Marketing

The Tourism Time

by Paul Nunes and Mark Spelman
Bomb
From the Magazine (April 2008)

Summary. Reprint: F0804A The number of international tourist visits will more
than double in the next dozen years. As demand for access to hot spots outpaces
capacity, some companies will profit by creating destinations. And all businesses
will need to adopt strategies for... more

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-center employees, Russian petrochemical engineers,

Chinese middle managers, and Brazilian salespeople are already
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 United Nations World Tourism
Organization, international tourist visits are expected to double
soon, from roughly 800 million in 2008 to 1.6 billion by 2020 (see
the exhibit “Travel Explosion”). 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. Gray markets may develop, as they have for scarce tickets
to sporting and entertainment events. 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 impact of increasing tourism on the fragile
Galápagos Islands ecosystem, is discussing doubling the park’s
entrance fee and further restricting the number of visitors.

Travel Explosion The United Nations predicts that the annual

number of international tourist visits will roughly double to 1.6
billion by 2020.

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
Incan 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 line just to secure the option of
visiting rationed destinations, even if they don’t exercise it. 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. And thanks in part to the
opening of the Qinghai-Tibet rail line, the number of visitors to
Tibet increased 64% last year to top 4 million, according to the
BBC. Meanwhile, would-be high rollers are now heading to
casinos in places like Biloxi, Mississippi, and Detroit to avoid the
crowded Las Vegas strip.

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 Center, not just in Paris.
Venice’s canals can be enjoyed in Macao, where the Venetian
resort and casino has three canals in its $2.4 billion, 10.5 million-
square-foot complex. And the prehistoric cave paintings in
Lascaux, France, are available for inspection in a meticulously
reproduced duplicate 200 meters away from the real thing.

Just as sites and structures can be successfully replicated in new

locations, so can institutions. If the swelling ranks of global
travelers can’t all come to you, you can go to them. The
Guggenheim, for example, was once exclusively a New York City
museum but is now a foundation with museums in Bilbao,
Venice, Berlin, and Las Vegas—and there are plans to expand to
Asia, Latin America, and the Middle East. Business schools have
been following a similar strategy. Northwestern University’s
Kellogg School of Management, for example, has established joint
executive MBA programs with schools in Israel, Germany, China,
and Canada.
As the scarcity of places grows, many companies will find
opportunities to profit by meeting new levels of demand for
authentic—and inauthentic—experiences. However, they will
also have to jockey for space in this increasingly crowded, mobile
world. Two strategies will help.

Get in while you can.

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 centers 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.

Stay away if you must.

In some cases, it will become too expensive and logistically
difficult for businesses to coexist with swarms of tourists in the
hearts of cities with major cultural sites or other attractions. The
hotels, taxis, and restaurants will simply be full. One response,
worth considering now, is to move to city outskirts that have the
necessary infrastructure—or even to work closely with local
governments to develop new communities. Business districts like
La Défense in Paris and planned communities like Reston,
Virginia, outside Washington, DC, are cases in point. The time is
ripe for similar developments to spring up around other
congested cities.

A billion or two additional international travelers represent both a

massive potential headache and an opportunity for business.
Which it will be depends on what companies do now, before
someone starts selling tickets to New York City.

AReview.
version of this article appeared in the April 2008 issue of Harvard Business
 Paul Nunes is the global managing director of
thought leadership at Accenture Research and a
coauthor of Big Bang Disruption: Strategy in
the Age of Devastating Innovation and Jumping
the S-Curve: How to Beat the Growth Cycle, Get
on Top, and Stay There (Portfolio, 2014).

MS
Mark Spelman (mark.spelman@accenture.com)
is the global managing director of Accenture’s
strategy practice; he is based in London.

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