Why Tourism Can And Will Change Its Operating Model

Marketers and managers of destinations have long absorbed the concept that places go through a cycle of development from the initial discovery of a place, through its early development, growth, consolidation and then stagnation phases.  Yet, this same cycle has not been applied to the macro pattern of mass tourism. This is strange because virtually every other aspect of human society is in the midst of a radical re-think and is starting to examine, question and evaluate the deep assumptions and beliefs that have sustained human progress and economic growth over the past 100-150 years.

As a human system that is so embedded in and dependent upon human society and economies, tourism will be profoundly impacted by the scope and depth of the re-think for three reasons:

  1. the key human actors in the system are shifting their values due their own personal development and in response to an even deeper shift in our understanding of how the world works . We live at a time in history when an entire worldview is being replaced.
  2. The industrial operating model that has enabled the growth and diffusion of tourism is now producing diminishing net returns to most participants. The way business is conducted is being re-shaped.
  3. External pressures including global population increase, climate change, resource scarcity, and geo-political and economic shifts in power between regions and countries, will require the tourism economy to pay for services that hitherto have been free or relatively cheap. Increased costs combined with demand volatility will further undermine the resilience of enterprises whose customers have become accustomed to demand more for less and who have not been required to pay the true cost of travel.

I believe that the mass global tourism industry, which is based on a worldview best described as rational, scientific materialism, is in radical decline (despite appearances to the contrary) and needs to be replaced by an alternative.

The industrial model on which tourism is based is collapsing. As it matures, it produces diminishing net, unit returns to all participants, and relies on volume growth to compensate for yield declines.  As visitor volume increases, so do the costs associated with resource depletion, pollution and wealth concentration.

Survival and prosperity depend not just on becoming green but waking up to a whole new way of doing business that can, in part, be summarized as follows:

 

 

 

 

 

It’s premature to specify what the emerging model will look like and how it will work but we can speculate.  In my paper titled, Can Tourism Change Its Operating Model: The Necessity and Inevitability, obtainable on request from theconscioushost@gmail.com . I explore its features in more detail. All we can do here is outline some key characteristics:

  1. In the old model, the starting point is the Product, an object that is assembled, packaged, produced and priced according to the rules of manufacturing. In the new model, the starting point is a Place that is recognized as qualitatively unique and therefore scarce. While products become commodities and lose value as they become more alike, “Places” that are celebrated for their unique geography, history and culture, gain value and are acknowledged as the primary motivator of travel.
  2. In the old model, guest and hosts act in an adversarial role, playing an “I win-you lose” game in which each party tries to win at the cost of the other. In the new model, that puts relationship building ahead of transactions, guest and host co-create experiences of meaning, benefit and value to both parties.
  3. In the old model, Hosts are producers who focus on the attributes of their product in order to persuade a target market to purchase. In the new model, hosts orchestrate unique experiences of places that are perceived of value and as transformative by guests.  Guest are attracted to a host for his or her personal, subjective qualities  – what they value; their sense of purpose; contribution to community; their integrity and authenticity over and above the physical artefacts and amenities
  4. In the old model, Producers PUSHED their products in front of potential buyers through various promotional techniques and, when that failed, they dropped their prices. The cost cutting methods deployed to maintain profit margins (standardisation, homogenisation and automation) further devalued the experience and guest satisfaction while suggesting that cheap travel was a right. In the new model, producers focus on protecting, rejuvenating and expressing the elements of a place that make it unique, attractive and worth paying for. Hosts who can communicate a strong signal about their values and their appreciation of the uniqueness of their place and corporate culture, PULL towards them customers whose values are aligned with theirs.
  5. In the old model, producers assumed that their first priority was to maximise profit for their shareholders. In the new model, producers understand that profit is an outcome that occurs when the enterprise has a higher purpose and when it works to generate net benefit for all its stakeholders (guests, employees, suppliers, and the host community). In the old model, tourism entrepreneurs were followers – applying models and values developed in manufacturing. In the new model. They will be active change agents in their communities and on the forefront of innovation.

This post is s summary of the content presented on the Conscious Travel web site and, more specifically of a discussion paper titled Can Tourism Change Its Operating Model: The Necessity and Inevitability obtainable upon request from theconscioushost@gmail.com. Further relevant references includes:

Rocky Year Ahead for Tourism – by Owen Hembry, NZ Herald 23Jan, 2012

UK Travel Firms must Radically Change Business Models to Survive 2012 – ETN Global Travel Industry News, 28 Dec 2011

The author welcomes all comments and contributions to the concept!


One Comment

  1. AnaHit April 27, 2012 at 11:12 pm #

    I think in our day tourism industry is experiencing changes towards new undiscovered destinations, unordinary and unique experiences. Today value proposition is the key to success. If a tour operator is capable of combining a full package of experiences and creates real value for the tourists, the tourists are ready to pay premiums.

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