if the growth is going to be as strong as we believe it will be, it will need also a new infrastructure basis, new hotels, new resorts new ways to handle travel & tourism. That is definitely one part of our issues that we are going to talk about next year.

TDN: What are WTTC’s proposals for managing this growth in a responsible way?

J-C. B.: Our proposal is the following: To have programs to enhance infrastructure. There will be need for destinations to rebuild new infrastructure. A program that will be for 15 to 20 years because when you built a hotel you are building it for 15 – 20 years, when you engage an investment plan for the hotel you engage yourself and all the investors for 15 – 20 years. So our proposal is governments and private sector have to put together developing plans for countries in a way that the period of the project to still exist even if the politician who had implemented it is no longer in power. So we can overcome that and that requires the commitment of the head of the government. In countries where the head of the government have decided that tourism is an important part of the country’s economical development, those countries are capable of making a medium and long term planning. On the other hand, countries that do not consider travel & tourism as an important part of their economies are not able to do that. It only can be achieved by public and private sector synergies. What does the private sector need? Private sector needs a good destination, a market and visibility. In other words, government has to give investors the visibility of 15 years; government should put together rules and roles which will be beyond the political life of its governance.

TDN: In a nutshell what is the meaning of breaking barriers – managing growth?

J-C. B.: Breaking barriers is to get all those visible and invisible targets which are behind the growth of travel & tourism. Airports, infrastructure, investment policies, air traffic control, all that. Managing growth gets the more dynamic part of it and it has two sides. One is how we get the markets, how each country; each company is positioned in the growing markets and takes advantage of it. The other side is, since we have growth we have to manage that growth in such a way that we will not destroy the environment and we will not destroy the social and cultural aspects of the countries. In other words we will talk a lot in the Summit about environment and social – cultural aspects because if we, as an industry -which contributes the 10% of the global GTP- do not consider the environment then we will have a problem. It is as simply as that. If we destroy our product we destroy our business. The other thing that is important is whenever a big project is being made, whenever a big plan is underway you have to invite in the local society. For example, if someone builds a hotel, it has consider the local society so they would be in the position to understand that this is good for them and that it will bring business to them. This is an aspect that we have to take under serious consideration. Local communities have to understand the value of travel & tourism, to understand the fact that they can develop business. 80% of the revenue in travel & tourism industry worldwide is being done by the small and medium sized enterprises. This is also our new approach.

TDN: Economy, travel costs, cost of oil, changes in technology and the increase of globalization are the major trends that drive the tourism industry today. How does the industry response to this and what are your estimations for the future?

J-C. B.: It is common to say that the world is globalised and it is true in travel & tourism. We saw that millions of Chinese went outside China last year, this year 13 millions are going to travel. Last year they went to the surrounding countries but more and more are about to travel long-haul. So, it is a fact. We are operating now as a globalised economy and society. It is amazing how people travel, how people go oversees. The other thing is the energy costs. There is a paradox. As energy will become more expensive more companies will become environmentally conscious. The cost of the energy is going to be high and we will see tourism enterprises to consume less energy and that works with hotels. There are now management plans that you save energy without having to harm the comfort of your clients. The other part is the consciousness of the consumer. Twenty years ago you couldn’t charge more for an environmentally conscious package. Now you can. The consumer will dictate what the product is. The product will become more and more environment – friendly.

We estimate that there will be a growth of 4.6% per year over the next 10 year for the future. This is in terms of economy and not in terms of traffic. That’s our forecast for the future and this is what all the other major organizations in the travel & tourism industry say. I think this industry is going to grow and it will grow fast and for two main reasons. One is the mature markets. We have the consumer who is traveling more frequently. Instead of going on vacation once a year, now people travel five times during the year. And we have the emerging markets such as China, India and Russia. On the other hand, there is Middle East which is characterized for a more domestic traffic and this is due to many reasons. Firstly, the Middle East travelers go less to the US, they tend to go more in the region and the region is offering fantastic products. Dubai is a perfect example.

TDN: Which regions do you see to have a serious impact from these trends?

J-C. B.: As far as WTTC is concerned travel & tourism is not only arrivals but all the three aspects of the tourism industry, domestic, inbound and outbound. We think that the new markets are going to help the mature markets. It is a matter of how each destination is promoting itself.

TDN: Can you give us an economic overview of the state of the industry in 2006 – 2007?

J-C. B.: 2006 will be a record year worldwide. The industry will grow in terms of economy 4.6% this year and 4.2% per year for the next ten years. In other words, 2006 will be a recovering year for the industry. The 4.2% for the next ten years is a healthy increase and 2007 will definitely a new record. We are very optimistic.

TDN: How do the characteristics of today’s traveler change?

J-C. B.: Besides the fact that they are more travelers there will be a bigger diversification of travelers. More and more people want to experience and to have something to tell returning to their homes. The ideal situation is that travelers go on a trip but they don’t want to spend all their day in the sea anymore but they spend part of the day inside the destination because they want to have a cultural experience, adventure experiences, in other words something more than traveling. People are now traveling more frequently and look for more experiences. There are many senior citizens in major markets such as USA who have more time and more money to spend. I see that more niche markets will come up in the near future. The bet is to develop these niche markets.

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