Lofoten in the Context of Global Travel & Tourism - 26 February 2019 Ben Martin Principal, HKS Advisory - Lofoten.info
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Lofoten in the Context of Global Travel & Tourism 26 February 2019 Ben Martin Principal, HKS Advisory
Tourism is Changing - 1919 Page 2
March 7, 2019
Tourism is Changing - 2019 Page 3
March 7, 2019
Tourism is Changing Page 4
March 7, 2019
• McLaren’s Ice Driving Centre is
an Arctic driving experience
located in Finnish Lapland
• Guests drive US $200k McLaren
570S’s around 100km of
specially designed Arctic race
tracks
• US $5,000 per night
(first two weeks February)
• Guests learn expert skills from
both current and former
professional drivers
• Stay in a boutique, 10-bed lodge
Table of Contents Page 5
March 7, 2019
• Introduction
• Global Tourism Trends
• Emerging Markets
• Luxury Tourism
• Arctic Tourism
• Nature, Heritage & Culture
• Challenge & Reward
• Volume Vs Value
• Challenges & Strategies for
Tourism Businesses in Lofoten
Introduction Page 6
March 7, 2019
Ben Martin, Principal
HKS Advisory
• Degree in Recreation & Tourism
Management
• Masters in Tourism Management
• Joined ERA in 1995
• ERA joined AECOM in 2009
• AECOM to HKS in 2018
• 23 years in resort consultancy
Introduction Page 7
March 7, 2019
Not so cute anymore, but
they help to keep me anchored.
Introduction Page 8
March 7, 2019
Where I do what I do…
Strategic Advisory for Tourism Development. More than 300 studies in over 50 countries.
Introduction Page 9
March 7, 2019
Let’s think outside
the bowl for a few
minutes…
Global Tourism Trends Page 10
March 7, 2019
2030
• Rising global wealth leading to Global International Tourist Arrivals (million) conservative
forecast
more people travelling 1 800
• Increased interest in immersive,
1 600
adventurous holidays 1 400
1 200
• Greater appreciation of GFC Slowdown
1 000
‘eco-tourism’
800
• Increased desire to get ‘off the 600
beaten track’ & experience
authentic culture 400
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Source: World Tourism Organisation (UNWTO)
Tourism has shown robust growth for decades, and shows no signs of slowing down.General Trends in Tourism Page 11
March 7, 2019
• Unique Experiences
• Bleisure
• Localisation
• Risk Aversion
• New Destinations
• Intergenerational Travel
• Eco-tourism
How does Lofoten (and your business) measure up against these trends?Trends in Tourism: Millennials Matter Page 12
March 7, 2019
• Expected to spend incrementally more on travel services than
any other age cohort
• 6 in 10 would rather spend their money on experiences
rather than material things
Porto Montenegro
Marina Bay
Sands Hotel
Millennials are a fickle bunch, but they’re soon to dominate the international travel sector.Trends in Tourism: Influencers Page 13
March 7, 2019
• “Word-of-mouth influence doubles the sales of paid advertising
and boosts the customer retention rate by 37%” (McKinsey &
Company)
• “92% of consumers trust an influencer more than an
advertisement or traditional celebrity
endorsement” (MuseFind)
7 Pines Resort, Ibiza
Famous social media
influencer Chiara Ferragni
offers her exclusive
products in concept stores
Influencers are often viewed similarly to a trusted peer and can be super-effective marketing tools.Trends in Tourism: Easternisation Page 14
March 7, 2019
Top 10 Countries for International Tourism Expenditure “Experience is the foremost priority for
(in billion $US) Chinese Tourists. Price is not a decisive
China factor when choosing travel destinations Chinese Outbound Tourism:
USA
or tourist attractions...”
Germany • 2008: 46 million
UK
France • 2013: 98 million
Australia
Canada • 2018: 134 million
Russia
Korea
Italy
0 50 100 150 200 250 300
The Asian tourist market, lead by China, is an extremely lucrative market to tap into.Trends in Tourism: Global Connectivity Page 15
March 7, 2019
• As global travel becomes cheaper and travel times Elon Musk’s BFR promises all long
reduce, the world becomes more and more connected distance trips below 60mins
(2024).
• This opens up new tourist markets, particularly for
places previously considered inaccessible due to cost or • London to New York: 29mins
time • London to Sydney: 51mins
• The A2: capacity 300 passengers
• Mach 5 – Focus on speed not scale
• Brussels to Sydney in 5 hours.
• 25 years from now
Increased global connectivity will significantly expand the potential pool of tourists for the Lofoten region.Trends in Tourism: Singletons Page 16
March 7, 2019
• Solo/single travellers now represent 50% of US market alone
• People with a busy lifestyle but strong control of their choices
• Lucrative sector, with individual needs
• Strong sense of independence
(IT plus choice = Free Independent Traveller)
• 1 in 6 travellers chose to go on holiday by themselves in 2018
compared to 1 in 9 in 2017
Lack of dependents means more available income and flexibility to travel out of peak-season.Trends in Tourism: Women-Friendly Travel Page 17
March 7, 2019
• There has been a 230% increase in the number of
women-only travel companies in the past six years
alone
• The percentage of business travellers who are
women has grown dramatically since the early
1990’s
A size of this sector has increased substantially – ignore this trend at your peril.Trends in Tourism: Wellness Tourism Page 18
March 7, 2019
• Increasing awareness of the benefits of a healthy lifestyle
• Rebellion against sedentary life
• Trend of continuous self-improvement
• Wellness Tourism is expected to hit $680 billion this year
and is growing 50% faster than the overall tourism industry.
Wellness tourism becomes more and more sophisticated – and Lofoten has much to offer.Trends in Tourism: Urbanisation Page 19
March 7, 2019
100 %
• The global trend of urbanisation has seen
more and more people move into cities
75 % Rural
Percentage of Population
• City-dwellers people are seeking out remote
holiday destinations to escape the urban 50 %
environment and reengage with nature
• Eco-tourism and nature-based tourism are
25 %
Urban
becoming more popular
0%
1950 1975 2000 2020 2045
Source: Population Division of the Department of Economic
and Social Affairs of the United Nations Secretariat
More travellers a looking to escape the urban jungle and get back in touch with nature.Trends in Tourism: Digital Detox Page 20
March 7, 2019
• People’s interaction with technology has become a love-hate At the same time…
relationship
• 73% of smartphone, tablet and laptop-toting
• Growing body of research linking constant connectedness to office workers will check their emails while
anxiety and other mental health issues on holiday
• ‘Digital Detox’ holidays offering the chance to ‘unplug’ becoming
• 62% expect their employer to contact them
popular
whilst they are on holiday
• 41% take mobile devices on holiday for work
purposes
The Light Phone is an ultra-
minimalist phone designed to
allow users to leave their
smartphones behind and switch off
from things such as social media
and news (phone calls & 9 speed
dials only)
Operators have the option of ‘connecting’ or marketing their ‘disconnectedness’ – you choose.Trends in Tourism: Nostalgia Page 21
March 7, 2019
• Need to retreat for short time periods into simpler times, or
some semblance of “time gone by”
• Understanding and participation in traditional activities
becomes interesting and worthy of trying
• Formerly routine activity such as cake-baking, jam-making,
and home-cooking are gaining popularity again
Feed off nostalgia to create memorable, authentic experiences.Trends in Luxury Tourism Page 22
March 7, 2019
• Virtuoso’s 2018 Luxe Report revealed that cold-
climate tourism to places such as Iceland was
increasingly popular with luxury tourists
• Top travel motivations included:
• Exploring new destinations
• Crossing off bucket-list items
• Seeking authentic experiences
• Personal enrichment
• Immersive Experiences > Passive Experiences
• Nature-based, sustainable eco-tourism is also
increasingly popular within this demographic
Create immersive experiences that are as authentic as possible, maintaining a high level of service.Question? Page 23
March 7, 2019
Where Do We Spend Our Time?
7%
6%
What percentage
of time does the
average American
spend indoors 87%
each day?
Indoors In the Car Outside
We may be indoor more, but we’re often wishing that we could be out in the great outdoors.What is Polar Tourism? Page 24
March 7, 2019
• Tourism based in high or
Polar tourism is not a new concept…
low latitudes
• Characterised by a cold and
extreme natural
environment
• Involves a mix of culture,
adventure and sports based
activities
1807 Arctic Travel Guides
first published
The harshness of the conditions found in Polar regions often forms part of the overall appeal of the experience.What is Arctic Tourism? Page 25
March 7, 2019
• Arctic tourism is on the rise
• 10.5 million people travelled to the
Arctic Circle in 2017
• Much more than one destination
(there are many different types of
Polar tourism)
Above: Different
Definitions
of the Arctic Region
The character of the Polar tourism offer will change quite considerably depending on the location.Arctic Tourism Page 26
March 7, 2019
• Arctic tourism is growing in popularity
Tourist Arrivals Indexed to 2008 figures
• Iceland has seen this figure quadruple 500
in the past 10 years 450
400
• Iceland has significantly outperformed
350
traditional holiday hotspots such as the
300
Maldives and Hawaii
250
200
150
100
50
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Iceland Maldives Barbados Jamaica Hawaii
Source: Statistics Iceland, National Bureau of Statistics Maldives, Barbados Tourism
Marketing, Jamaica Tourist Board & Hawaii Tourism
Arctic tourism is growing in popularity as people seek out new frontier locations.Arctic Tourism: Snow-Based Page 27
March 7, 2019
A series of very specific activities lend themselves to the ‘snowy’ locations (the ‘Winter Wonderlands’).Arctic Tourism: Nature-Based Page 28
March 7, 2019
Warmer destinations may actually provide a greater variety of opportunity across the year.Arctic Tourism: Polar Phenomenon Page 29
March 7, 2019
• Northern Lights/Aurora
Borealis related tourism
is extremely popular in
the Arctic Circle
• Greatest chance of
sightings from late
September to early
March
• Can combine with
things such as photo
tours, horse riding tours
and other nature-based
activities
The Aurora Borealis is extremely appealing and can be use to smooth out visitor seasonality.Arctic Tourism: Midnight Sun Page 30
March 7, 2019
It’s not all about the cold…
The greatest pressure
from demand comes
in summer
Hours of Daylight in June
Lofoten
Jutland
Newquay
Nice
Sicily
Agadir
Miami
0 10 20
Hours
Though much is made of the cold-weather activities, the real visit pressure comes during the summer.Nature Nails It Everytime Page 31
March 7, 2019
Reality is so much better than seeing these places on a screen.The Heritage Magnet Page 32
March 7, 2019
• It is important to recognise and leverage
heritage attractions
• When managed correctly, they can provide
a huge tourism draw
• Tourism can play a role in safeguarding
traditions and site of historical importance
Lofoten’s rich cultural heritage has the potential to draw significant interest. The media loves it right now.Culture & Traditions Page 33
March 7, 2019
People want to have
authentic cultural
experiences based
around:
• Local history
• Local sagas and
folklore
• Local traditions,
cuisine, festivals,
attire & customs
People like to engage with a location through its cultures and traditions.Heart of the Matter Page 34
March 7, 2019
Important to remember the Arctic
isn’t for everyone…
At certain times of the year, Lofoten may struggle to appeal to families with young children and senior travelers.Heart of the Matter Page 35
March 7, 2019
Challenges: Rewards:
The harshness of the Lofoten climate offers many challenges, but also many rewards. You must offer both.Volume Vs. Value Page 36
March 7, 2019
Tourism is about
finding a balance
between volume
and value…
Vs.
Lofoten should be about ‘Value’ not ‘Volume’ – the natural environment and community must be safeguarded.Issues for Lofoten Page 37
March 7, 2019
Nordland Tourist Arrivals (2018)
• Nordland currently receives around 140 000
120 000
1 million visitors annually, but the 100 000
numbers are very seasonal 80 000
60 000
40 000
• The sharp increase in tourism in the past 20 000
few years has not been without its 0
challenges
• Important to recognise the value of
tourism to the region
• An increased investment in tourism
infrastructure is required to ensure that
Lofoten does not feel ‘overloaded’
Investments will have to be made to ensure that future tourism operations are sustainable in Lofoten.Issues for Lofoten: Seasonality Page 38
March 7, 2019
Mixing Markets…
Important to develop infrastructure for a blend of activities
that will attract visitors year-round, and appeal to a mixture Families
of different markets.
Young people
Seniors
Mixing markets and having a broad activity programme throughout the year will help smooth seasonality.Issues for Lofoten: Accessibility Page 39
March 7, 2019
It’s not that easy to
get here!
Turn negatives into
positives. Make the
journey part of the
experience…
“The journey is just as
important as the
destination..”
The journey to Lofoten should form part of the experience. Turn this into a positive.Issues for Lofoten: Infrastructure Page 40
March 7, 2019
Accommodation Airport expansion Public transport
Roads Public Restrooms Waste disposal
To avoid the negative consequences of over-tourism, appropriate investment in infrastructure is required.Issues for Lofoten: Viability (High Operational Costs) Page 41
March 7, 2019
Average Annual Income (US$) in 2017
• Prices in Norway are high by international
standards (why do you think people camp?) Monaco
Liechtenstein 116 300
186 080
Bermuda 106 140
Switzerland
• They have to be – wages are high
80 560
Norway 75 990
Luxembourg 70 260
Macao 65 130
• Staffing is the dominant expense in the P&L Iceland 60 830
United States 58 270
for tourism businesses Ireland 55 290
Denmark 55 220
Singapore 54 530
• Can the market wear the prices required to Sweden
Australia
52 590
51 360
make a profit and payback construction costs? Hong Kong 46 310
Netherlands 46 180
Austria 45 440
Finland 44 580
Germany 43 490
Canada 42 870
Belgium 41 790
United Kingdom 40 530
United Arab Emirates 39 130
New Zealand 38 970
Japan 38 550
France 37 970
Israel 37 270
Italy 31 020
It must be hard to make a tourism business stack-up in Norway, with such a high payroll burden.Issues for Lofoten: Viability (Can I Push Rate?) Page 42
March 7, 2019
Fogo Island Inn, Newfoundland Sheldon Chalet, Alaska Union Glacier, South Pole
$8,130 per night (excluding flights)
You can push on rates, but the profile of the
physical and service offer will have to rise
(or the uniqueness of the experience)
$1,483 per night $2,880 per night
There are examples of small-scale exceptional developments pushing the boundaries on price in the Polar Regions.In Summary… Page 43
March 7, 2019
• The number of tourists to the Arctic is increasing
• The profile of these tourists is diverse and will be more so
• If you want tourism to grow, consider guest requirements
• What is your offer (and what is it not)?
• Preserve the ‘Asset’ at all costs
• ‘Challenge’ tourists then ‘Reward’ them
• Think creatively how to build low-months & shoulder-months
• Make the journey to Lofoten part of the experience
• ‘Value’ rather than ‘Volume’ likely to be the answer going forward
• Raising standards may enhance viability (but narrows appeal)
• Lofoten has extraordinary potential, what will you do with it?Lofoten in the Context of Global Travel & Tourism Page 44
March 7, 2019
**Inspirational Quote**
Questions & Answers
26 February 2019
Ben Martin Principal, HKS AdvisoryYou can also read
