Photo Credit: TW illustration by Jenn Martins

Balancing act:This month's WTTC Global Summit


By Johanna Jainchill & Arnie WeissmannApril 05, 2017

The quest for sustainable practices and growth is difficult in any industry, but it becomes especially thorny in a sector as complex, diverse and fragmented as travel.

Strategists must take into account that advances in technology will introduce course-altering disruptions on a regular basis.

Plans that require close international cooperation must acknowledge that rising nationalism threatens to raise barriers between nations.

And multiyear economic projections must factor in acts of terror that could upset business operations or influence government policy.

Among the presenters at the WTTC Summit in Bangkok:

• Douglas Anderson, CEO of American Express Global Business Travel
• Claire Bennett, executive vice president of American
Express Travel
• David Cameron, prime minister of the U.K. from 2010 to 2016
• Roger Dow, CEO of the U.S. Travel Association
• Christine Duffy, president of Carnival Cruise Line
• Kurt Ekert, CEO of Carlson Wagonlit Travel
• Peter Fankhauser, CEO of Thomas Cook Group
• Tony Fernandes, CEO of AirAsia Group
• Philippe Gombert, chairman of Relais & Chateaux
• Mark Hoplamazian, CEO of Hyatt Hotels
• Geoffrey Kent, chairman of Abercrombie & Kent
• Manfredi Lefebvre, chairman of Silversea Cruises
• Oscar Munoz, CEO of United Airlines
• Deepak Ohri, CEO of Lebua Hotels & Resorts
• James Riley, group chief executive of Mandarin Oriental Hotels
• Jeffrey Rutledge, CEO of AIG Travel
• Arne Sorenson, CEO of Marriott International
• Brett Tollman, chief executive of the Travel Corporation
• Rob Torres, managing director for travel at Google
• Gordon Wilson, CEO of Travelport

On April 26 and 27, United Airlines CEO Oscar Munoz, Marriott International CEO Arne Sorenson, American Express Global Business Travel CEO Doug Anderson and dozens of other chief executives from multinational hotel companies, airlines, tour operators, travel agencies and technology companies will gather in Bangkok to wrestle with ways to sustain the momentum of economic growth during times of enormous change in multiple arenas.

Joining industry leaders in the discussions will be a futurist, consultants, conservation groups, journalists and representatives from Interpol and the World Economic Forum, as well as former U.K. prime minister David Cameron.

Climate change, overcrowding, migration, protectionism and shifts in the labor structure are all on the agenda. But although the topics under discussion reflect present-day challenges that may be occurring on local levels, "The WTTC focuses on managing change on a macro basis," said the organization's CEO, David Scowsill.

The WTTC has long advocated that there must be three fundamental areas in place for travel and tourism to thrive: freedom to travel, governmental policies that support business growth and responsible business practices.

"We know there are going to be constant shocks to the system, and we have to roll with them," Scowsill said. "But for the industry to grow sustainably, we work within longer-term frameworks."

The theme of the summit is "Transforming our World," which is intended to complement and support the United Nations World Tourism Organization's "Year of Sustainability" projects. Amid discussions of future uncertainties, the summit will also carve out time to celebrate accomplishments, with a significant portion of the second day devoted to shining a spotlight on best practices and rewarding outstanding sustainability efforts during its "Tourism for Tomorrow" awards ceremony.

Tourism for Tomorrow award finalists

The WTTC's Tourism for Tomorrow Awards, now in their 21st year, honor travel companies that exemplify the ways that tourism creates economic, environmental and cultural benefits for local people and places. Click here to find out about this year's finalists.

The benefit of fragmentation

The WTTC released a set of studies in advance of the conference that suggest the fragmentation of the industry can actually help minimize the global impact of the "shocks to the system" Scowsill referenced. The organization's report on terror, released late last month, noted that although there were contractions in inbound tourism spending in Belgium, France and Turkey following attacks in 2016 and that traffic to North Africa continued to decline, global tourism spending increased 3.3% overall, outpacing the global GDP for the sixth year in a row.

In response to growing terror threats, the WTTC has called on governments to integrate the private sector into security planning, to implement electronic visas and advanced technology to enhance security, to create crisis response plans and to increase intelligence sharing across borders.

The industry, Scowsill said, "is resilient. People will not stop traveling."

When one region has economic weakness, it is more than compensated for by growth in other regions, according to a study conducted by Oxford Economics on behalf of the WTTC.

Southeast Asia, which showed the fastest growth, at 8%, helped offset the slowest growing region, Latin America, which posted only 0.2% growth.

The organization also projected a decrease in the world's largest tourism economy, that of the U.S., as a result of negative perceptions among potential foreign visitors following the signing of the proposed travel ban, as well as the strength of the dollar. Growth of the U.S. industry in 2017 is expected to be 2.3%, slower than the rate of 2.8% seen in 2016.

While the WTTC spotlighted only two countries with special reports -- the U.S. and the U.K. (the latter focused on the impact of Brexit) -- the organization does not assume an advocacy position in domestic politics.

"We might point out, for example, the unintended consequences of President Trump's travel ban as regards the industry," Scowsill said. "There is no doubt that the message has pervaded the world that the U.S. is not open for business as before."

"The WTTC focuses on managing change on a macro basis." — David Scowsill, WTTC
"The WTTC focuses on managing change on a macro basis." — David Scowsill, WTTC

Similarly, the WTTC chief points out that Brexit has introduced a great deal of uncertainty around issues related to travel and tourism, including the future of labor mobility, visas, open skies and border control and security.

"There are 120 laws that will have to be renegotiated," he said. "There have been a number of attempts to forecast what will happen, but there is uncertainty, and businesses want to make decisions, investment decisions. Corporations don't have a lot of visibility regarding the endgame, and business doesn't like uncertainty."

A futurist weighs in

Oxford professor Ian Goldin, who has made a career in forecasting by studying future-focused issues, acknowledges uncertainty and risks going forward, but he is nevertheless decidedly confident about the travel industry.

"I'm very optimistic that we'll continue to see the growth we've seen in the last decade in the next decade," he said. "But the sustainability of the trend depends on managing the risks, and the risks are associated with globalization."

"Protectionism is dangerous, something that needs to be countered." —Ian Goldin, Oxford
"Protectionism is dangerous, something that needs to be countered." —Ian Goldin, Oxford

Among those is the rise of protectionism in the U.S. and Europe.

"Protectionism is a very dangerous thing," he said. "It's not permanent, it's a phase we're going through, but it's something that does need to be countered."

The protectionist trend will slow travel because it will increase visa requirements; restrict global investment, thus slowing global growth; and lead to nationalism and xenophobia, which make people less willing to accept foreigners, Goldin said.

However, he pointed out that protectionism is "mainly an advanced-country phenomenon," not something that is happening in China or India or the other emerging markets that are currently fueling growth in travel and tourism.

"It's a problem of countries where people in the past saw the benefits of globalization but are not seeing it now," he said. "Whereas countries like China are seeing it now."

For example, travel between emerging markets, such as Chinese tourists going to Africa, is increasing sharply, Goldin said, albeit from a very low base.

Goldin is also encouraged by the decrease in the cost of traveling as overall world wealth increases, meaning travel for both business and leisure "is something that a growing share of the world's population can afford to do and wants to do. That is an amazing thing, and the most expressive symbol of it at the moment is the increase of Chinese travel, domestic and foreign."

The risks, of course, need to be managed, and Goldin thinks they can be with technology.

Cyberattacks will become an increasing threat with everything from the control of aircraft to booking systems to hotel access systems being cyber-enabled, Goldin said.

"I think we should assume we'll see many more challenges to cyber systems, and we'll see a need for much more investment in the stability of the systems," he said.  

Technology will also be key to preventing pandemics, another huge risk from globalization when it comes to managing hubs that have the potential to spread contagions.

And, of course, climate change, which Goldin said will have dramatic consequences for many of the places that people visit and will require travelers to be part of the solution rather than the problem.

Linking economics and environment

Maria Damanaki, the global managing director for oceans at the Nature Conservancy, sees this additional responsibility on the part of travelers as an opportunity for tourism to help the "blue economy."

"Most companies are keen to improve their corporate sustainability profile by making development decisions that reduce their environmental impacts," she said.

Damanaki hopes that the mutual dependence of oceans and tourism will translate into partnerships and commitments across sectors that "put ocean health at the forefront."

"Well-designed and sustainable tourism can support economic development." —Maria Damanaki, Nature Conservancy
"Well-designed and sustainable tourism can support economic development." —Maria Damanaki, Nature Conservancy

"Coastal and marine tourism is both highly dependent on environmental quality and a major driver of change in coastal and ocean environments," Damanaki said.

The plight of coral reefs, for example, is getting a lot of attention because of how important they are to the tourism economies of so many places.

"Well-designed and sustainable tourism can support economic development," Damanaki said.

April Rinne, a thought leader and World Economic Forum adviser with regard to the sharing economy, feels that peer-to-peer enterprises can produce similar results.

When it works, it helps emerging travel markets grow in a more sustainable fashion.

"Accessing, rather than owning, has a lighter environmental footprint," she said.

For example, Rinne said that one shared car can take between nine and 15 cars off the road.

"Right there, in terms of the material required to produce the cars and traffic and congestion, there are a lot of environmental benefits," she said.

And it is not only cars. Homes can be shared, as well as other spaces that can help meet the demand for tourism. Examples are restaurants, as well as spaces for events and meetings.

"The sharing economy is in its adolescence, far from maturity." — April Rinne, World Economic Forum
"The sharing economy is in its adolescence, far from maturity." — April Rinne, World Economic Forum

"When you start looking at all of the assets or spaces around you that are idle, and how they could be used more effectively and efficiently, you realize not only that your environmental footprint can be lowered but the overhead is lower," she said. "It saves money and natural resources."

Rinne said the future of the sharing economy will continue to disrupt travel and tourism, with new businesses launching every day that will target where we stay, how we get around, what we eat and who we meet.

"There is an abundance of innovation going on," she said. "Not all of it is going to succeed. We are in an early generative stage. The sharing economy is in its adolescence. It's out of infancy -- people know what it is -- but it's far from maturity."

Preparing for change

Scowsill predicted that the rate of innovation and change is only going to speed up, but he said travel companies have so far proved to be up to the task of evolving quickly.

"I can't think of any big companies in travel that have gone out of business due to major changes," he said. "Look at the travel agency community [and competition from OTAs]. The GDSs were under pressure but adapted. There are no pieces of the industry that have disappeared because their business model became obsolete. The latest challenge is the sharing economy, but you don't see hospitality companies becoming less profitable."

In fact, emerging models appear to be fueling growth. One in 10 jobs worldwide is now in the travel industry, up from one in 11 last year, and approximately 1.3 billion people crossed international borders in 2016. That number is expected to hit 2 billion in 2030.

The issues discussed in Bangkok this month at the WTTC Summit could very well help shape what the experience will be like for those billions of travelers 13 years from now. In fact, the quality of that experience will depend upon how well the industry itself prepares to cross unforeseen frontiers.

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