Background
Creating superior value for customers is a critical task for tourism organizations anywhere in the world, especially those committed to recovering as quickly as possible from the negative effects of the COVID-19 pandemic and emerge stronger in the new normal.
However, despite the importance of having a plan to create value in the coming years, the mechanisms that are involved from within and outside tourism organizations remain fuzzy and, in most cases, are subject to heuristics and trial and error.
The above highlights the complexity of the phenomenon of value creation itself—greatly influenced by the ever-increasing and varied number of agents that play a role in the tourism ecosystem—the powerful technologies that connect them, and customers who prioritize continuous innovation and higher quality of service.
In this context, the rapid advances made in data science and the popularization of the tools that support it, to name just a few, are proving a life jacket for many tourism organizations, which have started to realize new ways of facing the challenges of creating value with more confidence. Notwithstanding the progress made to address complexity and uncertainty through these new tools and techniques, creating value remains an area that deserves further exploration and a dedicated focus of research.
To help us navigate the rough waters of value creation in tourism and share his insights and perspectives on the matter, I am honoured to interview UNWTO’s Executive Director Manuel Butler. Dr Butler is a world-class expert who has been leading major tourism transformation projects around the world for years. From his privileged vantage point at UNWTO, Dr Butler kindly shares his vision on the future challenges for creating value in tourism and the changes that the future may bring to its ever-changing ecosystem.
We could not begin an interview like this with a topic other than the dramatic effects that the COVID-19 pandemic is having in the world and whose consequences on tourism are being especially devastating. Quite certainly, these last few months have been dominated by a climate of ‘value destruction’ than by another of ‘value creation’.
Navarro-Meneses: What consequences do you think this process of massive destruction of value that we are witnessing in tourism will have in the coming years, and how do you think it will hinder the speed of its recovery?
Butler: Tourism is in its infancy and moving into adulthood has many implications. One of them is that you start to realize that you have to be more responsible. At the same time, you see that everything becomes more difficult and complex. In this sense, the COVID-19 pandemic has served to greatly accelerate the process of entry into the maturity of tourism and has made changes happen much more quickly. Indeed, we could say that we are living in times of creative destruction of value in tourism, in the purest Schumpeterian style, which make me think about the need for tourism to reposition itself in its most social dimension versus the economistic one. With this I am not saying that the economistic approach is bad or negative, but that tourism has forgotten the most social part. Until now, it had been very difficult to focus on the social drivers, given the difficulties to measure them and adopt effective measures to help incorporate social externalities into tourism. But today, with all that we have learned from the field of climate change and environmental sustainability, we are much better prepared to understand the social impact of tourism, measure it and incorporate its externalities to real policies. This is of great importance and can be a source of opportunities for many countries if they are able to take advantage of it. No one will be surprised that thinking about how to create value in tourism today, when most organizations are in survival mode, is very difficult. It will take at least 2−3 more years to begin to focus on the real factors that create value, such as attracting talent or reshaping the skills of workers.
Navarro-Meneses: Every once in a while, some innovations reach a level of maturity such that they grab the attention of all participants in the industry. When that moment comes, companies, service and solutions providers, and even the public authorities seem to agree on a roadmap to drive change and rewrite the rules. This may be the current situation today as there seems to be a consensus in tourism that data and analytics are the new manna that will transform it into an even more dynamic ‘industry’ full of new opportunities. To what extent do you agree with this perspective? Do you think that there is a risk of a multi-speed tourism where companies with the capacity to take on the challenge of data take the lead, while the rest are left at the mercy of the old models? Could there be an imbalance in market forces in which a few digital operators, for example, Internet giants or the digital platforms, capture much of the value created at the expense of tourism operators?
Butler: The digitization process has accelerated enormously around the world in the last years. This phenomenon has broken the value chains in all economic sectors as we knew them and, of course, in tourism as well. Until recently, it was hoteliers along with a few distributors who served a loyal demand closely linked to a destination. Digitization has further stimulated a relocation of tourism demand, which means that demand is no longer tied to a specific destination. Now, the variables are different, and destinations have lost strength. The key today is the customer experience; this is the real challenge for everyone in tourism. In this context, the change from a tourism model based on accommodations that offer their services alone to the one dominated by large platforms is a reality. For tourism decision-makers to be able to provide a response, it will be necessary to work on strengthening cooperation between the public and private agents, devising new frameworks for public−private collaboration in which destinations and hoteliers intervene, together with local communities. This will offer new opportunities for local partnerships to recapture a part of the value that has hitherto fallen into the hands of the intermediaries.
Navarro-Meneses: Another consensus that seems to have been reached in the tourism community has to do with the key role that sustainability will play in the future of tourism. As such, the emergence of new sustainable business models (e.g., circular, sharing and peer-to-peer business models), strongly supported by digital technologies, is a good sign that might accelerate the transition towards more sustainable practices. However, there are still barriers that weigh on the transition and that make progress slow. What arguments, decisions, or policies do we need to activate so as to prove that sustainability is a unique source of value-creating opportunities, rather than a burden?
Butler: Here it is important that we distinguish between large companies, which have broadly assumed sustainability as a key strategic policy, and small- and medium-sized companies that continue to see sustainability as an added cost. A contributing factor to this situation is the fact that, in many countries, there has not yet been a sufficient business consolidation process. I am not referring exclusively to mergers and acquisitions, but also, for example, to the creation of cooperatives and other cooperation agreements. It is particularly worrying that nothing remarkable is happening in the market in this regard, nor that is expected in the short term. If tourism continues down this route, sustainability is going to pose many challenges in the future. In this situation, destinations are perhaps those in a better position to respond to this challenge, but on the business side, companies that do not have sufficient investment capacity may find themselves out of the market in the short term. As far as tourism policies are concerned, I think that these too are going to have to change substantially. In many cases, it will be necessary for the states to formulate true national tourism policies that they do not yet have. It will also be important to empower those responsible for tourism. In this sense, the COVID-19 pandemic has been the definitive test.
Navarro-Meneses: Faced with the avalanche of new changes that the advent of smartization and new technologies (e.g., robotization, artificial intelligence, big data and, the Internet of Things) is bringing to tourism, many groups of workers have begun to question about the future of their jobs and the way their workplace is going to evolve. In the understanding that the future of tourism is conditioned to having more adaptable and qualified workers, do you think that tourism workers have real reasons to be concerned? To what extent are those who predict a dark future for tourism workers right?
Butler: The most fundamental issue at this time is to focus on the upskilling of tourism workers. This is vital both for the sector and people. Countries should have a national plan exclusively dedicated to this issue. At UNWTO, we have been contributing massively to the training of workers for years because we believe that it is key. Organizational structures are becoming flatter and less hierarchical and a change in culture and mentality is taking place not only from employees but also from stakeholders. We are undoubtedly witnessing a true revolution that encompasses all jobs. Let me give you a plain example. Surely, I am not wrong if I say that in the future, we will see chefs who will not only know how to make excellent recipes but will also participate in the general vision of their company’s purpose. Of course, pursuing economic benefits will remain important, but workers will gradually become more sensitive to social externalities and the impact of their work on their local communities.
Navarro-Meneses: Finally, I wanted to ask you about UNWTO and its plans for tourism to continue to be the source of job creation, wealth, and well-being that it has been in the last decades. What are the key policies in place? To what extent will UNWTO need to rethink its action strategy for the coming years as a result of the crisis we are experiencing?
Butler: One of our main current challenges at UNWTO, which is a result of the current situation with the pandemic, is to try to solve the governance vacuum that we have experienced in the tourism and travel sector. We are very critical of this situation and the lack of coordination that we have lived at all levels—both public and private. There are many examples that prove what I say. The purchase of breathing machines was a total disaster at the beginning of the crisis, and even today air traffic is paralyzed in many countries. This has led us to launch various initiatives related to the governance of tourism on a global scale that have never been considered before. Keep in mind that UNWTO does not have any normative capacity, unlike other organizations under the umbrella of the United Nations such as the International Civil Aviation Organization. Our role is limited exclusively to guiding our member countries in the best possible tourism policies. Therefore, we will have to keep working hard in the coming years to somehow develop these capabilities so that we can contribute even more to areas such as sustainability, digitization, and improve the skills of workers in tourism.
