WTTC: Looking for daylight after yellow flag

VILAMOURA, Portugal -- For the World Economic Forum, it is Davos. For the travel industry, it is Vilamoura.

Since 1997, members of the World Travel and Tourism Council (WTTC) have gathered here every three years to discuss the state of the industry and share thoughts about how to move their collective businesses forward.

Among the WTTC's members are the CEOs, presidents, chairmen and chairwomen of the world's best-known hotel chains, airlines, tour operations, car rental companies and travel agencies as well as the heads of nontravel entities (credit card companies, insurance conglomerates and investment bankers) who have a keen interest in the continued health of the industry.

And, as in Davos, invitees, media, speakers and delegates -- many of them industry celebrities in their own right -- outnumber the attending members of the host organization. Though membership in the WTTC is limited to 100, this year's summit, held May 15 to 17, attracted 450 attendees to Portugal's Algarve region.

Present at every session, every meal and every party was former Air France president and current WTTC president Jean-Claude Baumgarten, throwing his arm around someone's shoulder and asking, "Ca va?"

If honest in reply, few answered, "Bien."

Picking a sound bite

During the three-hour, closed-door annual general meeting, there was, according to sources in attendance, much hand-wringing, followed by a few cautious expressions of optimism.

After listening quietly to the discussion, Marriott International chairman and CEO J.W. (Bill) Marriott Jr. is reported to have said, "OK. So what's the sound bite?"

Indeed, sound bites echoed through the general assembly hall, and a couple of them became the de facto themes of the conference, replacing the official theme of "Building New Tourism."

One oft-heard phrase was that the travel industry finds itself in a "perfect storm" of war, terrorism, a bad global economy and SARS. Marriott used it in his address and said the current environment "was the most challenging in the 47 years I've been in business."

Another recurring sentiment was that there is reason to be optimistic if the industry works together toward common goals.

American Express chairman and CEO Ken Chenault, after also making reference to the "perfect storm," told the gathering that his company's lobbyists were dispatched to work on behalf of U.S. airlines in Washington, encouraging lawmakers to reimburse the carriers for costs associated with security and war-risk insurance.

"It is undeniable that all of our fortunes are tied to the airlines," he said. "We don't have 20 years for them to work out their problems. They're essential to the global economy and the travel industry."

Three forces

Chenault talked about the relative short-term impact of events like the war but identified what he felt were the three forces that will have the greatest impact on the industry in the long term: The global economy, the state of the airlines and technology.

"Globalization has had a more positive than negative effect," he said, "but it has increased our interdependence" and has made it more difficult to isolate economic problems.

Of technology, he said, "Online travel is here to stay and keeps evolving. But constant change increases anxiety."

There are other changes affecting travel CEOs that are creating some anxiety, as well. Barry Sternlicht, chairman and CEO of Starwood Hotels and Resorts, discussed several of the issues that keep him up at night:

• The liability of signing SEC forms certifying the accuracy of accounting statements containing numbers rolled up from operations in 80 different countries.

• The knowledge that brand identity is important, but also knowing that, within his own brand, he has properties that are of various vintages, possibly creating the impression of inconsistency.

• Awareness that, if he chooses, he could be a "kamikaze CEO" and invest heavily during the economic downturn with the possibility of coming out of the down cycle faster than his peers -- or be wrong and never fill the extra capacity he took on.

• The worry that hotels could follow airlines in turning their product into a commodity.

In private conversations, the degree of the delegates' anxiousness seemed to be directly tied to the degree to which they have exposure in east Asia and to SARS.

"You think you have a problem?" one former airline executive said, noting that Cathay Pacific traffic fell 58% in April year-over-year. "Now, that's a problem."

Baumgarten said that in terms of raw numbers of jobs lost to the travel industry, SARS is five times worse than the fallout from 9/11.

"Almost 3 million jobs are gone in China, Hong Kong, Singapore and Vietnam, and according to IATA, the cost to airlines worldwide has been $10 billion," he said. "I'm confident it's temporary and that the prognosis for recovery is good."

In muted agreement, some delegates spoke of "numbers moving north" and that the industry was "rebound bound."

"Listen, everyone budgeted for no growth, but there has been some growth," Sternlicht said. "We're all just operating under a yellow flag."

Cosmic topics

Conference chairman Sir Ian Prosser, who also is chairman of the InterContinental Hotels Group, reassured the audience that "mankind's search for new experience is insatiable" and as proof, introduced the keynote speaker.

Walking out through the mist of manufactured fog as the sound system blasted "Also sprach Zarathustra," Neil Armstrong took the stage, looking more like a university professor than a space explorer, and gave a thoughtful keynote address.

Attending press were required to sign affidavits promising not to quote or photograph him, but it's fair to say he tied travel, philosophy and science into a speech that left the audience with a new appreciation for life on Earth.

Another moonwalker, astronaut David Scott, appeared on a panel the next day without any press restrictions.

A broad range of less cosmic topics was discussed at various panels, including the outlook for investment, emerging technologies, changing demographics of travelers and strategic responses to shifting environments.

The organizers also sought the perspective of media speakers, among them representatives of The Economist, the BBC, the Financial Times, Conde Nast Traveler, CNBC and Travel Weekly.

No cruise lines

The only segment that was noticeably underrepresented at the meeting was the cruise sector. Michael Crye, president of the International Council of Cruise Lines, sat on a breakout panel, but none of the major lines sent anyone to the meeting.

Baumgarten said he has been trying to get the cruise lines involved in WTTC, but so far without success.

Like the World Economic Summit, the Global Travel and Tourism Summit functions primarily as a place to network, exchange information and validate that your perceptions of the business climate are shared with peers.

Perhaps because of antitrust laws and other restrictions regarding what competing companies can and cannot do together, the document that was issued at the end of the summit was heavy on platitudes and light on specifics.

The "Vilamoura Declaration 2003" encouraged those in the industry to "work together to devise and implement policies that unleash travel and tourism's potential to be an economic and social force for good" and to "involve all stakeholders to make travel and tourism work for everyone, bringing prosperity to people in local host communities, enriching the experiences of those that visit them and strengthening the economies of destinations and outbound markets" as well as "ensure that all travel and tourism contributes to environmental, social and cultural preservation and enrichment."

However, the WTTC promises to follow up with a "Blueprint for New Tourism," a term defined at the beginning of the conference by InterContinental's Prosser as "travel and tourism that works for everyone."

Beginning next year, the summit will be held annually -- Qatar will host the event in 2004. Perhaps a good evaluation of whether "new tourism" is making progress a year from now will be to see if a Mideast Gulf state remains a viable venue for business meetings.

VILAMOURA, Portugal -- Houston, we've got a problem.

An astronaut who has walked on the moon squared off with an entrepreneur selling the dream of space tourism at a panel here at the Third Global Travel and Tourism Summit held by the World Travel and Tourism Council.

David Scott, who with Neil Armstrong completed the first Gemini space docking and who flew two Apollo missions, said the cost of programs described by Eric Anderson, president and CEO of Space Adventures, were, well, astronomical.

"You could never even pay the service on the debt," he said.

Anderson had said that space tourism was closer than most people think. "In just 10 to 20 years, we'll have hundreds of space tourists, then thousands."

He pointed out that only eight years elapsed from the time of the first manned space flight to the first moon walk.

"Yes, it's true that we did reach the moon in eight years," Scott countered. "We had 400,000 people working on it, and we spent $40 billion."

Even if tourists did not orbit the earth, Anderson said, there are plenty of people who would be willing to pay $100,000 to $200,000 to go roughly 60 miles up in a plane like the X-15 for 15 minutes.

He said they would have a true space experience and would "qualify as an astronaut."

Scott questioned the price tag, saying he thought it would cost much more.

"Just to get a space plane certified for flight would be expensive and time-consuming."

Anderson said there was big money behind private space projects, and pointed to Las Vegas hotelier and billionaire Robert Bigelow, who is spending $500 million to design and launch the first private space station.

Scott said that, having been in space three times, he understood the desire to be a space tourist and said that his experiences were "wonderful beyond my ability to describe it."

"Perhaps Mr. Bigelow and other billionaires should instead endow a program that would send a poet or artist into space, a young Picasso or Chagall, to help interpret the experience for everyone else. That would do more to inspire people to travel in space than anything else."

The moderator of the panel, which was titled "New Horizons," concluded by asking participants to predict what destinations might be popular in 20 years.

Conceding nothing, Anderson quoted Scott's earlier statement that "we overestimate what can be accomplished in the short term but underestimate what can be accomplished in the long term."

"I have to say it," Anderson said. "I believe space tourism will be a reality by then." -- A.W.