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Canada’s tourism sector is on the mend

Five trends that point to a healthier tourism industry, and how you can benefit from them

How is the growth in health spas helping to spur the recovery of Canada’s ailing travel and hospitality industry? Simple. Spas represent the fastest-growing leisure sector in North America, and they’re only part of a larger recovery in tourism and transportation. According to The Conference Board of Canada, the tourism, hospitality and leisure sector is rebounding from an overall slump that has plagued it for the past five years. The Conference Board’s outlook for the upcoming year is positive:

  • improved revenues in transportation due to increased passenger levels
  • a return to profitability for the accommodation sector in 2005
  • overall increased spending on travel-related services, sporting events, casinos and theatres

Yet there are still some challenges on the horizon. Global economic growth is slowing, and competition for tourists from the U.S. and emerging economies such as China and India will be formidable. These challenges will force the industry to become leaner and more focused. To help your business become leaner and more focused, we offer five prescriptions for a healthier travel and tourism industry.

1. Understand the changing demographics
Consumer behaviour is hard to track. Companies need to grasp important demographic changes and be able to capitalize on them. Traditional demographic categories defined as child, student, adult and retiree are no longer sufficient to understand today’s consumer. Consider, for example, twixters. This group represents the younger scale of the marketing demographic, from 18 to 29. Twixters are caught between being students and adults, and they are single, technologically savvy, independent and not committed to one brand. Most importantly, they still live at home and many have lots of disposable income.

The traditional demographic categories were based solely on age and assumed that as consumers age, their habits also change. Nowadays, people of all ages are backpacking across Europe, taking a trip to Disney World, or booking a Caribbean cruise. Age is proving to be a poor indicator, with personal preferences being the key driver of spending. That’s why it’s crucial for companies in the tourism sector to understand their core consumers to serve them better.

2. Appeal to emerging markets
Tourists from China and India are expected to become very numerous due to their large populations, increased prosperity and eased travel restrictions. The Canadian industry should work to attract these new tourists, many of whom are expected to visit Canada over the next decade.

These foreign tourists are expected to be very lucrative. Canada currently receives about 100,000 Chinese visitors a year. It may sound like a lot, but that represents a mere 0.1 percent of outbound travellers. This figure is likely to increase because Canada's Industry Minister announced in January 2005 that China has recognized Canada as an officially approved travel destination. Canada can now market itself to Chinese travellers, who can easily obtain tourist visas to Canada. However, Canadian travel and hospitality organizations won’t get their fair share of these competitive markets unless they promote and market aggressively.

3. Capitalize on promoting health and well-being
Spas are the fastest-growing leisure sector in North America — in fact, they are growing faster than golf and skiing combined. There are about 2,500 spas in Canada, and their revenues are approaching the $2-billion mark. Health awareness and health-related activities will remain a primary driver for tourism spending.

Since consumers are devoting extended periods to health-related destinations or packages, travel and tourism operators should have specific offerings for these consumers. Many package tours and cruises promote themselves as lifestyle-enhancing, with 24-hour fitness facilities, healthier menus and spas.

4. Manage safety and security fears
Consumers are concerned with potential hazards of travelling abroad, but they are also annoyed by conflicting safety messages. While terrorist threats strongly impact the tourism, hospitality and leisure sector, companies must recognize that safety and security worries are part of travel, and they’re here to stay.

The fact is, people still travel despite security fears. Planned leisure travel usually remains relatively constant, while business travel and unplanned getaways tend to change when risks are evident. Interestingly, leisure travellers are often more concerned about experiencing unfriendliness or rudeness. Companies should be educating travellers to put their fears into perspective.

5. Streamline online options and enhance CRM tools
The Internet is a mixed blessing. Online bookings will eventually represent one-third of travel spending, but most consumers are frustrated with the limitations of Internet sites. While 60 percent of Canadian travellers use the Internet for research, figures show that more people are “looking” than “booking.” Aeroplan members, however, now book 40 percent of their travel rewards online. Tourism and travel operators should therefore formulate a comprehensive online strategy that offers value-added features, not just pricing information and basic reservations.

Customer Relationship Management (CRM) is a key tool for travel and tourism companies because it enables businesses to track and manage customer activity. Hotel chains, cruise lines, tour operators, restaurants and other businesses should implement targeted, ongoing strategies to retain customers through reward and recognition. Maintaining a customer base by keeping existing travellers happy — in addition to enticing new ones — will reap rewards.

Mobile technology will also drive the next wave of CRM. Consumers can step off a plane in Chicago and have automated messages sent to their cell phone, informing them about local events. For repeat visitors, a CRM system could automatically make reservations at a favourite restaurant, check travellers into their hotel, or book an hour at the spa. Now that’s rewarding the customer.

There’s little doubt that the travel and tourism industry still faces a number of challenges. Although rebounding, its revenues are only now approaching 1999 levels. To recover effectively, tourism, hospitality and leisure companies can rejuvenate their businesses by focusing on these five key areas.

Prescriptions for a healthier tourism industry 
  • Understand the changing demographics
  • Appeal to emerging markets
  • Capitalize on promoting health and well-being
  • Manage safety and security fears
  • Streamline online options and enhance CRM tools