Hello and welcome to the High-Yield Tourism podcast. I’m Gary Bowerman. On today’s show Jens Thraenhart and I will be discussing one simple but critical question.

Is High-Yield Tourism luxury tourism in disguise? So let’s get started. This is High-Yield Tourism. So Jens, on our mini podcast today I’m going to ask you a single question which we’re about to discuss and this is something I think we’ve both been asked or both been confronted with by people that we’ve met over the past few months and that’s this.

High-Yield Tourism is just luxury tourism in disguise. How would you answer that Jens?

Well thank you Gary and great to discuss this topic with you because you’re right. A lot of people that I’ve spoken to and you as well as you told me, when I mention High-Yield Tourism they say, oh yes, yes, you’re talking about luxury tourism.

Yes, we want to bring in people that spend a lot of money and I think we are almost entering a phase, especially post-COVID, where these labels of luxury tourism and mass tourism strategically don’t really make sense anymore because if you want to really have tourism as a force for good to drive economic impacts, we need to understand where the money is going and what the costs are of tourism to really drive these benefits. So what I mean by that is, yes, we want to have people that obviously spend money in a destination but where do they spend money? How can we inspire them to really get connected to the destination? I think we talked about this concept of niche tourism and especially micro niches, building these communities of tribes that then become advocates and bring their tribes into the destination because they feel they are connected. You know, when we look at mass tourism, many times people say, well, mass tourism is group tours and yes, that’s sometimes the case but yet there are group tours that are very high-end.

And on the other hand, I mean, the other discussion that we had some time ago is this whole thing, well, what about backpackers? Are backpackers high-yield tourists or not? Because on one hand, yes, they may not spend that much money but that money may go into the right channels because they stay at local hotels, they stay, they eat at local restaurants. So that money affects the local community directly. So, you know, kind of summarizing my first thoughts here is, you know, kind of in the end if we want to really look at creating benefits for destinations, we need to understand, you know, who are the people that can actually connect to the community and that these revenues that they’re spending can drive profit, meaning that we can reduce the leakage factor, the money stays in the destination.

On the other hand, we need to understand the cost of tourism, you know, from infrastructure, plumbing, garbage removal, all these kind of things that are necessary to actually make tourism work. Also from the service standpoint, you know, capacity building, training, staff and so on, making sure that the promise of the brand of a destination is actually delivered. Yeah, I would agree with that.

I think one of the things that the pandemic taught us, Jens, I’m based in Asia-Pacific, you are a lot of the time as well, is that the pandemic showed that the economics of tourism, the economics of travel have changed considerably. They were changing during the 2010s, they certainly changed during the pandemic and they’ve changed considerably since. And I think discussing tourism in terms of mass or luxury or other labels which, you know, which get thrown around is just too binary now.

It’s just not the way that travel and tourism work anymore. I think some of those models that we saw, particularly in this region in the 2010s, could deliver year-on-year growth, sometimes quite impressive growth, revenue growth at a time when markets were growing. But when they stopped, and we had in Asia-Pacific two years of, you know, no international tourism, three years if you’re in China, that whole model or that modeling just came to a halt and you saw the lack of resilience in tourism models.

And I think what we’ve really seen since the pandemic reopening in Southeast Asia, Northeast Asia, and more latterly in China, is where the travel industry has responded. And it’s now looking more at yield and profit, not so much about revenue. Because as you say, Jens, revenue is very, very important.

But the cost of acquiring visitors, the leakages of tourism, all of these aspects mean that the economics of tourism aren’t just changing, they’re being remodeled along with different models of economics in retail, in banking, in fashion, in music, in all of these things. They’re all becoming quite interconnected now. And as we’ve seen this reopening growth in our region, since the pandemic, we’re still seeing this focus on driving the metric of visitor arrivals.

But we’ve also seen destinations looking much more closely at the diversification of their inbound markets, and the segmentation, the composite of those inbound markets. And that’s really where High-Yield, I think, comes into its own Jens, because it’s really looking much more deeply at the visitors that are coming in, and also domestic tourism. And one of the things that we haven’t really discussed is whether domestic tourism is part of High-Yield model.

I think that it actually is. And so we’re in a period of change, Jens, we’re looking economically at a different model. And it’s not about, as you say, mass, it’s not about luxury, it’s not about any other labels that you can really talk about.

It’s how you actually drive profit and resilience from travel and tourism. Yes, I absolutely agree, Gary. And I think we also have, obviously, MICE tourism, we have business travel, and the fact that, you know, you can actually entice and inspire a business traveler or a meeting attendee to spend a day before or after to explore the destination, to connect with the community, to spend more money, and also working for Saudi Tourism Authority, you know, where there are a lot of religious tourists coming in for Umrah, to go to Mecca and Medina, this whole concept of Umrah plus, where people, yes, go for religious purposes, but then have that plus, you know, spending leisure time still in the destination and contributing to the economy.

And I think what we need to really look at, and understand and remember is that tourism, in the end, is a means to an end. So, we need to start by asking the why. Why do we actually want to focus on tourism in a destination? And when we do that, then we understand that, well, you know, in the end, it is about creating economic benefits.

It’s about creating jobs. It’s about really making sure that local businesses and entrepreneurs can thrive. It’s also about the branding of a country, because if people have a good experience in a destination, that can also drive investment, where there are positive sentiments about that destination, because the people are friendly, it’s a great experience, and so on.

So, all of that is connected, but we need to start with a why, and then strategically work ourselves through how we can actually achieve the ultimate goal of why we want to do tourism. Yeah, I would agree with that. And I think high-yield tourism is a very flexible concept.

Luxury tourism has these connotations of certain aspects or certain drivers from within it. But high-yield tourism is very flexible in terms of different countries, different regions will have very, very different experiences of high-yield tourism. If you take, for example, the European summer this year, there was a lot of anti-tourism sentiment in some destinations, whether that’s Greece or Spain, but there’s still a lot of yield in the tourism industry in those destinations.

Some people were railing against just the pure volume of tourism, but you look at other destinations or other regions, Africa, which is emerging, the Middle East, Southeast Asia, Northeast Asia, they are still looking at volume tourism models. As you drive more visitors, your acquisition costs of actually having more visitors just increase as well. So, you’ve got to look at where is the yield.

Otherwise, you’re going to go down the same road of having more and more visitors, but you’re not actually generating that incremental benefit from the industry. As you said, Jens, this is a means to an end. Most governments in our region here in Asia-Pacific value tourism and travel because it tends to yield a significant proportion of annual GDP.

And that’s why it’s so prized. But you’re not going to increase or you’re not going to optimize that contribution to GDP if you’re only looking at numbers-based tourism, or even if you only look at luxury-based tourism, because obviously some of the costs involved with luxury tourism are a lot higher anyway. You have to look at where is the optimal yield.

And that’s across segments, that’s across niches, that’s across lifestyles, as you said, Jens. And that’s where really where I say that it’s not anything to do really with mass or luxury. It’s always in between.

It’s that bridge between all the different forms of tourism. It’s looking at it from a much more just economic-based, rational perspective. Yeah, I totally agree, Gary.

And I think that’s what gets me so excited to be working with you, in particular, and our small team on helping destinations to have this mind shift to really think about tourism differently, and not just driving numbers, which we see so many times. And obviously, numbers are a great indicator, and sometimes or many times is related or attributed to the success of the DMO or the tourism board. But the cost of tourism is not factored in.

So I think helping our destination clients to really understand that, develop strategies behind it, and then help them also execute these strategies gets me so excited. And with our small team, I think you’re coming as an analyst and having written books and helping various publications to drive this analysis in terms of where tourism is going. And myself, from the more practitioner standpoint, having worked in tourism boards, have led tourism boards in different parts of the world.

I think that combination is very strong. And I think we can really make a difference in helping tourism boards to understand this differently, build different strategies, and also implement our own proprietary EBITDA tourism model to look at the tourism economics in a whole different way. Yeah.

And I think, Jens, from the conversations that we’ve had over recent weeks and months at conferences or with people that we’re speaking to, is that there is generally a drive towards thinking about travel and tourism in slightly different ways. Of course, driving revenue and driving that proportion of GDP in Asia-Pacific is still very, very important. But I think that governments and tourism boards are realizing there is a natural ceiling on volume tourism.

And at some point, you have to look at this in a more diversified and strategized way where you’re going to segment much more carefully. I think that’s starting to happen. I think what we’ve seen as well around the world, Jens, is that city-based organizations tend to do this more easily, I think, than the national destinations, because there are so many different factors when it comes to national tourism marketing.

But when you’re promoting a city, you can dive much deeper into the economics of how that city works and where tourism’s place is in it. It just becomes a bit more difficult when you extrapolate that out on a national or even a regional basis. Yes.

And I think these podcasts that we’re doing in the tourism ecosystem from tourism boards and other players, I think we are learning so much around it too, what a city destination is doing, what a provincial destination is doing, what a country destination is doing, what a regional destination is doing. And I think that knowledge really helps us to fundamentalize where tourism is going in the future, how strategies need to be built to drive these economic benefits and tourism becoming and staying a force for good. And we don’t get, as you just mentioned, Garrett, these pushbacks from residents, because it’s almost like when you’re sick and you have a headache and you don’t feel well, that means that you obviously did something wrong.

Maybe you work too much. Maybe you ate something wrong. Maybe you didn’t wear the clothes when it’s cold outside and your body reacts with a pushback to protect itself that you don’t do more of that.

And that’s what we’re seeing with tourism as well. There’s a pushback. So that shows us that something is wrong in this natural ecosystem.

We see the nature. And it’s interesting to see that tourism reacts in the same way. But many times governments, tourism boards, destinations don’t react.

They try to brush over these pushbacks and not reacting in a way to actually correct the wrong that has been done. Yeah. And I think that that’s absolutely true.

And certainly since COVID, the world has recovered economically, socially and in travel and tourism terms at different rates since COVID. But if you think about it, Jens, we’re October 2024 now. By middle of December of this year, that will take us through a five-year COVID cycle.

It will be five years since that virus was identified. Now we know the damage that it caused to travel and tourism, particularly in our region where governments responded very, very cautiously and simply shut borders for probably too long. And the recovery has been very, very differentiated.

But as we move out of that five-year cycle, Jens, into 2025 and beyond, I think we will start to see a lot of differentiated thinking in how travel and tourism is incorporated into economies around the world. But also, as you said, very, very importantly, that community aspect, that regional aspect, that aspect about social, environmental and day-to-day living in societies where there is large numbers or high volumes of tourism, that will change. I’m pretty sure of that.

How that’s going to happen and how that will shape will be different in different countries and different regions around the world. We can’t expect uniformity. I don’t think that’s even possible.

But there will be some overarching themes. And I think looking at tourism from a much more rational, strategic and economic perspective, as we’re trying to do, Jens, is probably the way forward because it does actually allow for better analysis, for better usage of data as well, to actually determine where and when tourism is going to change. We’ve got climate change patterns as well.

We’re probably going to see different seasonality patterns over the second half of this decade in terms of travel in different parts of the world. There’s going to be huge change, Jens, and we want to be part of that. No, absolutely.

And so I think, you know, when you and I go to conferences all over the world and speak there, whenever people say, yes, I mean, you know, High-Yield tourism is luxury tourism, going back to your initial questions that you asked me, I think we can fundamentally say that High-Yield tourism is not luxury tourism, but it can be. And it’s not mass tourism, but it can be. And I think taking these labels away, understanding, you know, where the revenues are going, what the cost is, and how strategically by asking the why do we want tourism, how can we actually, you know, make sure that tourism is a force for good, drives these economic benefits and has this balance where the visitors are happy, the residents are happy, the businesses are happy, regardless of type and size.

So it doesn’t have the big hotel or it doesn’t have to be the small business. It has to be all of them, that everyone kind of lives in harmony. And it is a transformational process where people learn from each other, where it’s this cultural exchange.

And it can also help in really, you know, avoiding wars in a way where, I mean, obviously we have some regional conflicts here in the Middle East, you know, in Ukraine, but there are many other wars around it. So I think this cultural understanding is important. And I think tourism can play a role and a part in it to make sure that people live in harmony and that they respect each other’s households and environments.

And I think that cultural understanding means flipping around tourism a little bit and trying to think of it more from the visitor perspective, from the traveler perspective, rather than from the removed governmental or travel industry perspective. I I’m a mass tourist, I’m a luxury tourist, or I’m an Indian tourist, or I’m a Chinese tourist, or even I’m a business traveler. Nobody does that.

We ascribe those labels from the industry side to consumers. And I think we have to look much, much more at the consumer perspectives about how they perceive travel and tourism, how it’s changing for them, how the pandemic has really changed the way they think about cultural integration, about community impact, about the environment, and about the experiences that they want, and how they’re going to weave those into these new challenges that the world is facing, particularly around climate change. As I said, Jens, I think there’s going to be a lot of change, but I think we have to look at it both from the economic perspective and also from the consumer side.

Because I think that’s the only way that we’re going to drive models that actually make this more societally responsible, and community-based responsibility is going to be more incorporated into tourism. Otherwise, we’re simply going to be more and more back towards the 2010s, when it was just simply growth, growth, growth, in terms of visitor numbers. Absolutely, Gary.

And as we’re wrapping up, let me share a story with you, which was so inspiring to me. So as I’m consulting for Saudi Tourism Authority, I learned about this concept of hafawah. Hafawah basically is this whole mindset of welcoming to the Saudi culture.

And that’s what the Saudi Tourism Authority is looking to build, really, this environment of being welcoming. And as I interacted with the people that are developing this brand around hafawah for Saudi Arabia as a tourism destination, I came back from Doha recently, and when I got into my Kareem, which is like Uber car, the driver, he said, hey, here’s some dates. He had a nice plate of dates prepared for his passengers.

Then he gave me a napkin, some water, and he apologized that he didn’t have Arabian coffee for me as well. That welcome stays with you. It’s very similar also what Thailand does with the whole Thainess and the whole soft power thing, building these connections.

And I think that’s what stays in your mind. And that’s when you also spend more money, want to stay, want to connect. And that’s when you actually become kind of like a high-yield tourist.

Because that high-yield tourism, I think it’s not about just driving and pushing people to spend more money. No one wants to be sold. We all see it when we go to a tourist attraction and we have vendors pushing you to buy souvenirs.

No one likes that. You don’t go back. You want to do it from your own, that you passionately want to contribute, want to connect.

And I think building a brand around welcoming people and the people really inviting other people to come and share their destination, that’s the cornerstone. And I think that’s a catalyst to really drive high-yield tourism. It’s fascinating.

I mean, that’s a great story about how a small impact, particularly on a welcome, can really change the focus and the concentration of an entire trip. That’s really important. But it’s not just about the welcome, is it? That has to run through the whole of the experience.

If you have those kind of engagements all the way through your trip or different points of your trip, and even before your trip, before you actually take off, I think this is one of the things that we’ll discuss later, Jens, is that often we tend to, in the industry, only really ascertain or consider the expectations of tourists once they arrive in a destination, once they land at the airport. And we’re missing quite a lot in how they behave, how they travel, how they consume in their own destinations, and some of those preconceptions and expectations that they bring with them when they travel. If you don’t really understand those and you only really consider from the moment they arrive at the passport gate and enter your country, there’s a lot of optimization that can be missed there in terms of those kinds of welcomes that will be differentiated for different visitors from different places, from different demographics, from different cohorts from around the world.

Yeah, no, I mean, I agree. And I think that’s I think what excites me so much, I mean, not only to be working with you, but this whole notion of high-yield tourism to, as I said, help destinations to think about tourism in a different way and really make sure that tourism actually delivers on the why. And that’s, I think, the key there.

So I think this has been a great discussion, Gary. I really enjoyed it. There’s so many discussions that we’ve had.

And I think for everyone out there, I think please follow our podcast. We’re learning so much, and I think you will be learning so much as well. And don’t hesitate to contact us if you want to talk to us and see how maybe we can help you with your destination.

Yeah, you can contact us through our website at highyieldtourism.com or on our LinkedIn site. We’ll be back again soon, Jens. Thank you, Gary.