Tourism Takes Off Once Again
RECENT ESTIMATES SHOW THE INDUSTRY'S STRONG RECOVERY, LEAVING THE THREEYEAR PANDEMIC A THING OF THE PAST. HOWEVER, THE POSITIVE DATA TELL ONLY A PART OF THE SECTOR'S EVOLUTION, WHICH IN RECENT YEARS HAS BEGUN TO SHIFT BOTH ON THE DEMAND AND SUPPLY SIDES, BOOSTED OF COURSE BY DIGITALIZATIONTourism has picked up right where it left off before the pandemic. According to data from the World Tourism Organization, more than a trillion dollars was exceeded in revenue in 2022, double that of the previous year and reaching 64% of the pre-Covid amount, when tourism saw 1.4 billion people traveling abroad. In other words, the sector has recovered quite well, and even industry experts and workers agree that tourism is a rather sizeable and booming market. In fact, roughly 10% of global GDP and employment can be attributed to tourism, which become respectively 13% and 15% if we just look at Italy. In addition to retrieving the ‘slices’ lost, the pie is also expanding and will become even bigger in the future thanks to many countries with untapped potential who will enter the market.
Effects of the Pandemic, War and Inflation
“When looking at data estimates, even 2023 seems promising,” explains Cristina Mottironi, Bocconi Program Director of the Specialized Master in Tourism Management. “At this rate, it is estimated that by 2024 we will return to 2019 numbers. It is difficult to make estimates for the future, but with this very strong upswing it is safe to say that the sector can return to previous growth rates.” The forced halt due to the pandemic emergency is thus being overcome, and even the outbreak of the war in Ukraine and the simultaneous increase in inflation do not seem to have slowed down this obvious recovery much. “At this time, tourism demand is relatively less perceptible to price increases because in the post-pandemic period, the desire to travel again trumps all else,” adds Mottironi. “The war also had a relative impact; in Italy, Russian tourist arrivals were down 5.5 million out of a total of 220 million foreign visitors. While it is true that theirs is a high-spending tourism, the near stop of Russian tourism has been offset by a generalized increase of visitors hailing from the United States. Moreover, with the end of the pandemic, the reopening of the Chinese market is also significant.”
European Outlook
But in this generalized tourism revival, how is Europe doing? Magda Antonioli, Bocconi Professor of Economics of Tourism and Vice President of the European Travel Commission – an association that brings together all tourism boards at the European level – explains. “Europe remains the leader in world tourism, despite its share today being around 44% compared to 60% in the past. In fact, the entire market is expanding. Europe promotes its members to countries outside of the continent, but after Covid these promotional activities were also directed towards the European countries themselves. The ETC’s courses of action are addressed according to three pillars: nature and the outdoors; creative cities and culture; and issues of accessibility and sustainability, which are treated with particular attention.” These are topics that have taken on even greater importance after Covid, “Properties have adapted to a new demand for more sustainable tourism that is based on the concept of wellbeing. In Italy we remain tied to territorial distinctions, which must be adequately promoted.”
The Situation in Italy
Looking at our country, this paradigm shift also emerges from the data on responsiveness. “Until recently, the growth of the tourism sector in Italy was driven by medium- to low-end hotels. In the last five years, however, the share of luxury (e.g. 5-star hotels) has been consolidated, thanks above all to the uptick in guests from abroad,” continues Antonioli. “Today, 5-star hotels represent 20% of the total revenues in the industry. There are two other significant points to underline for our country: on the one hand, medium-sized high-end properties (60-70 rooms) in the suburbs – far from the cities of art – are increasing, yet capable of tapping into clientele within the areas known for their outstanding culinary, artistic and social traditions. On the other hand, in Italy we are witnessing the development of foreign hotel chains, which today represent 5% of the structures, yet 18% of the rooms.”
Recurring Destinations No Longer Trendy
It is the way of being tourists and doing tourism that has evolved; the traveler of this decade is a heterogeneous tourist, increasingly experimenting and therefore less loyal to a specific territory. “It is true that cultural travel and the seaside sector continue to be the main attractions, but the element linked to nature, adventure, sport, and lifestyle of a territory are becoming increasingly important along with experiences centering on authenticity and local traditions. These also include experiences with a heavy focus on personal wellbeing such as yoga, meditation and spa. In addition, there is an increasing demand from customers for sustainable solutions, which is somewhat confirmed by all industry studies,” underlines Cristina Mottironi.
Data, Data and More Data
Another major factor in transformation and development has been digitalization. Here the platforms, which have seen considerable development, reign. Giovanni Moretto – Bocconi alumnus and Director of Product Integration at Expedia – explains, “Years ago, platforms like ours were used as mere intermediation, which still remain today but are supplemented with others. For example, properties can receive ad hoc marketing solutions to be able to advertise to a very targeted clientele.” This is only possible thanks to the huge amount of data processed and global profiles accessed by platforms. “It is no longer a question of selling a product on the platform hoping that it will be of interest, but of supporting the operators’ sales strategies. Based on real data, processed in real time, we can provide precise indications to operators.” Just how much data are we talking about? A lot. “Consider that the possible variables on our platform when booking a trip are in the order of 1.26 quadrillion, or 1.26 million billion. It is clear that such a mass of data can no longer translate into indications without an adequate technological structure.”
AI is the Future
Following this data wave, technology of the future will probably be characterized by solutions that are able to process the data better and faster. “Fifteen years ago they said, ‘Cell phones are the future’. Today the cell phone is the present, and represent 50% of business in certain markets,” continues Moretto. “In the future, I see an increasingly strong implementation of artificial intelligence and machine learning, both to create better solutions and improve the models themselves – increasing the possibilities for customization of user experiences as well.”
by Andrea Celauro
