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Wednesday, 11 October 2017 00:00 - - {{hitsCtrl.values.hits}}
By Charumini de Silva
Acclaimed travel industry professionals from Asia Pacific recently shared their industrial insights, highlighting the pivotal role that innovation, authenticity and technology will play in the future of tourism and opportunities that Sri Lanka has as a tourist destination which is gaining much attention in this part of the world.
Uniting elite professionals from across the region under one roof, the Cinnamon Future of Tourism Summit served as a first-of-its-kind in Asia, providing resounding platform for industry specialists to discuss and understand what the future of tourism holds.
Banking on the biodiversity and experiences Sri Lanka has, digital marketing agency Dragon Trail Interactive Managing Director Roy Graff said the country had a lot of potential to attract the Chinese travellers.
Elaborating on the future of Chinese outbound tourism and opportunity for Sri Lanka, he said nature was the biggest draw card when choosing a destination and travellers look to breathe fresh air and take a break from busy Chinese metropolises.
“In the past four years, the number of Chinese travellers to Sri Lanka increased more than 400%, while in 2016, the total number of Chinese visitors surpassed 280,000 by posting a 25% y-o-y growth. Leisure is the overwhelming reason for travel,” he added.
Graff said sunny beaches with fresh air were popular among Chinese visitors and in 2016 around 30% of outbound travellers visited island destinations. In addition, they are interested in world heritage sites, Buddhist temples and wildlife. Tasting local delicacies is considered more important than shopping.
“As travellers make repeated trips overseas, they become less concerned with compulsive sightseeing and shopping and more interested in authentic experiences such as getting in contact with the locals and exploring less mainstream destinations,” he explained.
China is the second source of international travellers to Sri Lanka after India and it is the market with fastest y-o-y growth.
According to him, a typical trip to Sri Lanka spans around seven to nine days, mostly young Free Independent Travellers (FITs) for outdoor adventures. “The Chinese outbound tourism market has been traditionally dominated by large tour groups, but change is on the way. The growth is now in Chinese outbound independent travellers.”
It was pointed out that visa on arrival and e-visa as well as direct air connectivity from three Chinese destinations including Beijing, Shanghai and Kunming as key factors to attract this growing market.
Outlining the trends and forecast on travel and tourism, Euromonitor Research Analyst Jocelyn Cheung said Asia Pacific tourism is on the uptake.
She highlighted that there had been a 6% compound annual growth rate (CAGR) from 2012-2017 in bound arrivals, while recording a 15% CGAR inbound receipts in Asia Pacific in the same period. It is expected that the Asia Pacific share in international trips will rise up to 28% by 2022.
“The domestic travel between most Asian countries has seen a significant improvement over the past few years, especially in countries like Indonesia, China and India.”
Emphasising that frugal innovation in lodging was on the rise, she said emerging markets see stronger performance in lodging particularly for affordable and quality facilities in the Asia Pacific region.
In addition Cheung asserted that new consumerism was driving the tourism growth in this part of the world where people were keen on experiencing more and new things, while also being mindful about nature.
“Sri Lanka is well-positioned to be an authentic destination for experiential travel, especially in wildlife tourism. The country can be the best wildlife tourism destination outside Africa,” she added.
She pointed out that with proper policies, Sri Lanka could grow to be the best destination for wildlife tourism as travellers were becoming keen to explore destinations which offer unique experiences outside of Africa.
However, she insisted that wildlife conservation and protection would become extremely crucial. “Instead of promoting animal sightings, you will also need to cultivate the experience for discovering and understanding wildlife habitats in travellers,” she said, adding that increased understanding of a destination on the part of the tourist would contribute towards the destination’s sustainability.
Cheung also said that since Sri Lanka is one of the 35 biodiversity hotspots in the world, the country should take sustainability seriously.
STR Global Regional Manager – Pacific Matthew Burke spoke extensively on future of hotel revenue with comparative regional analysis about the industry.
“Supply infrastructure and demand infrastructure must work in unison. There will be short-term hurdles, but rate reactions counterproductive to the medium- and long-term. Therefore, manage supply growth to meet current and future source market needs,” Burke suggested.
In terms of Sir Lanka, he pointed that the demand was exceeding supply over the past two years, heavily dominated by multinational brands and some of the larger players in Sri Lanka. “It is important to elevate what you are building in terms of the hotels and in different types of destinations.”
However he stressed the challenge really was on the impact of supply in Sri Lanka within another four years.
He said Sri Lanka’s occupancy was around 65.3%, while the average daily rate (ADR) was around 67.7% YTD August 2017.
“An additional 5,000 rooms are expected from Sri Lanka’s under contract pipeline projects in the next four years. The supply is coming from the luxury and upper scale, where over 60% of them are going to be in Colombo,” he added.
In terms of total rooms being built, he said that the country did not fit into the top 10 in the region.
Speaking on OTA vs brand.com, Co-Founder booking.com Bas Lemmens pointed that everyone in the industry found OTAs a ‘threat’ because it had become unstoppable, with them responding to customer needs in a much faster manner.
Referring to his own company booking.com, he said: “I built a product that everyone wanted.”
Noting that the web had revolutionised the way people travel, he said that OTAs invest billions in tech, user experience, data management and data analysis to have a conversion advantage against leading global hotel chains that launch multi-million dollar ad campaigns in loyalty programs to drive direct bookings and improve guest experience.
“What I like about the tourism industry is that it really does not change much. The one thing that keeps evolving is distribution. Do something with your data,” he added.
In 2016, the global hotel industry paid $27 billion for distribution costs. An important aspect of OTAs is that internet browsing and social media activities create data that make it possible to identify customer profiles and create a whole system of recommendations.
Lemmens emphasised that although many companies did have the required data, many of them did not know how to make use of the available information. “If you know your data, you can add a lot of value to them. As we have a majority of hoteliers here, your expertise is to take care of the guests. It is the human touch that matters, nothing to do with technology. Our people always forget this,” he pointed out.
With the current customer journey being so evolved, people visit 22 websites on average before making a booking and up to 75% also visit the direct hotel website. After analysing visitor characteristics and behaviour, the OTAs are creating a personalised journey for its customers for direct booking, which has become a successful method now to optimise the return on investment of the companies, Lemmens added.
Mocinno International Managing Director Jeroen Gulickx elaborated on the changing future hospitality landscape to make hotels profitable.
“Change before you have to — that is what’s needed today,” he added.
According to him, mergers, buyouts, all about the brand, success of independent hoteliers, different demands in generations, importance of health and wellness, locality, experience above all, accessibility, cuisine and labour costs need an evolution in the hospitality industry.
He said Sri Lanka too was not doing a good job in terms of offering locality and experiences, when it had so much to recommend.
It was pointed out that the value of the brand was decreasing due to various factors, while independent hotels were becoming more successful. “Quick strategic and tactical decisions, increased efficiency, less reporting and paper work, increased focus on personnel has become major factors for independent hotels to become thrive in the industry,” he added.
Gulickx however noted that to maintain or keep profitability, firms must continue cost as opposed to revenue, remove 4Ps concept, divest from the typical hotel organisational chart and focus on innovation.
“Around 90% of hotel websites are absolutely useless; 40% of companies are not happy with their marketing and ad agency. These people cannot deliver better than an individual posting a picture on social media. Reality counts. People do not want lies.”
Noting that labour cost was the largest cost, he cited F&B and housekeeping as being on top the charts, while operating costs were also on the increase. “Of all projects in the last 10 years with Mocinno, 84% of incremental profits came out of revenue generation.”
Gulickx suggested that if the hotels could define, measure, analyse, improve and control, it would help them to overcome the challenges relating to increased labour costs.
Pix by Lasantha Kumara
