From the Window Seat

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SEOUL, South Korea — On Day 1 of the World Travel and Tourism Council’s Regional Summit here last week, data was presented suggesting not only that Asia would power the global economy for decades to come but that the travel industry, already outperforming the economy as a whole, would ride Asian coattails to unimaginable heights.

Expected growth was described variously as “mind-boggling” and “staggering.” Asia’s rising middle class would triple to 1.7 billion in less than seven years.

The Asian travel and tourism sector would grow 6% every year for 10 years, compared with 4.4% for the industry as a whole. Some 47 million new industry jobs would be created in the region by 2023.

Korea Prime Minister Jung Hong-won told the group during the opening session that he expected arrivals in his country to reach 16 million by 2017, up from 11.1 million last year.

But a tempering drumbeat of caution began to issue from the dais, first obliquely and then with direct challenges to the notion that the audience could, figuratively speaking, take the future to the bank.
WTTC Blair
Keynote speaker Tony Blair, the former prime minister of the U.K., while noting that “power is shifting east, and shifting fast” also said that due to the speed of technological development and the interconnected nature of the world, “we live in an era that’s uniquely unpredictable.”

Although Blair was talking specifically about political dilemmas such as the one President Barack Obama faces in Syria, those words were increasingly applied to travel predictions about Asia by subsequent speakers, with Alan MacCharles, lead partner for commercial strategy and research for Deloitte, going so far as to reduce the predicted 47 million new industry jobs by 50%.

“You won’t need 47 million new jobs. You will innovate half of them out,” he said, citing, as an example, the possibility of check-in kiosks replacing front desk personnel at hotels.

Identifying issues

While those predicting a beyond-rosy future were for the most part taking trend lines and extending them out, speakers on a panel titled “Removing the Barriers” ended up identifying several factors that could slow or even derail the predicted near-exponential growth.

Moderator Christopher Rodrigues, chairman of VisitBritain, said that “this wave of travel is not without consequences.”

He pointed out that the very nature of the industry, comprising cash-intensive, low-margin businesses, would certainly not lose any of its fragility if it were scaled up in Asia as anticipated.

He also observed that “when the business gets hit hard, participants can lose money very, very fast. Confronted by projections of fantastic growth, it’s critical that we ... minimize the number of self-inflicted wounds.”

PATA CEO Martin Craigs mocked what he described as the “mouthwatering growth charts.”

“Is that really how life happens?” he asked. “Hasn’t the world collectively not predicted all the changes we’ve seen [over the past few decades]?”

Craigs nonetheless made a prediction of his own, saying that a lack of highly trained personnel, pilots and engineers in particular, could slow expansion.

Time International Asia editor Zoher Abdoolcarim expressed concern about cultural issues and that interactions among Asians and host countries, including intra-Asia travel, could “create problems we have not seen before.”

“Even in Hong Kong ... there is palpable resentment and anger towards fellow Chinese visiting from the mainland,” he said.

He also cautioned hosts not to assume that, for instance, outbound Asian travelers are going to be uniform in their desires.

“There will be classes of Asian travelers,” Abdoolcarim said. “There may be Chinese who want an exclusive tour of vineyards in France, and [visitors] from Southeast Asia who just want to see the Eiffel Tower.”

Carnival Corp. and Singapore dreams

WTTC FoschiDuring a discussion on the development of the cruise industry in Asia, a balance between sky-high hopes and on-the-ground realities came together without seeming to dampen enthusiasm for Asia’s potential.

Pier Luigi Foschi, CEO of Carnival Asia, talked about work he has done in the region for the past seven years.

“When we started with Costa in Shanghai, there was no cruise terminal,” he said. “But in three months, they prepared a temporary terminal. ... In two years, we had a true terminal and then, in five years, one that was large enough.”

Still on the topic of infrastructure, he said, “What we really need is integration with the airport, railroads and roads. Easy access to the cruise terminal. We need government effort to clear the luggage [at the airport] and dispatch it to the cabins.”

But Foschi also stated, “It’s not only ports and related infrastructure that need work. It’s the destinations themselves. ... They need adequate hotels, resorts, theme parks and so on. They still have a long way to go.”

The lack of scale has meant that the line still does not offer air/sea/hotel packages, he said.

“We’re not big enough in Asia to plug into major agreements, though we could possibly do it out of Singapore,” Foschi said. “That’s part of our dream. Singapore is fortunately situated. The weather is good for ships year-round, and the sea is relatively calm. From Shanghai, we can position ships there and head south. From Singapore, you can go to Thailand, Malaysia and Indonesia. But we need airlift capability.”

If Foschi’s experience is typical, the challenges of Asia are not enough to discourage anyone but the most unlucky from seeking the scaled-up rewards that statisticians promise.

“We’re already profitable,” he said. “When we decided to invest heavily in Asia, we did a study. Our expectation is 3.7 million passengers in Asia by 2017, and 7 million by 2020. If that happens, 20% of the world’s cruise market will be in Asia, led by Chinese, Japanese and Korean passengers. It may happen that we won’t have sufficient capacity to serve the market.”

He smiled.

“But that would be a positive problem to have.”

Follow Arnie Weissmann on Twitter @awtravelweekly.


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