It's World Travel Market 2009 and this is a speech given at a Caribbean Tourism Organisation Event during the show
There's a saying that a week is a long time in politics. And I'd say a year is a hugely long time in the travel industry. We are weathering the economic storm. The banking system hasn't collapsed completely. And there are now a huge number of experts - sounding like primary school teachers teaching letters speculating about how we'll come out of recession will it be a letter V, a U a W or even a bumpy VW? But - despite the variety of economic predictions - they all seem to agree it's going to be a slow, long process and consumers will be in a different mind set for many years to come. I agree. We're in a different place financially and emotionally from a year ago. So are our customers and trade partners.
There may be green shoots of recovery but 2010 is not going to be easy. We've got an election next May. Unemployment is predicted to reach 3 million by that time. A new government is likely to bring in a raft of emergency measures to generate more income. VAT - the government tax on everything we buy will go back up from 15% -possibly to as high as 20%. Then we've got the new Air Passenger Duty APD. Economy longhaul passengers will pay between £60 to £85 in tax from next November To cap it all it's the football world cup in South African in June when I'm told that no self-respecting football fan would be seen dead away from his TV set. So we've come a long way but we've got a long way to go
This time last year I hijacked a well-known quote, which says, "the most successful people are those who are good at plan B". And my prediction for 2009 was that the most successful people will be those that have plan B, C and D. That's never been more true. We need to do things differently in a different climate. A recession makes us look hard at every part of our organizations and ensure every part is adding value. But to really succeed it's not just about managing costs, it's about thinking where the market opportunity will lie in three years time and investing and working towards that now so you're first off the block when the upturn comes. So we need to think differently. Let me give you just three things to think differently about
First - think about new markets. When a recession hits, the first thing to do is to look at resilient market sectors which might not always be your main focus in growth times. That's sectors like visiting friends and relatives, repeat visitors, special interest and independent travellers. They are far more likely to travel in tough times. So these are great for continuity but, because they tend to be niche they won't help you to grow sustainably and build long -term, high yield traffic in the future. So its time to look hard and think again about markets you may have considered, or not tackled yet. Are there things happening you should be aware of and can prepare for?
Take China for example. Just this month, TripAdvisor bought China's number 2 search engine. It's also recently launched a Chinese travel review site called Daoda. Owners Expedia are investing heavily in other brands to build a group which can challenge the dominant market leader Ctrip. One interesting nugget of information I saw reported by the analysts PhocusWright is that competitors to Ctrip are gaining ground by offering tools in what they describe as the "travel discovery phase". For any destination that is considering China I read that as a call to action. What will the Expedia group and other operators in China need from you to help them market Caribbean destinations in this discovery phase in the future?
My other example is Russia. My company is a founder member of a global agency network called Pangaea. Our Russian agency partner Eventica tells me that only 11 million Russians currently take a holiday booked through an operator or travel agency out of a total population of 142 million. But that figure is rising. While overall outbound traffic from Russia reduced by 22% in the first two quarters of this year, the volume of people taking premium or long haul holidays actually increased. More than 30,000 Russians now to the Dominican Republic every year and 20,000 to Cuba. That's why the big beasts of the travel industry are circling the market opportunity. At the ABTA Convention this autumn I was fascinated to hear Peter Long the head of the TUI group say he's been to Russia 14 times this year and he thinks the CIS markets could be as big for TUI as the size of the UK and German business combined. Thomas Cook is also reported to be looking at this market.
This month met Louise Bates of TUI Travel plc who is the project product director for emerging markets. TUI has now completed the acquisition of VCO Travel in Russia. It's the country's second largest tour operator, with around 160,000 passengers a year and has a chain of 120 shops.
Together with a team of eight staff in Moscow TUI Travel are now planning the summer 2009 programme for VKO Travel. Russian's apparently book very late - 80 per cent of holidays are sold in the last four weeks before departure. So summer brochures won't be published until March next year. Russians spend an average of $1,000 per head on their holidays. Just as a comparison Brits spend around £500 a head. Louise tells me the typical European "empty nester" customer doesn't exist in Russia. Russian travellers are active, sociable and looking for new experiences and enjoy excursions. They like the reassurance of branded hotels. VKO Travel doesn't have many winter sun destinations. So TUI is now considering its global options. It's reviewing strategic partnerships with airlines to and within the Caribbean next winter. Louise said Spanish Caribbean is likely to be top of the shopping list, but there's an open door for anyone interested in discussing the opportunity with TUI.
One point, which Louise asked me to tell you all, is that the biggest barrier for Russian travellers is visas. Because they book close to departure, any country which has a complicated visa process is just discounted. Russians can travel easily to Turkey, Egypt, Dubai and Thailand and that's why they travel there in such volumes.
So a call to action now for any country considering marketing to Russians is to look hard at any visa restrictions for Russia. Explore new industry partners who may be emerging in Russia.
So new markets is my first thought for the day. The second- how can new technologies help us to reach people in new ways?
The online world is changing fast and we all need to be speeding alongside it and understanding what is around the next corner. I thought you might be interested to see this statistic from Microsoft Research which shows 94 pc of online touch points before purchase are given no credit for conversion. We only tend to evaluate "last click". So how are companies influencing touch points before purchase? The student long haul specialist STA set up a web page some time ago called Travelbuzz. That's now migrated from being purely a webpage to a club that meets monthly in London for a destination-themed evening sponsored by the agency and tourist board input. Rather than being a brochure the website has helped them to create a community
Let me give you some more facts from a longhaul report we've produced for World Travel Market. The monitoring service Hitwise recently published astonishing figures for internet traffic for last year which showed that social networking sites are now the second biggest traffic drivers to websites after search engines. At a Travolution conference earlier this year I heard the head of TripAdvisor had been embedded within Facebook to discover that many people in Facebook weren't aware of it as a standalone brand. They'd only encountered it in Facebook. Just last week a survey of 90 travel industry Twitter users in travel was published by key travel blogger Andy Jaroz - his blog is called 501 Places. It's a small sample but he came up with some interesting stats. He concluded that most of the users surveyed had only started using Twitter in the last six months. But 60% had used Twitter to connect with local suppliers before they traveled and 28% reporting they'd made a reservation following an initial contact on twitter. So this microblogging site could be a powerful source of business in the future.
So if Twitter was the big new thing for 2009, what's going to affect us most in 2010? Well if I'm brave my crystal ball says its going to be Google Wave. This is what Google describes as a new model for communication and collaboration which is still in beta testing but which promises to incorporate email, instant messaging and social networking so consumers can log into just one platform. There's not doubt this means Google Wave will be the first point of contact when users browse the internet in future and could become the strongest social platform on the web.
My third and final thought is to question how can we work together more cooperatively to drive our way through global recession and to build our industry for the future. We already work cooperatively together as the Caribbean Tourism Organisation, marketing our region, what more can we do? Well we can work together to create a sustainable industry for the future. A group called Tourism 2023 was launched in the UK this year with the intention of creating a sustainable vision for the outbound travel and tourism industry. It's backed by some big names - British Airways, Carnival, ABTA, Thomas Cook and the travel agency consortium Advantage Travel Centres. The group has put together possible scenarios for what our industry will look like by 2023 . Think of them as rather scary risk assessments. And from that they are trying to create a route map so we work together to reach the most beneficial scenario. This group has hugely ambitious aims and the launch material is inevitably a bit vague. But when I read the launch document I was struck by their call for the industry to work together. They say there are three areas which need urgent action and which can't be tackled by one organization in isolation. The first and top priority is to work with destinations. Their contact details are on screen if you'd like to find out more and we'll certainly be checking it out for the CTO.
We also share a common need to speak with a clear voice to politicians in source markets. We're certainly going to be facing tough battles with the British government over the next twelve months. Issues like APD came to our attention too late. ABTA has changed its structure and appointed a political lobbying spcecialist who starts in his new role in December. I'll be approaching him on behalf of the Caribbean to see how we can be better coordinated and better informed about British government plans which may affect us. And there may be other ways of working which I hope we can bring to the table.
I do believe in a crisis new thinking will win the day. In a different world we need to think differently. Re examine what we take for granted and reconsider how we do business.