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TRansfoRmaTional ElEmEnTs of ThE TouRism sEcToRJuan Roure, Albert Castelltort and Júlia Gifra

Research PaperJuan Roure, Albert Castelltort and Júlia Gifra Tourism Sector | 2016 - 2017

TRansfoRmaTional ElEmEnTsof ThE TouRism sEcToR

Executive Education — Industry Meetings 5

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ConTEnTs

IntroductIon

1. demographIc Forecasts, mIddle classes and cItIes:

ImplIcatIons For tourIsm

2. chIna: the gIant that Is transFormIng the Industry

3. dIgItIzatIon: cell phones as a consumer channel

and the collaboratIve economy

3.1. cell phones: the leadIng channel

3.2. sharIng economy: Impact, players and busIness models

FInal remarks

reFerences


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InTroduCTIon

Tourism is one of the fastest-growing economic sectors globally. Despite years of recession and the different geopolitical tensions that have occurred in various regions of the world, it represents 9% of global GDP and generates one in 11 jobs.1

It is one of the main players in international trade and a key motor of global socioeconomic progress, with a turnover comparable to that of other important sectors such as the oil export, food product and automotive sectors. The impact and importance of tourism are seen both in industrialized and developed countries and in emerging and developing countries. They all benefit – economically and in terms of being given an impetus – from other interrelated sectors such as infrastructure, telecommunications, city management and growth, food and mobility, among others. The tourism sector’s impact on the value chain of many other related sectors is obvious. In this sense, tourism is a strategic sector both globally and domestically, because it helps create employment, because of its ability to promote trade and investment, because it acts to stimulate infrastructure improvement and implementation and, in short, because of its ability to promote economic growth.

A quick glance at the main figures for the sector is enough to confirm its impact, relevance and evolution. The total number of tourists has risen from 25 million in 1950 to 1.1 billion in 2015 and is expected to reach 1.8 billion by 2030. Its exports amount to $1.4 trillion, which constitutes 6% of the world total of service exports. Europe remains the world’s leading destination for international arrivals, with France at the top. China and the United States are the top tourism source markets.2

The sector is not only growing but changing and it is influenced by various trends that affect its evolution. On the one hand, tourism cannot be separated from the sociodemographic projections forecast for the coming decades or from the associated urbanization process. On the other hand, current tourism and its future prospects cannot be understood without the role of China as a source market country, inbound tourism market and world investor, as a challenge and opportunity. Nor could tourism be discussed without addressing the technological transformation and leadership of this sector in innovation and in new business models. Finally, the debate on the sustainability of tourism models continues to be a key issue, not only from the environmental point of view and in relation to climate change but also from the perspective of urban pressure, ways of traveling, and protection,3 among other challenges.

This research paper4 is part of the research document series of IESE’s Industry Meetings Division on the occasion of the 5th Tourism Industry Meeting. The purpose of this work is to define this industry’s transformational factors and scope. It seems appropriate to us to outline some elements and data about the state of the sector and its future, without trying to address all the agents of change. The issues that we will deal with in this document will focus on three aspects: demographic forecasts and their implications for tourism; China and its transformational role; and the digitization of the sector from two specific perspectives – cell phones as a consumer channel and the collaborative economy. All of these drivers of change should be seen not only as challenges but also as opportunities for innovation, entrepreneurship and satisfying consumers’ new demands.

1 World Economic Forum, The Travel & Tourism Competitiveness Report 2015, p. 3. 2 World Tourism Organization, UNWTO Tourism Highlights, July 2015, pp. 1–15.

3 For example, in recent years, tourism has been particularly affected by terrorism and security issues. 4 J. Roure, A. Castelltort and J. Gifra, “Transformational Elements of the Tourism Sector”, IESE Business School, Occasional Paper, OP-288-E, 2016. Available at: http://www.iese.edu/industrytrends

IEsE Business school8

Industry Trends

1. dEMographIC ForECasTs, MIddlE ClassEs and CITIEs: IMplICaTIons For TourIsM

The 21st century is experiencing sociodemographic changes that will shape society and the overall economy of all the countries of the world. Many of these changes are already having a clear impact on all sectors and industries, with tourism being one of the industries most affected. Indeed, the rise in and aging of the population, as well as the increase in the middle classes and urbanization, as will be seen below, have particular repercussions on this sector.

According to the average forecasts of the United Nations Population Division, the world population will come to 8.4 billion people in 2030 and 9.6 billion in 2050. Africa and Asia will be the regions with the highest percentage (40%) of the world population from 2050.

Source: United Nations, World Population Prospects.5

Figure 1. LiFe expectancy at birth For the worLdand deveLopment groups (1950–2100)

Furthermore, there has been an increase in life expectancy in recent decades, in parallel with advances in the field of technological innovation and medicine: the current population is living longer in all regions of the world and, according to estimates, in 2050 there will be two billion people over 60. Thus, the world population is living longer, especially in developed countries, where life expectancy is 82 years for women and 79 years for men. In fact, for the first time in the history of humankind, many countries (especially in the West) have turned their age pyramid upside down, with a higher number of people over 60 than under 20.

The graphs below illustrate these trends. The first shows this increase in life expectancy globally, with the longevity in more developed countries standing out.

5 United Nations, World Population Prospects: The 2012 Revision, Methodology of the United Nations Population Estimates and Projections, New York, Department of Economic and Social Affairs, Population Division, 2014.

Life

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Less developed regions

More developed regions

Least developed countries

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Figure 2. gLobaL aging popuLation (2014 vs. 2050)

The following illustration shows the current situation and forecasts for the global aging population up to 2050 from the perspective of the evolution of tourism. Europe will

be the continent with the oldest population, followed by the Americas, Asia and finally Africa.

This demographic change will be accompanied by a process of urbanization and city growth in the coming years. At present, 54% of the world population lives in

urban areas and the percentage is expected to reach 70% by 2030.

Source: Horwath HTL, Tourism Megatrends, 2015.

Source: United Nations, World Urbanization Prospects.6

Figure 3. urban and ruraL popuLation oF the worLd (1950–2050)

6 United Nations, World Population Prospects: The 2012 Revision, Methodology of the United Nations Population Estimates and Projections, New York, Department of Economic and Social Affairs, Population Division, 2014.

Pop

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(milli

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Industry Trends

Currently, half of the urban population lives in small cities with fewer than 500,000 inhabitants. However, urban agglomerations will proliferate further. Forecasts on urbanization and the growth of megacities (with more than 10 million people) through 2030 constitute another of the key trends. Among the countries that already stand out because of their high number of megacities are China and India.7

Indeed, population growth and the aging of the population, as well as the increase in the middle classes and urbanization will have direct repercussions on the tourism sector. For a start, it is not difficult to make a connection between the global increase in the middle classes and the prospects for growth in the number of tourists, which will increase at a rate of more than 4% over the coming years. As a result, there will be more and more tourists with disposable income.

Furthermore, consumers – depending on their age and level of digitization – will require different products, customized and tailored to their circumstances. Thus, as the number of elderly tourists increases, their demands for more sophisticated products and services

To these projections must be added the growth forecasts of the middle classes globally. It is estimated that, in 2020, the middle-class population globally will exceed three billion people and, in 2030, it will come to 4.8 billion.8 By region, the number of middle-class people and the percentage they will represent in the coming years is illustrated in the table below. At present, Europe and North America are the regions with the highest proportion of middle classes. However, in 2030, the Asia-Pacific region will have overtaken them.

will need to be taken into greater consideration. Furthermore, tourism from Asia will require the demands of the new rich and middle classes to be addressed as well as the needs of a tourism that may be on a larger scale and more organized. Also, flexible, mobile and social formats will have to meet the demands of the millennial generation.

Likewise, the urbanization process will generate greater pressure and will make cities more important as tourism destinations. Urban tourism is thus proved to be a dominant trend, with prospects of becoming even more important in the coming decades. Tackling the issue of urban tourism and city models requires several aspects to be dealt with: the existence of different tourism

7 United Nations, World Urbanization Prospects: The 2014 Revision, Highlights, New York, Department of Economic and Social Affairs, Population Division, 2014.

8 H. Kharas, The Emerging Middle Class in Developing Countries, working paper No. 285, OECD Development Centre, January 2010, pp. 1–61.

Source: H. Kharas, The Emerging Middle Class in Developing Countries, working paper No. 285,OECD Development Centre, January 2010, p. 28.

Figure 4. numbers (miLLions) and share (percent) oF the middLe cLass (2009–2030)

2009 2020 2030

North America 338 18% 333 10% 322 7%

Europe 664 36% 703 22% 680 14%

Central and South America 181 10% 251 8% 313 6%

Asia Pacific 525 28% 1,740 54% 3,228 66%

Sub-Saharan Africa 32 2% 57 2% 107 2%

Middle East and North Africa 105 6% 165 5% 234 5%

World 1,845 100% 3,249 100% 4,884 100%


Tourism

9 Euromonitor International, Cities for Success, June 2015. 10 World Travel & Tourism Council, Governing National Tourism Policy, 2015, pp. 1–68.

patterns according to the positioning of each city in the global market; the economic, social and cultural benefits to which tourism contributes and the improved options for growth of the local communities themselves; the effective management of cities from the point of view of sustainability, the reconciling of tourism with the social coexistence of citizens, security and mobility solutions, among other key elements. For the tourism sector to be able to have a positive impact on the cities and countries in which it develops, what is required is a supportive economic, competitive, regulatory and policy environment that provides impetus and leadership,9 as well as sustainable management of each city’s tourism model. In this regard, efficient intergovernmental coordination is necessary so that the policies promoting the urban tourism sector – as a pivotal sector acting as a driving force for many other sectors – are coherent, effective and sustainable.10

In this regard, sustainability will continue to be a fundamental issue in the framework of this trend, which implies a greater number of tourists and a certain mass tourism, and also in the current scenario following the 2015 Paris Summit (COP 21), in which new frameworks have been defined for global governance on climate change for the coming decades. It should be pointed out that the adoption of emission mitigation policies and moving them into areas of activity such as air and road transport, among others, will directly affect the tourism sector. From this perspective, sustainability and the fight against climate change will encourage the need to rethink and redefine current tourism models. This will require the coordination of policies globally and greater collaboration between the public and the private spheres.

All these demographic and urbanization trends will also have a bearing on the progress and performance of ICTs, as well as on the digital transformation of the tourism sector since, as the urban population grows, so too will the connected population, and the process of change and digitization will accelerate. In fact, in countries where there are greater advances in ICT development, there is a clear transformation process of their industries, including the tourism industry. Moreover, as digitization reaches new heights thanks to technological progress in fields such as connectivity, mobility, access to information and cloud computing, the transformation will be quicker and quicker and affect all sectors and spheres of the economy and society.

As will be seen below, the digitization of the tourism sector is reflected already in a disruptive way in two specific areas: on the one hand, in cell phones as a regular consumer channel and, on the other, in the emergence of new actors from outside the traditional ecosystem, with new business models.


Industry Trends

2. ChIna: ThE gIanT ThaT Is TransForMIng ThE IndusTry

We could not understand the tourism industry or its evolution in the coming years without considering the role played by the Asian giant from a global point of view. It is the largest source market in the world, as well as one of the main tourist destination countries. Likewise, today China is one of the world’s biggest investors in an increasing number of activities, both in

This leadership is also explained on the basis of the growth prospects of its middle classes in the coming years. The figure 2 below illustrates how China and India will be the

the field of tourism and in other strategic sectors such as the energy and infrastructure sectors, in which it stands out significantly.11

As illustrated in the graph below, the growth rate of outbound tourism from China between 2015 and 2030 confirms its leadership and importance in the coming decades.

countries that will experience the highest growth up to the year 2050 in terms of the number of middle-class people and the associated consumer capacity.

Source: Euromonitor International, Future of Travel 2030, October 2015.

Figure 5. main source markets (2015–2030)

11 See the analysis by the American Enterprise Institute and the Heritage Foundation, available at http://www.aei.org/china-global-investment-tracker.

Trip

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China US UKGermany


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Source: H. Kharas, The Emerging Middle Class in Developing Countries,working paper No. 285, OECD Development Centre, January 2010, pp. 1–61.

Figure 6. percentage (%) oF gLobaL middLe-cLass consumptionby country and region (2000–2050)

The figure below, which puts the focus solely on China, also forecasts the growth of middle-class households according to their disposable income up to 2030.

Source: H. Kharas, The Emerging Middle Class in Developing Countries,working paper No. 285, OECD Development Centre, January 2010, pp. 1–61.

Figure 7. middLe cLasses in china: evoLution and growth

Cum

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erc

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Annual income (2005 PPP$, log scale)


Industry Trends

The challenges and opportunities of China-related tourism are found, on the one hand, in outbound tourism – i.e., in the opportunities generated by these growing middle and upper classes with purchasing power who travel to Southeast Asian countries, Europe, the United States and other countries. As more of the population and households have higher disposable incomes, the number of people traveling will increase, both outside and inside China.

On the other hand, there are also opportunities in its own domestic tourism, since it must not be forgotten that China is, per se, one of the top domestic tourism destinations, a situation encouraged by its own government policies. Hong Kong and Macao are its main tourist destinations, followed by other countries such as South Korea and Singapore.

The development of domestic tourism is closely related to the growth of its cities, to the advance of the hotel sector, to the need for new infrastructure (roads, airports, etc.), as well as to the increasing development of online

trade. As a consequence of its rapid urbanization process, many roads and airports have been built in recent years in a very short period of time. In fact, as has been mentioned already, the forecasts of urbanization and the growth of megacities with more than 10 million people up to the year 2030 indicate that China and India will be the countries with the highest number of cities in the coming decades. In particular, China will have six of the 30 biggest agglomerations forecast for 2030: Shanghai (30 million), Beijing (27 million), Chongqing (17 million), Guangzhou (17 million), Tianjin (14 million) and Shenzhen (12 million).12

This may get faster in the coming years, due to the rate of growth and evolution being experienced by the construction, hotel and digital sectors in a China that is growing by 6% a year. While it is true that the latest global growth forecasts from international organizations warn about the slowing down of the Chinese economy, it is reasonable to assume that China will continue to play a fundamental role in the global tourism sector.

12 United Nations, World Urbanization Prospects: The 2014 Revision, Highlights, New York, Department of Economic and Social Affairs, Population Division, 2014.

summary: opportunities and chaLLenges regarding china’s roLe in worLd tourism• The growing middle and upper classes with purchasing power traveling to Europe, the United States

and other countries will remain in the coming years, as illustrated by the fact that China will continue to be the main power in outbound tourism. The challenges related to possible mass tourism and its sustainability must also be mentioned.

• There are also opportunities in its own domestic tourism, in the growth and development of the hotel sector in its cities and megacities, in the need for new infrastructure (roads, airports, etc.) and in the major digitization of sales and distribution methods.

• There are also opportunities in the huge investment capacity of Chinese business and financial groups and in their growing interest in the tourism sector.


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13 M. Dolliver, et al., “Millennials and Their Smartphones: How Many Have Them and What They Do With Them,” eMarketer, 2015, pp. 1–17.

3. dIgITIzaTIon: CEll phonEs as a ConsuMEr ChannEl and ThE CollaBoraTIvE EConoMy

Digitization is a challenge and an opportunity. In the tourism sector, technological disruption has been greater and faster than in other areas. This is confirmed by recent analyses: the two most common and widely used areas of e commerce are online travel purchases and financial services. The study13 depicted in the table below reflects this trend and analyzes the uses and purchases made in the context of the United States according to generation or age, sector and device. As

illustrated, the millennial generation (18 to 34 years of age) uses the smartphone and PC on a regular basis to make travel purchases; in the case of Generation X (35 to 50), the PC is the method most commonly used to make travel purchases (35%); and in the case of baby boomers (51 to 69), the PC and travel occupy a predominant position in comparison with other methods and sectors.

Source: eMarketer, 2015.

Figure 8. devices used by u.s. smartphone/tabLet users For shopping, by generation

and industry (october 2014)


Industry Trends

3.1. cell Phones: The leading channel

The main consequence of this trend is that the tourism sector is gradually changing its channels and its sales and advertising methods, as well as its products and services. Likewise, analysis of the data shows growth of the cell phone as a widespread consumer method in the coming years. That is, a transition is observed from Internet channels in their fixed connection format to the mobile format.

This situation corresponds, logically enough, with the evolution experienced by the penetration of cell phone communication in many countries. One of the most recent ICT measurement reports from the International Telecommunication Union14 in fact highlights the decrease in fixed-line telephony and fixed connections and the growth in the cell phone communications market and its associated connectivity. In developed countries alone, the penetration rate of the mobile format reached 121% in 2014.

Source: Euromonitor International, From the Online to the Mobile Travel Era, September 2015.

Figure 9. evoLution oF the number oF Fixedand mobiLe broadband subscriptions gLobaLLy (2009–2015)

14 International Telecommunication Union, Measuring the Information Society Report 2014: Executive Summary, pp. 1–46.

Mill

ions

sub

scrip

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Mobile Broadband Suscriptions Fixed Broadband Subscriptions


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In this context, a relevant piece of information is that sales and bookings carried out via a computer have decreased in the last few years in favor of mobile Internet platforms, which are growing year after year. By way of example, recent studies estimate that hotel bookings made online from a cell phone will triple between 2013 and 2017. In the same vein, the reports confirm that 95% of users and consumers already use

digital resources and content when organizing a trip (an average of 19 websites and mobile applications), not only to make bookings but also to look for information and to find inspiration and ideas.15

The figure below illustrates this transition from fixed to mobile Internet, forecasting that this medium will be the fastest growing in the coming decades.

Source: Euromonitor International, Future of Travel 2030, October 2015.

Figure 10. transition oF traveL saLesto mobiLe internet (2015, 2020, 2025 and 2030)

15 J. Guggenheim, et al., Travel Goes Mobile, The Boston Consulting Group, June 2014, p. 3.

US

$ b

illio

n

Mobile Travel Sales

Offline Travel Sales Online Travel Sales ex Mobile


Industry Trends

This change of channel involves new consumer patterns, since mobility is radically transforming the way content and information are accessed and obtained, as well as the itinerary and the process of purchasing and traveling.

To illustrate this new setting and the changes in consumer habits, a Google infographic serves as an example. Known as The Five Stages of Travel, it describes each of the points where travelers manage their experience using their cell phones. The journey begins at the dreaming stage, when the user sees the trips that have been taken by their friends and colleagues on social networks such as Facebook, Twitter or Instagram. Then comes the planning – that is, research of the destination, which

is done via platforms such as TripAdvisor or even using Wikipedia. Once the trip is planned, the user makes the purchase, using, in this case, platforms such as Booking, eDreams, Airbnb, Rumbo, Google Flights or Hotels.com, and this is often complemented by apps aimed at providing tours – whether with guides, professionals or local people – such as Trip4real. During the trip, other services are also used such as Google Maps, the phone’s camera and other content that the hotel or tour guide may provide. Finally, the experience is shared on the same social networks where the trip started so that a virtuous circle is created, which can be represented graphically as follows:

Figure 11. googLe inFographic the Five stages oF traveL

EXPERIENCING

DREAMING

PLANNING

BOOKING

SHARING


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In this scenario, the tourism industry must rebuild and redraw the relationship with its consumers and customers through these new connectivity and access schemes.

One of its main challenges is to manage and keep the relationship with the consumer – i.e., to ensure that consumers who were loyal in earlier periods continue to be so in this new multichannel and hyperconnected setting. Carrying over old competitive advantages and maintaining them in the mobile ecosystem is no easy task. It is not simply a matter of transferring the same features and online services for use on cell phones; it also implies understanding the paradigm shift and the new usage and consumption frameworks that are being defined: mobile connectivity is local (wherever the consumer is), personal (it is adapted to tastes and preferences) and social (it can be shared). In this sense, mobile connectivity is transforming companies’ relationships with the consumer, in the same way that the Internet first did. While 58% of users in the PC environment use search engines and aggregators to plan their trips, apps take center stage in the mobile environment. There, the sequential logic is altered and disappears, to be substituted by a logic that is

multiscreen, multidevice, with simultaneous use, 24 hours a day, seven days a week, 365 days a year, democratic, social and transparent.

Without a doubt, another opportunity associated with this new scenario is the generation and management of data and information. The tourism sector and all the players taking part in it have a special ability when it comes to obtaining and gathering information from their customers. It is not only about personal data but also about information relating to their preferences, destinations, hotels and travel habits, among much else. Used well, this information has great potential for marketing and sales and for improving the experience of customers, who see their tastes and preferences catered for, as well as for gaining in efficiency and competitiveness with greater and better control, for example, of expenses. By way of example, such important items as gasoline are being improved significantly in terms of efficiency and cost, thanks to special sensors installed in airplanes – among other technological innovations that have already been put in place and brought into operation – which allow refueling only when it is really necessary either to advance or delay a particular mechanical overhaul.


Industry Trends

3.2. sharing Economy: impact, Players and Business models

The paradigm shift that has just been described is especially acute in the development process of the sharing economy, whose overall value was already $26 billion in 201316 and which, according to forecasts, will amount to $335 billion in 2025.17 Also known as the collaborative economy, the sharing economy consists of sharing property or services among individuals, usually in exchange for an economic rate. The model has existed for decades in areas such as the renting or exchanging of homes for vacations but technology and above all the Internet have increased its scope exponentially, since they let full visibility be given to any property or service one may wish to share. Platforms between individuals (peer to peer) are not, therefore, a new phenomenon in the tourism sector, although it is true that digital platforms and easy access to them via smartphones have helped make them visible, accessible and widespread. Moreover, mobile technology facilitates payment and geolocation services, key elements for the success of these platforms.

The tourism industry is particularly attractive for these models for several reasons. First, due to the tendency of consumers to try things and experiment on their travels. The digitization of the tourism sector brings with it this cultural change and change in the habits of consumers, who are now much more open to sharing resources, locations and opinions and who are also eager to seek authentic experiences when visiting or getting to know a country or a city.

Second, the collaborative economy is particularly suited to the tourism sector, since there is a multitude of elements that are needed temporarily when traveling. In this sense, the tourism sector is particularly inclined and favorable to the emergence of business models designed to use collaboratively a house, a transport service, a guided tour of a city by a resident of the area or a food service. Therefore, the emergence of collaborative consumption platforms occurs above all in the subsectors of accommodation, transport and catering, where companies such as Airbnb, HomeAway, Uber, BlaBlaCar and EatWith currently lead this growth.

It is in these areas where the collaborative economy is affecting the traditional tourism industry the most. Recent studies produced by the association Hotels, Restaurants and Cafés in Europe (HOTREC) estimate that tourist accommodation booked through collaborative platforms represents more than double the accommodation obtained through the traditional hotel industry.18 For example, Airbnb19 has more than one million properties and accommodation options in nearly 200 countries, while Hilton – one of the largest hotel chains worldwide – has 215,000 rooms in 76 countries. Another example is Uber, a platform of individual drivers that operates in 400 cities throughout the world. Also in the catering subsector, shared food through platforms such as EatWith and VizEat offers alternatives to the cultural and gastronomic experience associated with tourism. The shared economy has a multitude of business models based on collaborative consumption, and its degree of penetration differs according to the country or market: it is more developed in North America and Western Europe, and rapid expansion is taking place in Asia.

This situation puts particular pressure on established companies in the sector since, in order to compete, they need to stand out through their services or their prices. In this sense, a trend that is already beginning to take shape – and which will be on the rise in the coming years – is the creation of collaboration and partnership models set up between companies from the traditional tourism sector and from the sharing economy. For example, the Hilton hotel chain integrated Uber’s transport and geolocation services into its own app, in order to provide information about the proximity of restaurants and other services of use to the hotel’s customers in different cities.

16 “The Rise of the Sharing Economy,” The Economist, March 9, 2013. 17 PwC, The Sharing Economy, Consumer Intelligence Series, 2015.

18 OECD, OECD Tourism Trends and Policies 2016, 2016, p. 93. 19 G. Zervas, D. Proserpio, and J.W. Byers, “The Rise of the Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry,” Boston University School of Management research paper No. 2013-16. Last update: June 2016. Available at: http://cs-people.bu.edu/dproserp/papers/airbnb.pdf.


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20 HOTREC, Levelling the Playing Field: Policy Paper on the “Sharing” Economy, November 2015. 21 HOTREC, The 10 Steps of the HOTREC Chart Towards a Sustainable and Responsible “Sharing” Economy in Tourism Accommodation, 2015. 22 Wallsten, Scott. The Competitive Effects of the Sharing Economy: How Is Uber Changing Taxis? Technology Policy Institute, June 2015. 23 OECD, OECD Tourism Trends and Policies 2016, 2016. 24 A recent study by Credit Suisse concludes that one effect of Airbnb in New York is a decrease in hotel prices. See: http://qz.com/ 341292/new-york-city-hotel-rooms-are-getting-cheaper-thanks-to-airbnb.

The collaborative economy also means pressure on governments and regulatory bodies since it represents a regulatory challenge in several respects, which may include the collection of taxes on income generated by individuals, fair competition among the traditional and the new models, the obtaining of licenses, investment or auditing, as well as the need to guarantee aspects such as hygiene, healthy conditions, safety and the correct state of the service provided by the individual.

Policy and regulatory responses vary greatly from one country to another and even from one city to another. Thus, for example, some countries or cities adopt a proactive strategy and integrate the new accommodation services into their tourist property registration systems: this is the case of Ireland, which, given its long tradition of accommodation in homes with its bed and breakfast network, has integrated these new collaborative economy categories with ease. Other countries, however, adopt reactive or passive strategies and opt for a system of surveillance and inspections that penalizes those accommodation providers who offer tourism services clandestinely and who do not have the proper permits, or they prohibit Uber’s services as they consider these to be illegal urban transport. In any event, regulatory asymmetry and what traditional companies consider to be unfair competition are some of the key issues. HOTREC recently launched a policy paper20 so that European institutions might adopt a common policy and regulatory framework regarding the particular case of the accommodation sector in the collaborative economy.

In summary, the 10 recommendations that it includes are:21

1. Integrate short-term accommodation rentals in legislation as tourist accommodation.

2. Establish a system of registrations and permits.

3. Compile statistics and data.

4. Enforce the established requirements and carry out inspections.

5. Ensure fiscal obligations are complied with.

6. Verify visitor identity and data according to requirements set out in the Schengen Convention.

7. Protect employees’ rights.

8. Guarantee that neighbors’ quality of life is respected.

9. Clarify and differentiate between residential and commercial property.

10. Control the dispersal of short-term accommodation rentals.

On the other side of the analysis, the opportunity that the collaborative economy represents for the tourism sector should also be assessed. First, it acts as a stimulus so the sector grows and it encourages competitiveness.22 A recent OECD study argues precisely that the sharing economy is partly responsible for the growth of the tourism sector globally, since it widens the range of possibilities offered to the consumer.23 Second, this model contributes to the development of areas with a tourism infrastructure. The geographical dispersal, for example, of apartments in Airbnb is much greater than that of hotels, which promotes development and tourist activity in areas where investing in the construction of a hotel would not be profitable but renting out a property would be. Finally, it is an opportunity for consumers since, with there being greater competition, they can improve their tourism experience and have more options to choose from, with more competitive prices and services.24


Industry Trends

In short, the shared economy is transforming the tourism ecosystem in particular, and the traditional players (hotels, taxis, etc.) are called on to adapt and, just as they are doing already, to seek regulatory environments that are a good fit and are even-handed for the sector’s players as a whole, including the new ones. Once the question of regulations is resolved and well focused, a priori, the entry of new participants increases competition and benefits the consumer, who ultimately has more options to choose from and forces the players to offer competitive products and services. Nevertheless, at present, these informal and alternative models already offer tourism services that compete with traditional suppliers and contribute to growth and innovation in the sector.


Tourism

FInal rEMarks

The rise in and aging of the population, the growth of the middle classes, and urbanization are factors that particularly affect the tourism sector.

• The world population will grow in the coming years, especially in Africa and Asia. In regions such as Europe, the key trend will be the aging of the population.

• At present, there is a greater urban than rural population, and the trend toward urbanization and city growth will be dominant in the coming decades. This urbanization process will generate greater pressure and will make cities more important as economic and social centers and as tourism destinations that will need to propose models in conformity with their growth and sustainability.

• The middle classes are growing all over the world, and in some areas in particular: China and India will experience the highest growth in this respect in the coming years. Consequently, there will be increasing numbers of tourists with disposable incomes.

Today China is already one of the biggest investors globally in many sectors and industries, including the tourism industry. It is also the main source country of tourists, a trend that will continue and grow in the coming years. The Asian giant’s opportunities are based on its investment capacity, its potential as a source market and its own domestic market (in sectors such as infrastructure, hotels, etc.).

Digital transformation in the tourism sector is reflected clearly in the growing role of cell phones as the main channel for queries, sales and consumption. Therefore, the sector has to offer new business models and strategies to adapt to this digital mobile ecosystem.

• The role of cell phones is radically transforming the way content and information are accessed and obtained, the itinerary and the process of consuming, purchasing and traveling.

• Consumers, depending on their age and level of digitization, use the channels, media and information in different ways. They expect different types of products, customized and tailored to their circumstances and expectations.

• An opportunity associated with the mobile connectivity scenario is the increased generation and management of data and information. The management of big data will continue to be crucial in the coming years.

• The contents, monitoring, loyalty and customization of the customer change in a setting such as the mobile one and even more so in a multichannel setting where the consumer uses a computer, tablet and smartphone interchangeably.

• The new technologies and new business models of the so-called collaborative economy have a particular hold in the tourism sector, where the platforms – between individual and collaborative use platforms – offer new travel options and formats with regard to where to stay, what to do, how to get there, where to eat, etc. Its impact is getting bigger and bigger and it is encouraging new forms of collaboration. Therefore, in the coming years, it is reasonable to expect greater regulation of this set of companies and activities.


Industry Trends

rEFErEnCEs

Bouton, S., et al., Unlocking the Future: The Keys to Making Cities Great, McKinsey & Company, June 2015, pp. 1–3.

Dolliver, M., et al., “Millennials and Their Smartphones: How Many Have Them and What They Do With Them,” eMarketer, 2015, pp. 1–17.

Euromonitor International, Cities for Success, June 2015.

Euromonitor International, Future of Travel 2030, October 2015.

Euromonitor International, From the Online to the Mobile Travel Era, September 2015.

Guggenheim, J., et al., Travel Goes Mobile, The Boston Consulting Group, June 2014, pp. 1–16.

Horwath HTL, Tourism Megatrends, December 2015, pp. 1–16.

HOTREC, The 10 Steps of the HOTREC Chart Towards a Sustainable and Responsible “Sharing” Economy in Tourism Accommodation, 2015.

HOTREC, Levelling the Playing Field: Policy Paper on the “Sharing” Economy, November 2015, pp. 1–32.

International Telecommunication Union, Measuring the Information Society Report 2014: Executive Summary, pp. 1–46.

Kharas, H., The Emerging Middle Class in Developing Countries, working paper No. 285, OECD Development Centre, January 2010, pp. 1–61.

OECD, OECD Tourism Trends and Policies 2016, 2016, pp. 1–384.

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United Nations, World Urbanization Prospects: The 2014 Revision, Highlights, New York, Department of Economic and Social Affairs, Population Division, 2014.

Wallsten, Scott, The Competitive Effects of the Sharing Economy: How Is Uber Changing Taxis? Technology Policy Institute, June 2015.

World Economic Forum, Outlook on the Global Agenda 2015, 2014.

World Economic Forum, World Economic Forum, The Travel & Tourism Competitiveness Report 2015, pp. 1–503.

World Tourism Organization, 2015 International Tourism Results and Prospects for 2016, 2015.

World Tourism Organization, UNWTO Tourism Highlights, July 2015, pp. 1–15.

World Travel & Tourism Council, Governing National Tourism Policy, 2015, pp. 1–68.

Zervas, G., D. Proserpio, and J.W. Byers, “The Rise of the Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry,” Boston University School of Management research paper No. 2013–16. Last update: June 2016. Available at: http://cs-people.bu.edu/dproserp/papers/airbnb.pdf.

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