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20 Dec, 2010

Defining Comment of WTM 2010: “Mistakes Were Made”

Arguably the most defining comment of last week’s World Travel Market 2010 came during the tourism ministerial summit organised by the UN World Tourism Organisation (UNWTO) on November 9.

An Essay

LONDON: Arguably the most defining comment of last week’s World Travel Market 2010 came during the tourism ministerial summit organised by the UN World Tourism Organisation (UNWTO) on November 9. Briefed to focus on the economic impact of tourism and the competitive advantage of destinations, the moderator, CNN Travel show presenter Richard Quest, asked the ministers to assess whether they felt tourism was “punching its weight” in the places that matter, and if not, why not. Citing his own earlier encounter with a minister whose country had joined the tourism bandwagon and then been over-run by eyesore developments, he said the minister took him aside and whispered, “Mistakes were made.”

As was apparent in the forums and discussions throughout the WTM 2010, the last major trade show of the first decade of the 21st century, mistakes are still being made and people industry-wide are paying the price, especially at the lower rung of the socio-economic ladder. Indeed, an analysis of the many comments, views and announcements at the WTM indicated that beneath all the gloss and veneer, the travel & tourism industry is in dire straits. Stability is out, volatility is in. The emergence of too much capacity too rapidly in too many destinations has led to excessive competition that is squeezing margins, affecting pay-scales and failing to attract quality people to work in it. Yes, there is plenty of growth but that is a mere illusion at the rank-and-file level, meaningless to them and the status of their respective destinations and companies.

Alongside, both external and internal shocks continue unabated. A few days before the WTM, more security scares emerged in the form of parcel bombs, which guarantee that the industry will face more cost pressure. The right-wing Tea Party made big gains in the U.S. congressional polls, making a lame-duck out of President Obama and his “Change You Can Believe In” agenda for the remaining two years of his presidency. Currency wars were on the table at the G20 summit. On the streets of London, students protested the U.K. government’s austerity drive which has forced up university fees. It is also planning to lay off thousands of public servants. Ireland, once a booming economy and the darling of investors, is in financial trouble. Greece, Portugal, Spain and other “developed” countries appear to be not too far behind.

Much of this tumult can be traced back directly or indirectly to two tectonic geopolitical events that have defined the first decade of the 21st century: The global impact of the trillion dollar wars in Iraq and Afghanistan, and the global power drift to Asia and the BRIC countries. The definition of “developing” and “developed” worlds is changing. Declining powers are being forced to reinvent their economies and business models. Many have been so busy lecturing the “developing” countries to clean up their act, they have forgotten to clean up their own. That clean-up, now under way, will not be pain-free. UNWTO Secretary General Taleb Rifai sounded a note of caution in a press conference after the ministerial summit. Yes, he said, the world has recovered from the latest economic and financial crisis, a major depression has been averted and travel flows are returning to 2008 levels. But, he added, “We’re not yet out of the woods.”

In spite of being buffeted by these winds of change, the travel industry’s response has been riddled with mistakes. The biggest mistake is the unwillingness to recognise that mistakes have been made, and the complete lack of accountability by those making them. The UNWTO tourism ministerial summit would have been an ideal opportunity to review the ups and downs of first decade of the 21st century, analyse the man-made and natural disasters that have struck the industry virtually every year since 2001, draw some lessons and chart a way forward. Instead, the summit largely became a rehash of the hackneyed clichés about why the industry does not get the economic importance it feels it deserves. In fact, the answer lay in the topic itself. The industry does not get recognition because it refuses to recognise its mistakes, and hence fails to address them. A “one size fits all” remedy has never worked, nor has it ever bred respect.

Lack of genuine debate

During the summit, Mr Quest politely sought to press the ministers to admit at least a few mistakes. One dominant discussion theme was the air passenger duty (APD), a tax imposed by the U.K. government that has significantly raised the cost of holidaying abroad, especially for families. The Caribbean delegate cited figures to prove the impact this is having on host destinations. But, countered Mr Quest, governments need tax money to fund education, health and other public projects. (He didn’t mention the wars in Iraq and Afghanistan.) If they don’t tax airline passengers, who should they tax? That caught the ministers off guard. Only the Tunisian tourism minister Mr Slim Tlatli admitted that was true. The private sector always wants lower taxes, the minister said, noting that the travel & tourism industry is a voracious consumer of energy and water, both of which have a significant, but unmeasured, environmental impact.

Another related mistake is the almost total lack of genuine, intellectually-stimulating debate that is a vital and healthy component of all democratic systems. Several events on the WTM programme were described as “debates”. Hardly. A “debate” is a contest between opposing “for” and “against” points of view. There is no such debate at the WTM. Certainly, some moderators, such as the BBC’s HardTalk anchor Stephen Sackur, do ask provocative questions, and others do come from the floor, but none of that constitutes a full-fledged debate.

One example of how an opposing viewpoint can liven things up came in the discussion on sports and tourism. That was designed to highlight the growing connectivity of the two sectors, especially with the London 2012 Olympics coming up, and the successful soccer World Cup staged earlier this year by South Africa. The round of mutual back-thumping by the panellists was abruptly interrupted when Tom Jenkins, Executive Director of the European Tourism Operators Association, cited studies showing that such mega-sports events do not necessarily deliver the tourism results they are expected to. His research showed that countries such as China, South Africa and others had grossly inflated visitor-arrival projections for events like the Olympics, etc. The numbers were never achieved, and the events left behind a huge surplus of hotel rooms and empty stadiums.

A third major mistake

Mr Jenkins was challenged both by questioners from the floor and the panellists who cited the fringe-benefit value of such mega-events, e.g., the increased expenditure for national infrastructure, the opportunity to uplift national pride and improve the global image and identity of the host nation. All true, Mr Jenkins said. “I am not denying any of that. I am just saying that from a purely tourism return on investment perspective, they do not always deliver the results they are claimed to.” The injection of an alternative perspective woke up the audience and certainly generated food for thought.

Alternative perspectives remain unheard precisely because of a third major mistake: The line-up of speakers and panellists does not encourage it. Certainly, on the trade floor of the “World” Travel Market, over 200 countries, states and territories are represented. But the seminars and side-events are heavily dominated by British speakers, followed by Europeans and Americans. There are virtually no Asians, Africans or Arabs. This significantly narrow-casts the perspective on issues.

Take for example the session on Small & Medium Sized Enterprises. There, one of the U.K.’s pre-eminent business speakers, Lord Digby Jones, went into a detailed discussion of globalisation, the rise of China and the emerging opportunities for British business. However, that same day, local media headlines were all about British Prime Minister David Cameron lecturing the Chinese about human rights and democracy. Had a Chinese been on the panel, he may have told Lord Jones that the British may make greater commercial inroads into China if they mind their own business and worked on fixing their own domestic problems. In the Q&A session, I told Lord Jones that the reason why many developed countries are facing economic problems is because they don’t learn from past mistakes, and don’t practise what they preach. He agreed with part of my comment, but not all.

“No longer a reward for risk”

Indeed, reality-check frustrations about the downside of globalisation were aired in the tourism futures forum organised by Bournemouth University, almost the final event of the WTM. One panellist, Noel Josephides, co-founder of Sunvil Holidays, rued the growing market power of large conglomerates like Thomas Cook and TUI which he said was squeezing out many SME companies and raising concerns about the “abuse of dominant power.” He said that with TUI and Thomas Cook becoming so powerful, the middle range of tour operators is dying off. If that happens and the large tour operators develop exclusivity with a section of hotels, it will inflict a great deal of pain on mid-range hotels. Mr Josephides said that all-inclusive deals were another looming problem area and would lead to vastly reduced expenditure by tourists in host countries and closure of restaurants.

“What worries me is that there is no longer a reward for risk. So many awful things hit you in any given year…you may think you have started something new yourself but unless that last departure has come back, you just don’t know what’s going to hit you.” He said the small and medium sized players “can always cope with competition but my biggest worry is that we are not operating on a level paying field.” He said some online travel websites don’t pay VAT on their transactions. Others can shift their business offshore. “If governments allow consolidation and allow the powerful to become more powerful, we will see a complete breakdown of consumer protection in the U.K.”

Another panellist, Gary Grieve of the Chartered Institute of Marketing Travel Industry Group and Capela, who runs a company that offers training in marketing skills for inbound and outbound agents, said that in spite of all the talk of the opportunities offered by social media, new technology is “absolutely terrifying to the small business and hotels. They don’t get it and are not sure what is happening. They get bombarded by information and often don’t understand what is going on.”

Visit to the History of the World Exhibition

Such challenges to conventional wisdoms were rare. The travel industry has never held a proper debate on the pros and cons of globalisation. It has never sought to better understand the dynamics of the historic global power shift to Asia, the ebbing of the American empire and the root causes of the various wars that undermine industry stability, be they hot wars, cold wars, the “war on terror”, trade wars and the latest entrant on that, currency wars.

Mindful of the dictum that those who don’t learn the lessons of history are condemned to repeat them, I visited the History of the World exhibition at the British Museum, an institution renowned for saying it like it is. As I walked through the various halls of the Byzantine, Greek, Ottoman, British, Spanish, Roman, Portuguese, Dutch, Mesopotamian, Mughal, Mongol and numerous other historical empires, a common thread became apparent. Empires fall when they get over-extended, become victims of their own hubris and mistakenly assume that a divide-and-rule policy will work forever. Perhaps the most important lesson was contained in the section on India’s Mauryan empire (321 to 185 BC). The Emperor Ashoka the Great (273- 232 BCE) was so shaken by the death and destruction after one battle that he forsook it all and became a Buddhist, one of the most important factors that contributed to the spread of Buddhism throughout Southeast Asia.

Britain also observes Remembrance Day with a two-minute silence annually at 11 a.m. on November 11 (eleventh hour of the eleventh day of the eleventh month). Thousands of Britons wear the symbolic red poppies to remember the troops who have died in the many wars. But another perspective on that memorial came from Barbara Tucker, a 40-something mother of two. Along with a small group of anti-war protestors, she has been camped right outside the Parliament since December 2005 to denounce the British involvement in the wars in Afghanistan and Iraq. A few days previously, she told me, she had witnessed the British university students protests over the fee increases. “Do you know why they are protesting?” she asked. “It’s because the government has no money to pay for education. And the government has no money because it has wasted billions in Iraq and Afghanistan.”

In his session, Lord Digby Jones was wearing a red poppy for the troops who he said had died to protect the freedoms of the West. Ms Tucker had another view on that, too. Cutting a forlorn but defiant figure, with tattered jeans and faded gloves, she said her father, a war veteran, had recently passed away at the age of 89. “He never went to a Remembrance Day celebration,” she said. “He taught me that ALL life is valuable, not just ours. I hope one day we will have a Remembrance Day for ALL victims of war, not just our troops.”

Signs of awakening

Consider that for a second. The students’ opposition to higher university fees and the travel & tourism industry’s opposition to the Air Passenger Duty can both be sourced back to the same reason: two hugely expensive wars that have both drained the U.K. Exchequer and failed to achieve their original purpose. Iraq was attacked in pursuit of weapons of mass destruction (which were never found). Afghanistan was attacked to find Osama bin Laden (who has not been found either). However, while Ms Tucker and the university students protest in the streets, the travel & tourism industry prefers to prattle away in forums, while continuing to live in denial about the reasons why that APD is being imposed in the first place. A huge mistake.

As for other more direct consequences of the various wars, such as heightened security, stringent visa regimes, racial profiling, privacy concerns, right-wing racism, xenophobia, Islamophobia, lack of accountability and so forth, not a single session was devoted to any of these issues. Another huge mistake.

Some signs of awakening are nigh. At the Slovenia press conference, I came across Mitja Cander, a 38-year-old visually-impaired poet who has been appointed Programme Director of Maribor 2012, the European Capital of Culture. Afflicted by a progressively degenerative condition that is sapping his eyesight, the award-winning poet said he was determined to help the 2012 event “rise to new levels of creativity.”

“We are in a financial and economic crisis and the world is searching for new models of development and I believe that culture can be an engine of development and creativity. Culture of coexistence must be part of it… many groups of our society are not part of society, they are on the fringes of society and we must improve this situation. Culture is about relationships. We will try to make something new in this field. I know that former European capitals of culture have followed the traditional meaning of culture. But we think we should go deeper. Because coexistence is one of the very, very important questions. I am also handicapped, I am hard of sight but I can still see that this is a very important part of us. We need to forget about new buildings but focus on content.”

Marvellous stuff. Such new ideas can only emerge if the industry broadens its intellectual base to bring in new people and encourage new thinking, which is exactly what Slovenia has done.

Stronger nexus

Indeed, the nexus between culture, coexistence and tourism is set to strengthen. Istanbul is the 2010 European Capital of Culture. At their press conference, the Turks announced that culture would now become part of the national tourism promotion strategy. Rather than opening more tourism marketing offices, they are to open cultural centres. On the same day as the WTM media conference, Turkish President Abdulla Gul was in London to open the first of what is hoped to be many Yunus Emre Cultural Centres around the world. Even UNWTO chief Taleb Rifai mentioned that he is forging closer links with UNESCO and its director-general Irina Bokova who sees cultural cohesiveness as being a major factor in the global development agenda.

The unnamed tourism minister’s comment to Mr Quest was spot on: Mistakes have been made. But the travel & tourism industry, unwilling to upset sponsors or stray into “sensitive” areas, fails to admit or recognise them. It remains a top-down industry with low tolerance level for dissent, no check-and-balance mechanisms and certainly no debate. Outlining the challenges ahead, Mr Rifai quoted Mr Obama’s favourite phrase, “Let there be no mistake” before adding: “Tourism needs to be seen as part of the solution.” That will not be the case unless the industry moves beyond trumpeting job-creation, economic impact, resilience and sustainability. Shifting from building buildings to building bridges may be just what it needs to earn the elusive respect it craves. If the first step towards fixing a problem is to recognise that there is one, the last major travel show of the first decade of the 21st century may just have taken the first tentative steps in that direction.

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