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International travel is no longer the exclusive province
of the rich. Over the next several decades, hundreds of
millions of new entrants to the middle class will want not
only the things—but also the experiences—that money can
buy.
Indian
call-center employees, Russian petrochemical engineers,
Chinese middle managers and Brazilian salespeople are
already scouring the web for deals on trips. They want to
see
Paris from the
Eiffel
Tower, relax in the Maldives and play blackjack in Las
Vegas. According to the United Nations World Tourism
Organization, international tourist visits are expected to
double soon, from roughly 800 million in 2008 to 1.6
billion by 2020.
However,
only so many people can visit a particular building or
beach in a given year. Where will all the other tourists
go? This skyrocketing demand for travel will lead to a
“scarcity of place” and to three probable market
responses:
First,
most tourism-related prices, such as hotel room rates in
popular cities, will continue to escalate as demand
outstrips supply. Gray markets may develop, as they have
for scarce tickets to sporting and entertainment events. A
new type of scalper may emerge, offering hotel rooms, air
travel and even museum passes—at whatever price the market
will bear.
In
addition, governments and institutions may seek to control
demand by imposing heavy surcharges on travel to the most
popular places or by requiring costly visas for access to
them. That’s already starting to happen. For example, the
government of
Ecuador,
concerned about the impact of increasing tourism on the
fragile
Galapagos Islands
ecosystem, is discussing doubling the park’s entrance fee
and further restricting the number of visitors.
Second,
rationing—and the resulting waiting lists—will become
commonplace. Some groups, for example, are already calling
for limits on traffic to ecologically sensitive
destinations, such as the Incan ruins at Peru’s Machu
Picchu. As rationing becomes more prevalent, the very
existence of waiting lists will, paradoxically, spur
demand. Many will get in line just to secure the option of
visiting rationed destinations, even if they don’t
exercise it. The value of a place in line—any line—will
give rise to a variety of business opportunities,
legitimate and otherwise.
Finally,
jaw-dropping prices and decades-long waiting lists will
prompt the creation and the expansion of destinations in
both developed and developing economies. The Chinese, for
example, are developing Hawaii-like Hainan island and
Macao, a gaming paradise on China’s southern coast. And
thanks in part to the opening of the Qinghai-Tibet rail
line, the number of visitors to Tibet increased 64 percent
last year to top 4 million, according to the BBC.
Meanwhile, would-be high rollers are now heading to
casinos in places like Biloxi, Mississippi, and Detroit to
avoid the crowded Las Vegas strip.
Companies
and governments are also creating facsimiles of popular
destinations. The Eiffel Tower, for example, can be seen
in Las Vegas and at Disney’s Epcot Center, not just in
Paris. Venice’s canals can be enjoyed in Macao, where the
Venetian resort and casino has three canals in its $2.4
billion, 10.5 million-square-foot complex. And the
prehistoric cave paintings in Lascaux, France, are
available for inspection in a meticulously reproduced
duplicate 200 meters away from the real thing.
Just as
sites and structures can be successfully replicated in new
locations, so can institutions. If the swelling ranks of
global travelers can’t all come to you, you can go to
them. The Guggenheim, for example, was once exclusively a
New York City museum but is now a foundation with museums
in Bilbao, Venice, Berlin and Las Vegas—and there are
plans to expand to Asia, Latin America and the Middle
East. Business schools have been following a similar
strategy. Northwestern University’s Kellogg School of
Management, for example, has established joint executive
MBA programs with schools in Israel, Germany, China and
Canada.
As the
scarcity of places grows, many companies will find
opportunities to profit by meeting new levels of demand
for authentic—and inauthentic—experiences. However, they
will also have to jockey for space in this increasingly
crowded, mobile world. Two strategies will help.
GET IN
WHILE YOU CAN. As costly as it is to operate in hot spots
like London, New York and Tokyo, some companies will
always need access to talent and clients in key locations
and will have little choice but to compete with tourists
for the cities’ limited resources. Businesses should
secure their places now. With new centers of economic
power emerging, companies should also establish themselves
in rising metropolises such as Beijing, Rio de Janeiro,
Moscow and Abu Dhabi, where prices on prime real estate
will surely climb as demand outpaces availability.
STAY AWAY
IF YOU MUST. In some cases, it will become too expensive
and logistically difficult for businesses to coexist with
swarms of tourists in the hearts of cities with major
cultural sites or other attractions. The hotels, taxis and
restaurants will simply be full. One response, worth
considering now, is to move to city outskirts that have
the necessary infrastructure—or even to work closely with
local governments to develop new communities. Business
districts like La Defense in
Paris and planned communities like
Reston,
Virginia, outside Washington, D.C., are cases in point.
The time is ripe for similar developments to spring up
around other congested cities.
A billion
or two additional international travelers represent both a
massive potential headache and an opportunity for
business. Which it will be depends on what companies do
now, before someone starts selling tickets to New York
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