Sometimes some facts & figures can change your view of the world… Tourism development  is often seen as a sustainable way out of poverty. This week Natural is educating 143 tour operators from 28 developing countries on the Scandinavian tourism market under the flag of CBI´s Export Coaching Program in Rotterdam.

Enjoy Hans Rosling´s inspirational speech at TEDx Tokyo, showing that the world is reasonably on track when it comes to fight poverty.

A recently published study, Netstudy Travel Industry 2009, by Swedes Peter Hellman and Alf Hedlund, shows that e-marketing is becoming more important within tourism.

The travel industry´s online market has grown tremendeously, from SEK 10 Bn 2005 to SEK 25 Bn 2007 (US$ 1,43 Bn to US$ 3,58 Bn). The travel sector has increased the most and stands for 30% of all online shopping in Europe. The pure net travel actors had a turnover of SEK 7 Bn 2007, estimated to SEK 9 Bn next year (US$ 1 Bn to US$ 1,29 Bn).

The consumer behaviour is now rapidly changing. 90% begins their journeys on the net, but information on a website or online reservations is no longer enough. We´re in for the third wave of e-marketing: social media. Visibility, contribution and interaction, almost in real time, in an engaging way, are keywords to get online tourists to identify themselves with your brand and contribute to the dialogue that leads to bookings.

The online trend is boosting all over Europe. The online travel market had a turnover of € 49,4 Bn 2007. Great Britain and Germany together stands for almost half the value, wich indicates that swedish incoming tourism companies who wants to be part of the market at least should consider translating their websites, but that´s just the beginning.

While the use of internet increases – 1 Bn users already back in 2006 – the search engines´ role are becoming more important, why knowledge and strategy in e-marketing are crucial for future success.

wind power vs. tourism employees in Sweden 2008

Sources: Swedish Energy Agency & Swedish Agency for Economic and Regional Growth

Fill in the blanks…

Sweden is becoming more and more unknown among foreigners, accordning to a recently published report by The Swedish Institute. “The reason for this is that the choice of countries being investigated changed compared to previous years” says Olle Wästberg, SI Director-General. “The other reason is that the competition has become tougher as a result of globalization.”

Well, there´s a shortcut to change peoples opinion about Sweden: Invite them to see for themselves. Sweden have thousands of tourism related entities, with approximately 160,000 employees all together who would be excellent hosts to guests from abroad. If only the potential guests knew, for example, where to make a mid-sweden guest house reservation, understand what´s on a swedish restaurant menu or book a swedish train ticket from home. None of it is easy today.

Which lead me to part three in our series of  “7 growth industries characteristics” – the requirements for operating on the international arena of tourism & travel.

The tourism industry has an advantage compared to other businesses: There is already an existing worldwide network of distributors eager to find new destinations for their customers. You just have to meet the requirements to be part of the game. So what are they?

1. A sales manual.

A description of the destination, not only your own business or the closest neighbourhood. Tourism is a question of cooperation. We move consumption between places. So you must be able to give sales support to your distributors on the places and experiences you offer.  A friend of mine, Neil Rogers, has put together a list of what should be included:

• Written materials that bring itineraries to life and make them sound appealing in comparison with product from other companies and destinations.  It is necessary to deliver information in well written English and other languages if the size of a particular market warrants it.
• Detailed hotel descriptions and amenity information such as bed configuration, physical activites bathroom and toilet facilities, meal times, type of menus etc.
• Information on cultural interaction as most trips are a combination of cultural and physical activities.
• Quality assurance (testimonials from clients and travel companies) and any quality schemes you are part of.
• Level of excursion, activity or tour difficulty, average distances walked, type of terrain with trail maps and destination relevant maps to give context to the itinerary.
• Whether your company and those you work with are licensed to operate and if your company carries adequate insurance for injury, accident and liability.
• Do your vehicles (land and water) have adequate safety equipment such as seat belts, fire extinguishers, emergency medical kits and are your driver or guides trained in case of medical emergencies. 

When you approach international tour operators they will most probably ask for this information. If you´ve got your ducks in a row, you´re in. If not, you´ll have to do the homework.

2. Tour Packages

 Make the experiences you offer saleable. A tour starts at the travellers home. Not yours. This opens for unlimited marketing opportunities, before, under and after the actual journeys.  Say, an average american tourist, first time in Sweden, will spend a week or two in “Scandinavia”. If you´re lucky this means Sweden. Then they´d like to see the archipelago, buy some crystal in Småland, see the midnight sun and go shopping before taking off to Alesund in Norway. Leaves 2 nights to your business. Where do you fit in?

Cooperation is the key word. When you put together an attractive tour package, look for distributors that already have your potential guests in their customer database.  Make it easier to contract you by offering a study tour or pioneer trips.

3. A Price list

See my posting on part 2, Pricing. This includes the supplements of additional services to make the whole travel solution workable. Negotiating reasonable rates with your partners/suppliers to make the tour saleable to your target group is crucial for your success. Easy said. And quite easy done.

Curt Landin

PS. Don´t forget there are high-end clients as well as budget travellers. Just to mention, Urban Nomads mongolian tour starts at USD 2 millions per person…

Being a tourist in Sweden is cheaper than in ages. A hundred swedish kronor is equivalent to USD 12,16, EUR 9,03 or GBP 8,45 today. It´s a 40% drop in value of the swedish currency since april 2008. This means business for incoming tour operators and overseas agents. However, Riksbanken (the Central Bank) says it´s a temporary situation and expects the krona will be back at normal rates within a year or two. The reason is that, despite the international recession, Sweden has a quite strong position compared to other countries with an overplus in the current account balance.

I wouldn´t say it´s now or never. But it´s definitely a chance to see Sweden at bargain prices this summer.
/ Curt Landin

As I´ve mentioned in previous postings, Sweden is investing hundreds of millions of kronor in tourism development all over the country nowadays. It´s everything from building the worlds biggest wooden moose to indoor rapids, restored viking villages and witch hotels. Projects aimed to increase tourism in rural areas of Sweden. Sounds fine in days of recession, doesn´t it? Well, it would be great news if we didn´t repeat the same old mistakes.

Imagine you lead or own a company manufacturing whatever, be it cars, refrigerators or mobile phones. Or you offer services to your target group of choice. Let´s say you run an accounting firm, barbershop or a chain of restaurants. Traditional top-down management models and business practice works perfectly OK here. You have a vision, form your business plan, set your sales targets and implement the operational strategies.  It´s your money invested, you´re in charge of the entire business process and, if you succed, you get the profit.

Tourism is different. Why? Because nobody owns the whole product. For tourism services, you have to cooperate in production, marketing and distribution to reach the market. This makes tourism development somewhat tricky. Those who are responsible for the resources used, like roads, nature, transportation etc, don´t get much of the cake when the guests finally arrives. Therefore, tourism development planning requires an entirely different approach, bottoms-up. This means strategy work starts abroad, by the distributors and their clients defining the products and target groups, to be continued by people at operational level in Sweden forming the necessary cooperations and product development needed.

It´s a question of deciding who is doing what? In which order? On whose mandate? And with whose money?

Tourism development strategies follows as a result of this, in contrast to other industries where in most cases an executive group work out the business plan and then implement it in the organization. Tourism products is about cooperation and delivery in a series of moments-of-thruth, why it´s crucial that those who will be delivering the services are involved in the decisions and strategy work.

Nevertheless, a quick glance at a number of the current projects, if not all of them, shows that the development plans are written primarily to fit the rules for EU-funding, by tourism executives top-down, rather than what´s needed for successful development of tourism destinations.

It reminds me of Whitesnakes wonderful rock ballad, Here I Go Again. Enjoy!

Curt Landin

Recession times are investment times, an old friend said to me a while ago. It seems to be true, at least within tourism. Huge amounts are invested in tourism these days and there´s more to come.

As an industry, tourism is different from other markets. Tourism requires more cooperation between

Now in Sweden?

suppliers to put together packages to a total travel experience. There is also an existing worldwide network of distributors that´s not just satisfied with their present programs, they´re also regularly looking for new destinations and unusual tourism attractions. And last, but not least, tourism is depending on a number of society owned resources, like nature reserves, public transportation and common services for the daily life.

In tough times, public funding traditionally has been some sort of a sheet anchor and so it turns out nowadays too. Everyone benefits from an increase in tourism.Sweden is now investing hundreds of millions kronor in tourism projects thanks to co-financing from the European Union.  Some of the projects going on includes…

• A triple destination development at The High Coast around Sundsvall city
• A new winter destination in Härjedalen county
• Local tourism development projects in a most of Swedens communities

…just to mention something. And there is more to come. One of the more fascinating investings I´ve seen are  probably the plans for a new chinese (!) town outside Gävle. In Sweden. With a Mongolian village in Håbo, not far from Uppsala. It´ll take at least a Billion SEK (~US$ 120 Million) to turn the plans into reality.

Plans, you say… we´ll see… Well, I wouldn´t have believed it if they hadn´t already built Dragon Gate (see a TV-clip here ). Now they want to expand it to be Dragon Land. I think it will be a success. Remember where you read it first.  That is, if they manage to handle the Swedish administration and bureaucracy, which sometimes is a nightmare…

The swedish tourism industry grew to a total turnover of SEK 215 Billion (~US$ 27 Bn) last year, an increase by 10%, while foreign tourists expenditure in Sweden raised by almost 20% to 75 Billion SEK (~US$ 10 Bn). No wonder we´re investing. And it´s not only in Sweden people are investing these days. Despite the talks about tourists taking shorter holidays closer to home, there are long distance destinations that are cheap for living once you arrive there.

Like Thailand. The economy is expected to grow 4-5% in 2009, while property investment rates are as low as 3,75%. Resorts and residence clubs are being built all over the country at an amazing speed. One of the reasons is that the Thai property market is well insulated from the global financial crisis as it is not fuelled by debt financing as it is in most western countries.

It has been reported that even the American property billionaire Donald Trump will join the investment and development of a new luxury retail plaza with Gaysorn Group. The new plaza, located  at Ratschaprasong Intersection, Bangkoks prime retail site, is intended to compete with two direct rivals nearby, Central World and Siam Paragon. 

A number of Swedish sports celebrities, like Alpine ski world champion Ingemar Stenmark, tabletennis world champion Jan-Ove Waldner and former NHL pro Börje Salming has also invested in Thailand living, according to Swedish media.

There is hope for a future.

/Curt Landin

My apologies for haven´t been blogging for a while. I´ve been busy with producing our new website during the winter holidays. Check it out and let me know what you think: www.naturalconsulting.se

Every now and then I´m surprised how the blog stats suddenly goes up dramatically. I´d like to think it´s because I´ve written about something interesting, but it´s also nice with a helping hand. Thanks to the Blogburst network I´m happy to announce that the posting on “Know your clients – social tourism marketing” recently was published by Reuters, the world´s leading source of intelligent information for businesses and professionals according to themselves. Yeah, that´s where I want to be … It was also inspiring to see the posting on “How about dating a dolphin” in Chicago Sun Times a couple of weeks ago.  Not bad for a snowcovered blogger from Sweden, eh? Thanks a lot, BlogBurst.

/ Curt Landin

Travel trade commission structure

Are you one of the lucky guys that are running a tourism business with more demand than what you´re able to supply? I thought not… they´re a rare species. Have faith, there´s help to get if you activate a network of distributors. One of the most effective tools to get others to provide you with lot´s of customers is your pricing strategy.

A packaged tourism product generally contain three core elements: Transportation, accommodation and activities. It´s as simple as that. Or is it? A closer look reveals that these elements might contain a number of components, such as arrival services, transfers & in-country transport, accommodation, food, guiding, activities, experiences, lectures, entrance fees, rental equipment, tipping, baggage handling, service charges, taxes, commissions and administration costs.

It may seem appealing to be able to sell your product exclusively to clients that book direct with you, thus saving on commission, but it can be quite stressful with todays client trend to book later and later. It also leaves you with all the marketing and sales stuff. If you´re cooperating with the travel trade they do it for you, handle all the pre-tour enquiries, administration and provide you with the resulting business, planned and prepared.

When you´re developing a pricing structure for your products it´s s important to understand that there could, and in most cases should, be one or more other entities involved. If you allow them to make a reasonable profit on your tours, they´ll open their customer databases and give you access to an audience you would never have reached by yourself.

Overseas tour operators and clients booking direct often want service providers to provide a range of services rather than having to book and pay 3 or 4 directly service providers in the region they are visiting. If there´s no incoming tour operator or destination management company available, one of the service providers has to be the product owner. This means taking  responsibility for finding, booking and paying for all the services the tour operator or client needs and, consequently, taking this into account when making the quotations and pricing.

One of the most common mistakes tourism entrepreneurs make is to sell their services cheaper to direct sales customers than if they´d booked through an agency or tour operator. Big mistake. You´re out of your distributors´ programmes in the wink of an eye. Instead, your rack price should be the same no matter where the end client makes his reservation.

Commission should always be viewed as a marketing cost and budget for as such. The image above presents briefly the travel trade commission structure and the effect it has on the end price for services booked prior to client travel to the destination. There are of course a number of other requirements to meet if you´d like to be taken seriously by the travel trade. More on that next time.

/ Curt Landin