1. Developing Leader for Change & Innovation in Tourism 28 th June 2010

2. Future Industry Trends, Creative Thinking and Innovation Tom Baum PhD University of Strathclyde, Glasgow

3. 3 Key Concepts and Learning  Understanding future trends and developments in international tourism  Harnessing strategic planning tools as a means of maximising the benefits of this understanding  Planning and implementing creative/ innovative strategies and solutions in order to enhance business competitiveness

4. 4 Programme Overview SESSION 1 Tourism – a future scan: utilizing the tools SESSION 2 Finding and applying creative/ innovative solutions

5. Thinking about the future….. And learning from the past

6. The Future  The future is inherently unpredictable –The purpose of planning is not to predict the future but to increase the possibility space for the organisation  The future is co-created –We are neither passive victims of forces beyond our control nor masters of our destiny

7. Wind the clock back 10, even 20, years ….. What we DID NOT know  List a few ideas/ things/ ways of doing things that have entered our lives over the last 10 years….  IF you are old enough, do the same for 20 years ago…….

8. Maybe…..

9. Tourism: The future Climate and environment ResourcesTechnology New frontiers The unexpected Customers and competition Conflict and terror Economy

10. A NNUAL REPORT TEN IMPORTANT WORLD TOURISM ISSUES 2011 David L. Edgell Sr., PhD Professor of Tourism, East Carolina University Ex-US Department of Commerce responsible for Travel and Tourism

11. 1.Repercussions from the global economic slowdown on tourism 2. Continuous concern for safety and security with respect to tourism 3. Significance of sustainability in the development and management of tourism 4. Effect on tourism from natural and manmade disasters 5. Growth in the use of electronic and other technologies in tourism

12. 6.Impact on tourism with the introduction of new destinations 7.Importance of fuel costs on tourism 8.Influence of mega events on tourism 9.Using strategic tourism policy and planning tools for communities and nations 10.Recognition of increased tourism activity in the East Asia and Pacific Region

13. Interpreting these in the Maltese context? Your main themes:  Access routes and options, all year round  Fuel price impacting on access  Market dependence on UK – need to develop new markets (Far East)  Develop internal, domestic markets  Need to develop higher spend niches

14.  Creation of a year round destination – address seasonality  Need to upgrade product and focus on quality  Dealing with change and new challenges  Maximizing Impact  Monitoring performance  Managing Information  Utilise social networks to best effect

15.  Climate change impacts – source markets and at home  Rising sea levels  Worldwide recession and lower spending visitors  Understanding the tourists of 2015 and 2010 – Gen Y  New competing markets – Libya  Increasingly demanding customers

16.  Development of ecotourism options – issue of awareness?  Future of traditional distribution models – travel agents/ tour operators – who will we be dealing with?  Growth in demand for marine tourism

17. What is required is a strategic approach to the identification and analysis of future trends……

18. The organisation The business ecosystem The future Increasing awareness Scenarios (Imagining the future) Strategic options (Exploring our future possibilities) Co-evolution (Discovering our place & relationships) The Goal: To increase awareness about the organisation, its environment and the future.

19. Malta tourism  Culture –What are the patterns of thinking & behaviour which characterise tourism in Malta? –Is change needed?  Competencies –What is tourism in Malta distinctively good at? –Do these give competitive advantage? –What needs to be developed?

20. Your organisation or area of responsibility  Culture –What are the patterns of thinking & behaviour which characterise your organisation or area of responsibility? –Is change needed?  Competencies –What is your organisation or area of responsibility distinctively good at? –Do these give competitive advantage? –What needs to be developed?

21. The environment International law Government s Standards bodies StakeholdersStakeholders Supplier’s suppliers Customer’s customers New entrants CustomersCustomers SuppliersSuppliers CompetitorsCompetitors SubstitutesSubstitutes Malta/OrganisationMalta/Organisation An Ecosystem for Malta or your organisation

22. Mapping the ecosystem  PEST (Political, Economic, Socio-cultural. Technological) plus E - Environmental  Customers  Markets  Competitors – who are your main competitors?  Business or Destination analysis? Competition or coopetition?  Porter’s Five Forces

24. Strategic options “Our future possibilities”  Key strategic issues –What are the real areas which affect our business? –(E.g. service, channel, market)  Formulate key decision areas –Where do decisions need to be made?  Create clusters of options –Discover coherent strategies –Check against distinctive competencies

25. Scenario PLANNING “Imagining the future”  Identify key driving forces  Choose most uncertain/most significant  Develop alternatives  ‘Flesh out’ with narrative

26. Planning is not about…  Planning is not about predicting the future  Planning is not about writing a detailed road map into the future  Planning is not about a few people writing a vision statement & then getting ‘buy-in’ from everyone else

27. EU Project Comprehensive sectoral analysis of emerging competencies and economic activities in the European Union

28. Potential of drivers of change  New lifestyles and consumer trends (eg. concerns about health, climate, environment, convenience etc.)  Food prices  Economic development and globalisation  ICT and digitalisation  Strengthened legislation on food safety  Food technologies: Preparation, cooling and storing  The ageing population  Climate changes

29. Classification of drivers CERTAINUNCERTAIN IMPORTANT LESS IMPORTANT Economic development and globalisation New lifestyles and consumer trends (eg. concerns about health and environment, convenience etc.) Food prices Strengthened legislation on food safety Food technologies: Preparation, cooling and storing The ageing population ICT and digitalisation Climate changes (actual climate changes will not influence the sector much until 2020. In the long run climate changes might result in dramatic changes in the sector)

30. Main drivers of change  Main/most important drivers of change –The ageing population of Europe –New lifestyles and consumer demands –Increased use of ICT and the Internet –General economic development and Internationalisation

31. Driver: an ageing population  Consumers will be older in the future and older tourists require more specialised services, among others due to disabilities.  An ageing population means an ageing workforce. This is important in the sector, since its workforce today consists mostly of young workers.  When it comes to catering and canteens the ageing population will mean a potential growth in their integrated services, which increasingly include elderly care.

32. Driver: new lifestyles Customers are becoming more and more enlightened and demanding when it comes to health, climate, environment and politics  For restaurants, cafés and bars healthy menus and traceability of foodstuff – as an example - becomes more important and require staff to be knowledgeable in that aspect For hotels it means giving its customers a full-time experience including for example spas and professional health-guiding Within catering, snacking increases while simultaneously diminishing the demand for traditional ‘heavy’ lunches

33. Driver: Increased use of ICT  For the customers it means greater possibilities in finding Hotels and restaurants and catering establishments online, and the ability to be pickier.  For the companies it means greater possibilities to market themselves and to receive customers from areas far beyond the neighbourhood.  In the coming years, supply chains and administration will increasingly be handled online. The increased use of ICT and the internet has had, and still has, a great impact on the Hotels and restaurants sector.

34. Driver: general economic development Economic development  When people have more money they tend to spend more on travelling and dining out. Also, their demands for quality and uniqueness rise.  An economic recession, on the other hand, will result in decreased demand and a higher focus on price and value for money. Internationalisation  Internationalisation means increased opportunities for attracting new customers from outside Europe but also growing competition.  Internationalisation means a growing dominance of big cooperations and international brands and chains in the sector. The general economic situation is of utmost importance for the Hotels and restaurants sector, which is often highly dependent on the tourism economy.

35. SWOT analysis Strengths  Non-substitutable: People will never stop travel or eat.  An open sector: The sector creates job opportunities for young people and for women. Also, people with limited education can get the opportunity to a career.  It is a global industry with highly international markets  Due to its labour intensive and customer close nature it cannot be exported or outsourced  It is a flexible industry which relatively easy handles changes. Opportunities  The ageing population could be a boost for the catering sub- sector.  Changes in the gender structures, more women entering the labour market means less time to cook at home. The trend of higher demands on quality could add value to the sector.  Concerns for climate and health are also trends potentially adding value to products and services.  Increased globalisation leading to more international travellers and tourists especially from emerging economies.  Being increasingly on the move we need more snacking and take away Weaknesses  High dependency on tourists, which are highly sensitive to political events.  High seasonal dependency for most parts of the sector.  Tend to be reactive instead of proactive  Low productivity: Low profit margins and low added value  Low levels of skills and educations among employees  Reluctance to invest in its employees e.g. training, education, working conditions etc  Perceived to be a low status employment sector  Low barrier sector- many star ups and failures pressing profit margins (50-60% of all start ups ends as failures after 3 years) Threats  The black market is a threat to working conditions, and to the sector’s competitiveness when it comes to recruiting skilled staff.  The lack of sufficiently skilled personnel jeopardises the quality of the sector.  With the climate threat, long distance travelling might decrease.  An ageing population makes it even harder to recruit labour  The educational system is ageing and might risk the quality of the sector.  There is a trend to invest less in food for employees.  Terrorism and political unrest

36. Questions for discussions  General comments: Do you agree on the drivers identified as being the main drivers of change?  What is the major threat as well as the major opportunity for the main sub-sectors of tourism in Malta (hotels, travel services, attractions) in the coming years?  What is the major threat as well as the major opportunity for YOUR BUSINESS in the coming years?

37. Crossing drivers of change Puritanism Consumers will develop a more puritan and spiritual approach to consumption. The personal responsibility concerning for example health, environment, climate and fair trade is taken very serious. Saving before spending becomes more important. Economic recession and nationalism A recession will influence the society for the next 10-12 years. It will result in increased nationalism and regionalism where regions and nations turn their back to global cooperation concentrating on their own lack of resources. Economic growth and globalisation The ongoing economic crisis is just a minor and short economic slow down. With such a positive economic development increased globalisation will follow. Escapism Consumption is typically driven by the ‘faster, better, bigger’ ideology. Climate problems for example are not seen as a personal responsibility´. The escapists are concerned about health and the fairness of the world but tend to escape via wellness and traditional luxury.

38. The four scenarios Economic recession and nationalism Continued economic growth and globalisation Scenario 1 The Marco Polo Scenario Scenario 2 The Sunny Beach Scenario Puritanism Scenario 3 The Body Shop Scenario Scenario 4 The Asceticism Scenario Escapism

39. Characteristics of the four Economic recession and nationalism Continued economic growth and globalisation EscapismPuritanism The Marco Polo Scenario High individualisation Some specialisation possibilities Polarisation of the market High growth in inbound tourism Wellness and traditional luxury The Body Shop Scenario High individualisation Many specialisation possibilities Segmentation of the market Healthy lifestyle and holidays Goodness: volunteering, fair trade, organic food, etc. The Sunny Beach Scenario Mass produce, economies of scale Highly price driven market Conformity Comfort – but no luxury Regionalisation of travelling The Ascetism Scenario Basic living – simple holidaying ‘Close-to-home’ tourism Experiences: healthy, sustainable and cheap Food: vegetarian, organic, local produce, simple

40. The Marco Polo Scenario

41. The Body Shop Scenario

42. The Sunny Beach Scenario

43. The Ascetism Scenario

44. The Marco Polo Scenario The Body Shop Scenario The Sunny Beach ScenarioThe Ascetism Scenario  Malta’s future?  What needs to be done?  How would you and your business cope with each of these?

45. Strategic tools to enable us to more effective analyse and respond to external change in hospitality and tourism – here we’ve used A. PEST B. SWOT

46. What is PEST Analysis?  This analysis is essential for an organization before beginning its marketing process  Consists of internal environment and external environment

48. SUMMARY Political/ LegalEconomicSocio-culturalTechnological Environmental regulations and protection Economic growthIncome distributionGovernment research spending Tax policiesInterest rates & monetary policies Demographics, Population growth rates, Age distribution Industry focus on technological effort International trade regulations and restrictions Government spendingLabor / social mobilityNew inventions and development Contract enforcement law Consumer protection Unemployment policyLifestyle changesRate of technology transfer Employment lawsTaxationWork/career and leisure attitudes Entrepreneurial spirit Life cycle and speed of technological obsolescence Government organization / attitude Exchange ratesEducationEnergy use and costs Competition regulationInflation ratesFashion, hypes(Changes in) Information Technology Political StabilityStage of the business cycle Health consciousness & welfare, feelings on safety (Changes in) Internet Safety regulationsConsumer confidenceLiving conditions(Changes in) Mobile Technology

49. Role of PEST  Helps Assess the market including Competitors from the stand point of a Particular Business.  PEST is relevant for any type of Business large, small & medium.

50. S.W.O.T. Analysis Strengths Opportunities Weakness Threats Factors Internal to Organization Factors External to Organization

51. SWOT  A SWOT analysis generates information that is helpful in matching an organization or group’s goals, programs, and capacities to the social environment in which it operates.  Factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T).  It is an instrument within strategic planning.  When combined with dialogue it is a participatory process

52. Simple Rules for SWOT Analysis  Be realistic about the strengths and weaknesses of your organization or group.  Distinguish between where your organization is today, and where it could be in the future  Be specific: Avoid gray areas.  Always analyze in relation to your core mission.  Keep your SWOT short and simple. Avoid complexity and over analysis  Empower SWOT with a logical conceptual framework.

53. Future of Travel – Dr Patrick Dixon http://www.youtube.com/watch?v=L1C1 chw1I4U

54. Applying Dixon to Malta  To the destination?  To your business?

55. Thank You! Discussion.