While luxury travel marketers look to current economic conditions – and there is plenty to consider – other analysts are looking ahead and finding trends and forces that might turn the entire travel industry on its head – and in the not too distant future.

What really happens when a global tourism explosion in developing countries--China, India, Russia, Brazil, for starters—runs into a massive meltdown in air transportation for all of us?
    Insights from two recent articles compel our attention when it comes to fundamental changes in travel:
1) “The Tourism Time Bomb” – (Harvard Business Review April 2008 and follow up LT 360 interviews with Authors Paul Nunes (an executive research fellow with the Accenture Institute for High Performance) and Mark Spelman (global managing director of Accenture’s strategy practice, based in London.)
These analysts see a world where so many more people are traveling that “a scarcity of place” will result. That means higher prices, rationing (perhaps decades- long waiting lists for important attractions). In turn that may result in the creation of real and “artificial destinations” in developing areas.
2) “The End of Aviation”: (The New Republic, August 27, 2008)
Here, reporter Bradford Plumer sees a potential “aviation apocalypse” as high fuel prices and the threat of climate change could result in dramatic cuts in service and routes, and tremendous changes in travel patterns. (See story below)

First, Tourism Time Bomb: You Can Already Hear It Ticking

In last week’s interview with Nunes and Spelman, the researchers offered elaboration on their thesis, particularly as it might affect the luxury travel sector.  Selected Highlights

•    Nunes- What prompted the article “was not just the intersection of the trend of growth of income, and travel demand from emerging economies, but also the recognition of physical constraints on travel and certain destinations, which is the shocking aspect.”

•    Spelman sees parallels with Japan’s economic rise in the 1970’s. ”But it’s not just about emerging economies, it’s about interdependence and tremendous opportunity. As the incomes of residents of China, India, Russia and Brazil grow, people will be looking to travel well beyond their borders. Their travel ambitions will be global."

•     Nunes - “Luxury” will be a relative term for many new travelers. “We may not consider a bus tour through Europe as luxurious. But to a newly arrived middle class Chinese person, the ability to travel to France would be luxurious.”

•    Nunes and Spelman both say it’s difficult to figure out at which point income will allow for spending on international travel. However, it has been estimated that 1 in 20 "Russians can now afford to travel internationally, a number that will rise to 1 in 4 by 2020. And travel will not be solely for leisure. In an interconnected world, people will have friends, relatives and exposures through the Internet and elsewhere to other countries they might want to see; it will not be purely for sightseeing.”
With so many Chinese and Indians living and working outside their country, we’re getting more national linkage – and that will stimulate travel as well. It all adds strain on the infrastructure.
                
•    Elaborating on the infrastructure point, Nunes pointed to the Maldives, which currently offers roughly 10,000 hotel beds that serve roughly a million customers a year. “In a world where two billion people might be able to afford to travel to the Maldives, only 100 million will be able to do it in a lifetime. It will be the same in places like Machu Picchu in Peru and the Taj Mahal, which are physically constrained.
•    “Asked why the industry is not taking more notice of these potentially world-changing trends, Nunes said, “It’s like the boiled frog effect, where the process is so slow that the frog doesn’t realize what’s happening until its too late. If people are looking at 6 or 9% or even 10 or 12% growth, they might not recognize that that may continue for 25 or 30 years, creating a much larger problem. Many affluent westerners simply think the world will always be there for them, but it may not be. It may be priced out of their range or they may end up on a waiting list. Can you imagine a $1,000 ticket to the Louvre?”
•    For luxury marketers, the authors say it will be a question of delivering an end-to-end experience. It won’t be enough to simply be a hotel at Angkor Wat, but to deliver the experience of Angkor Wat.  Luxury companies will have to recognize whether they’re going to drift down into a more middle affluence place or actually continue to seek the absolute heights of luxury.”
 
•    (Editors note-In our next issue, we will pick up on more of the color commentary and insights  from Nunes and Spelman, and also share important marketing intelligence gleaned from a Nunes paper on China. Meanwhile, seethe End of Aviation story this issue or at www.luxurytravel360.com).