Arnie Weissmann
Competition among travel companies is going to heat up significantly over the next 10 years. The World Travel & Tourism Council predicts that, by 2034, travel and tourism will generate $16 trillion, or 11.4% of global GDP, up from $9.9 trillion and 9.1% of global GDP in 2023.
For this growth to occur without further overburdening currently popular destinations, many areas of the world that aren't thought of as tourist regions today are likely to see opportunities to get on the tourist map and compete for a piece of the pie. Similarly, new travel businesses in all sectors -- hotel, tour, air, cruise, retail, ground transport -- will emerge to exploit this expansion.
These new entrants will present challenges for mature destinations and legacy companies to retain their current market share. Incumbents will have to make strategic shifts and tactical investments simply to maintain current standings, let alone grow in the face of intensified competition.
At the WTTC Global Summit in Perth, Australia, earlier this month, I moderated a panel on this rise of competition and what it may mean for attendees, most of whom run sizeable travel and tourism operations.
Insights on impending competition came from panelists Audrey Hendley, president of American Express Travel; U.S. National Travel and Tourism Office director Brian Beall; and Perth Airport CEO Jason Waters. I was glad to see that James Thornton, CEO of Intrepid Travel, was also a panelist because Intrepid's brand profile is intimately tied to sustainability, and it would be hard to discuss the WTTC's predicted growth numbers without also addressing the pressures it will put on the planet.
Many surveys I've come across, with the notable exception of one fielded by Virtuoso, indicate that the majority of consumers want to travel sustainably but that the vast majority won't pay extra to do so.
It has been my observation that the suppliers that are indeed verifiably ecofriendly tend to be in the luxury market, where price sensitivity is less of a concern than further down the economic scale. It's not surprising that Virtuoso's findings buck the general trend, but the other survey results that point to a reluctance to pay more for sustainable travel become more concerning in the face of predicted accelerated growth.
Intrepid does offer a line of upscale tours, but most of its offerings are closer to mass market. Assuming that a truly sustainable product is more expensive to produce, I asked Thornton how he delivers sustainability and remains competitive on pricing. Did he present such a compelling story about sustainable travel that consumers loosened their purse strings? Did he sacrifice margin to stay true to the company's sustainability ethos? Something else?
He first acknowledged that there are aspects of travel where it is less expensive to choose less sustainable options. He gave the example of low-cost airlines in Europe, which put out higher per-passenger carbon emissions than trains but are often the cheaper alternative.
Nonetheless, he maintained that Intrepid is more sustainable and more profitable than ever.
"The secret of what we do is stay in local accommodations, eat at local restaurants, use different types of local transport and work with many types of local providers. That doesn't cost [as much as alternative options], so we're very much still a value-based proposition.
"It works very actively to reduce our emissions per passenger, per day and still deliver a great travel experience, with a net promoter score of 82," he continued, referring to a predictor of customer loyalty that rates businesses on a scale of negative 100 to 100. "[Our trips] benefit the environment and make sure that as much money as possible stays in local communities."
Guides are seldom employees of the tour company whose logos they wear. And rarely do tour operators own the hotels where their guests stay, the restaurants where they dine or the coaches that they board. So, on my second round of questions to the panel, I asked Thornton how Intrepid vets the myriad global vendors it contracts with to ensure that they actually deliver a sustainable product.
He acknowledged the challenges of working with 4,000 suppliers on all seven continents. "Many are operating in destinations where they don't necessarily know what it means to reduce carbon emissions, let alone how to measure them."
Intrepid is a B Corp, which means it has been verified as operating in accordance with a stringent set of ethical and sustainability criteria. Those standards must also be upheld throughout the company's contracting supply chain. To aid B Corps in meeting these "scope three" goals, the company that issues B Corp credentials also provides a methodology to educate suppliers and vendors.
"I just want to flag that it's really hard work," Thornton said. "It takes time, it takes energy, it takes commitment."
He invited the audience to go to Intrepid Travel's website and use its open-source toolkit to help decarbonize their companies. "I think it's imperative for travel businesses to share knowledge," he said. "Airlines don't compete on safety, and we shouldn't compete on sustainability."