Tourism & More

Oil and Tourism

October 2005

If we like it or not, tourism entities need to begin to consider the relationship between the cost of oil and the tourism industry. Tourism is a very oil/price sensitive product that sells a commodity with high spoilage rates. That is to say, once an airplane has left the gate, the profit from unsold seats can never be regained. The same is true of unsold hotel rooms, or attraction tickets. To make tourism even more sensitive, most people are not obliged to travel except in cases of business and family. For the most part, leisure travel is something that people elect to do, rather than are obliged to do. This right to not travel, simply to spend one’s vacation at home, means that the tourism industry dare not allow itself to become arrogant or too self-assured. It is in this light that travel and tourism experts need to watch the rising cost of oil carefully. No one knows at what point travel can become so expensive that people simply decide to forgo it. While no one can predict the future, it is also a mistake not to plan for the future. Then as realities develop, those plans can be adjusted as needed. To help you plan, Tourism and More offers you the following ideas and scenarios.

• Assume that gas and oil prices will continue to rise, at least for the foreseeable future. Gas pump shock is now something that tourism officials are going to need to consider. In those countries, such as the USA, where gas prices have traditionally been low, the public is less likely to ignore rising fuel prices. There is already a move to greater carpooling, and seeking of alternative forms of transportation.
• Do not panic; do plan. The continual rise in fuel prices will impact every aspect of tourism. This is not the time to panic, but rather to be creative. Hold a local summit meeting between hotels, restaurants, attractions, and even such secondary tourism components as police and city governments. Develop several scenarios and then develop creative methodologies to meet these potential challenges. Remember, in a crisis, it is easier to modify a pre-set plan than it is to develop a new one from scratch.
• Take an active role in developing gas price incentives. Until now tourism entities have mainly taken a reactive role in gas price issues. With gas pump price-shocks becoming more common, tourism and travel may need to become creative. For example, create promotions that include a free tank of gasoline for new visitors, or people spending an extra night in hotels or at attractions. The bottom line is that gas pricing often creates emotional reactions, and tourism is a business of emotions.
• Make sure you know how people arrive in your community. If you are a destination to which most people drive, then you are going to be directly impacted by the high cost of motor fuel. If your tourism industry is airline dependent, airline service cutbacks and flight frequency (often caused by high airplane fuel prices) will impact every aspect of your tourism industry. One solution for many will be to expand markets by finding more visitors closer to home. While this temporary solution may help the local hotel industry, it is not adding to the community’s economy as tourism revenues from outside of the local region begin to fall. Instead, develop compensatory marketing schemes that will continue to make travel to your destination worthwhile. In some areas, such as many island destinations, there are no closer markets. In that case, develop creative pricing, along with creative airport hospitality. Get travelers to forget the woes of travel as soon as they deplane.
• Higher fuel prices means that the tourism industry needs to be thinking of its product as an integrated whole rather than as a series of independent components. The additional cost of transportation means that visitors will be seeking other ways to economize. Visitors do not see their tourism experience separately as hotels, restaurants, transportation and attractions, but rather as a unified experience. The tourism industry now needs to do the same. Each component needs to be working with the other sectors of the industry to find ways to compensate for higher fuel prices. If visitors do not see the total experience as worthwhile, then all of the tourism industry’s components will suffer.
• Be aware that the rise in fuel prices has caused many airlines to cut back on service. Most airlines have taken the position that higher fuel costs should translate into (1) poorer service and (2) higher ticket prices. It may be a number of years until travel historians will be able to determine if this policy was wise or not. What is known is that people enjoy flying less, and now where once the trip was a positive part of the travel experience, when combined with security considerations, many people now dread the transportation component rather than looking forward to it. This cutback in service means that on-the-ground tourism service providers must work extra hard to provide compensatory good service. For example, hotels (a major component of the hospitality industry) may want to ask their guests how they are arriving, and notify front desk personnel to be extra patient with people arriving by air. Registration counters may need to provide a small snack realizing that airlines no longer provide meals, and rooms may need to be readied at earlier hours for those people who arrive by air prior to 12 noon.
• Show your appreciation. All too often tourism businesses act as if they are doing the customers a favor. This is the time to develop creative ways to show appreciation. For example, locales may want to develop “welcome passports” to be used at restaurants and hotels where visitors are provided with a free “extra” as a way of showing appreciation. Follow-up letters may also be sent in which the local tourism industry thanks people for visiting. The letters can even be e-letters and used as a way to encourage visitors to return for another visit.