Chapter 13. Back to the Big Picture: Globalization and Trends
13.2 Top Trends
Morgan Westcott and Wendy Anderson, Eds
Throughout this textbook, a range of trends have been identified that exemplify some of the forces and influences associated with globalization. This section revisits some of those trends and explores some additional ones.
Take a Closer Look: Trends Reports
In the tourism and hospitality industry, and in global business, many minds work to decipher industry trends in order to keep informed and make smart decisions. One example is the Global Competitiveness Report 2019, a product of the World Economic Forum.
Focused strictly on tourism and hospitality, the UNWTO produces a World Tourism Dashboard that is updated regularly.
First, let’s take a closer look at the difference between trends and fads. While trends and fads may look the same initially, fads will almost always have a definite start and end; they are finite. Examples include tornado tourism (storm chasing tours) and terminal tourism (where people visit airport terminals without flying out from them), which appear destined to disappear as quickly as they appeared.
In contrast, trends influence things for long periods of time, potentially shifting the focus or direction of industry and society in a completely different direction. For example, the growing awareness of tourism impacts seems to be a long-term trend, leading to greater focus on developing sustainable experiences, products, and services for the mindful traveller. With hindsight, we can identify the trends versus the fads. Predicting the future, however, is not as easy.
A useful tool to use in the analysis of global trends is the PESTLE model, an acronym for political, economic, social, technological, legal and environmental forces that affect the people, organization, or destination under study. It is important to note though, that the lines around these categories are somewhat fluid, and many factors will have implications on several areas. Now let’s delve into PESTLE in more detail.
Take a Closer Look: Analysis Tools
The more complicated the world gets, the more it’s imperative that business leaders and decision-makers employ a framework for analyzing trends. While this chapter uses a PESTLE approach, other acronyms include PEST (omitting the legal and environmental reviews), or PEEST (omitting the legal reviews). For more information about these frameworks, to access templates, and learn to use them in your own analysis, visit the GroupMap PESTLE analysis web page.
So, how do you know whether something is a trend or a fad?
Political Trends
While we may be intrigued by global issues and their macro implications on the world in which we live, we also need to pay attention to local politics and policies. The world is currently challenged by growing populist movements, power conflicts and protectionist measures (Ipsos, 2020). Within this climate however, support for globalization is increasing, public services are improving (generally), and living standards are rising. The complexity of the political landscape is intensifying, making it that much more important for industry players to carefully monitor global conditions.
Let’s have a look at political trends around the world and explore their implications on the tourism and hospitality industry.
As more countries and regions around the world become more dependent on tourism for revenue generation and employment, competitiveness has become a major focus (see Trends Reports, World Economic Forum, 2019). Traditional Western destinations are under pressure to formulate policies, and create strategies and spending patterns that will enable them to compete with emerging destinations. Often, these national policies are impacted or governed by formal international agreements, affecting everything from the movement of people (visas and passports) to the flow of goods and services. International organizations such as the World Trade Organization (WTO), European Union (EU), Organization for Economic Co-operation and Development (OECD) and Asia-Pacific Economic Cooperation (APEC) influence how the tourism and hospitality industry operates around the world.
Spotlight On: International Economic Groups
On the international stage, several groups are responsible for developing and setting policy that has an impact on tourism and hospitality development. Two examples are:
The Organisation for Economic Co-operation and Development (OECD) has 31 member countries that gather to discuss a range of policy issues, with a special committee dedicated to tourism. For more information, visit the OECD’s tourism web page.
The Asia-Pacific Economic Cooperation (APEC) forum also has a Tourism Working Group that recognizes the importance of sustainable tourism development for countries in the Asia Pacific Rim region. For more information, visit APEC’s tourism web page.
Each country is responsible for creating and funding its own organizations responsible for tourism development at the federal, state/provincial, and local level. In the United States, for example, the National Travel and Tourism Office (NTTO) is responsible for actively participating in domestic and international policy creation. One such policy is a memorandum of understanding with China regarding leisure group travel. The NTTO is engaged in international tourism discussions with organizations such as the OECD and APEC (see Spotlight On above), and has a representative at UNWTO (NTTO, n.d).
Spotlight On: The International Civil Aviation Organization
Many aspects of the tourism and hospitality industry are governed by international agreements and policies. The International Civil Aviation Organization (ICAO) was created in 1944 with the signing of the Chicago Convention as a specialized agency of the United Nations. It works with 193 member countries and industry groups to help develop aviation policies and build capacity in countries with underdeveloped air industries. For more information, visit the International Civil Aviation Organization website.
While from a policy perspective, countries such as New Zealand, Australia, Mexico and the United Kingdom have embraced tourism growth through a planned approach, tourism policy in Canada has often struggled in comparison to the attention given to other sectors such as oil and gas, forestry, fishing, and agriculture.
A number of organizations, including the Conference Board of Canada and the Tourism Industry Association of Canada, have made recommendations for strong government policy support that could help the industry. Two key policy reforms suggested include (TIAC, 2019):
- Increase base funding for Destination Canada (Canada’s national tourism organization), with performance-based annual increases to improve global competitiveness
- Streamline the travel visa issuance process, improve the Electronic Travel Authorization (eTA) program, monitor visa processing times, and continue to pursue visa-related partnerships with other countries to make it faster and easier for visitors to visit Canada
Take a Closer Look: Canada’s Tourism Vision
The Canadian government, pre-COVID pandemic, introduced their plan for tourism in Canada. Recognizing the value the tourism and hospitality industry brings to the Canadian economy, the government outlined key targets and pillars for growth. Focused on making Canada a Top Ten most visited destination (again) by 2025, they committed to increased Marketing, improving Access, and building new Products — their “MAP to growth.” To explore more, visit Tourism in Canada.
Spotlight On: The Rise of Populist Nationalism
In 2016, the world experienced two major political acts that shook the international order. The British vote to leave the European Union and the election of Donald Trump in the United States were not the cause of populist nationalism. However, they were two very visible indicators about the extent of its rise around the world. It seemed that the global consensus that globalization was a positive force for international cooperation was being replaced by an emphasis on national sovereignty. Tribalism is winning hearts and minds. This increase in barriers to trade and cross-border movement has implications for many aspects of the tourism and hospitality industry (CreditSuisse, 2018, Ipsos, 2020).
The trend here may be the ongoing need to convince and lobby governments at all levels about the potential of tourism and the value of strategic planning and investment in tourism. It is perhaps not surprising that the tourism and hospitality sector, with such diverse organizations involved, struggles to find a single voice at times. This leads to a cycle where the sector rallies around initiatives such as Expo 86 and the 2010 Olympic and Paralympic Winter Games, and then experiences a period of fragmentation. The post–COVID-19 pandemic world will require similar cooperation for the industry to renew itself.
Economic Trends
Like most other industrial sectors, tourism is affected by global economic trends. Tourism was initially negatively impacted after the global financial crisis of 2007–2008, with international tourism arrivals dropping globally from 950 million down to just under 912 million (Papatheodorou, Rossello, & Xiao, 2010). However, the industry was quick to rebound, with the number of travellers increasing by 2010, surpassing the 1 billion mark in 2012 and 1.4 billion by 2018 (World Bank, 2020), prior to the COVID pandemic and near collapse of the global tourism industry.
Economic uncertainties for the tourism industry have persisted, however, leading many industry insiders to monitor several economic trends, including collaborative consumption, shifts in emerging economies, and conscious consumerism.
Collaborative Consumption
Although the phenomenon of collaborative consumption (CC), also known as the sharing economy, began before the global financial crisis, it gained strength as a result of it. CC is a blend of economy, technology, and a social movement where access to goods and skills is more important than ownership (Sacks, 2011). Research has shown that CC is motivated by a variety of factors including sustainability, enjoyment of the activity, and economic benefits (Hamari, Sjöklint, and Ukkonen, 2016).
Airbnb was one of the first, and arguably most well-known example of the tourism sharing marketplace, but several other companies have joined it, including Zipcar, Uber, and Couchsurfing. According to Nielsen (2014a), more than two-thirds of global respondents to a poll are interested in joining this revolution. A gap may exist though between attitudes and behaviours surrounding CC – people may perceive it positively, but then do not follow through with purchasing (Hamari, Sjöklint, and Ukkonen, 2016). The impacts on the tourism industry are still to be determined, although the World Economic Forum outlined four main trends affecting this movement (2019b). They note that: (1) growth is likely to be uneven – mindsets and trust in the CC systems take time; (2) demographics will drive the adoption – CC enables people to access things that might not normally be able to afford; (3) regulators are taking notice – more policies and regulations are being enacted to manage CC; and (4) “sharewashing” is occurring – not all CC is built on the original underlying philosophy. CC is one trend that is likely to persist for some time into the future.
Emerging Economies
In 2001, a new acronym was introduced into the economic world — BRIC. This refers to the growing economies of Brazil, Russia, India, and China (Northam, 2014). These turbo-charged emerging economies were growing fast and looking to be the new powerhouses in global economic circles, even forming political and economic alliances. South Africa joined the group in 2010 and they became known as the BRICS (da Silva, 2020), although in some definitions they were replaced by South Korea in 2018 (International Monetary Fund, 2019).
With this growth came travellers looking for new destinations to visit. Outbound tourism development from China has been especially energetic, with numbers increasing from 58 million in 2010 to over 160 million in 2018 (Statista, 2020). But all has not gone well for these emerging economies and only China has maintained the pace of expansion. Other countries have joined the race, creating new terms such as MINT (Mexico, Indonesia, Nigeria, and Turkey) and Next Eleven (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey, and Vietnam). Time will tell where new tourism growth and opportunities arise in the frenetic global economy, and who will be the next powerhouse to watch.
Conscious Consumerism
Conscious consumerism, or socially conscious consumer behaviour, is another economic trend with implications for the tourism industry. This term refers to consumers who are using their purchasing power to shape the world according to their values and beliefs, leading organizations to project a more ethical or responsible image (Government of Canada, 2012). Conscious consumers look for positive outcomes with what they buy and/or seek ways to minimize or eliminate the negative effects of consumerism.
This socially and environmentally-responsible purchasing by many consumers can direct travellers to more sustainable services and products, or even a “de-growing” of tourism (Higgins-Desbiolles, 2018). Destinations and businesses interested in pursuing this market need to be acutely aware of social and environmental issues, potentially ranging from organic produce and animal welfare to human rights (Shaw, Grehan, Shiu, Hassan, & Thomson, 2005). Veganism, the complete abstaining of the use of animal products, or vegetarianism, the abstinence of consuming meat products have experienced growth in part due to conscious consumer choices regarding health and the environmental impacts of industrial meat production. Some of the key principles for consideration by the tourism industry include an assumption that the traditional industrial model is not working and needs to be replaced, that awareness of the issues require a different mindset, and that change will come from the grassroots rather than from above (Pollack, 2012). This is a shift that has profitability and culture change firmly in its sights (Nielsen, 2014b).
Social and Cultural Trends
Defining culture as “a way of life” brings us to consider the implications of globalization as a defining influence in how we live and, therefore, who we are as individuals. Some argue that globalization has created a culture crisis, with values, beliefs and identity all made secondary to economic interests and the pervasive and ever-growing nature of technology in our lives. Some key socio-cultural trends to consider include using travel to socially bond, dynamic populations and migration, growing global inequality, and the consumption of experiences.
Travel as a Time to Bond
Visiting friends and relatives, known in the industry simply as VFR, is a common and important subset of tourism demand worldwide. With their busy lives, people are seeking a moment, place, and activity to share with family or friends. In addition to the growing VFR trend is the increasing popularity of group travel, as exemplified in the sports tourism sector (see Chapter 6 on entertainment) with sports clubs and teams who travel together, and associations that bring together people with shared interests in cuisine, walking, birdwatching, or other avocations.
Dynamic Populations and Global Migration
Certainly a trend in globalization is the significant movement of people around the world and changes in their characteristics. The population of British Columbia, as of January 1, 2020, was estimated at 5.1 million, with immigrants (64,441) representing the main source of population growth in 2019, along with 9,551 people from other provinces (Government of BC, 2020). According to Canada’s 2016 census, just over 30% of BC’s population are a visible minority with the largest groups being Chinese (11.2%), South Asian (8.0%), Filipino (3.2%), and Korean (1.3%) (Statistics Canada, 2017).
Western populations are continuing to age as reproduction levels are tending to be below replacement levels (Ipsos, 2020). While countries are adjusting between young and old, rich and poor, tipping points are being experienced, resulting in social pressures on services and systems. Employment patterns are shifting as the working masses also age, creating gaps and opportunities in work forces.
Additionally, population growth around the world is not occurring uniformly. “More than half of the projected global rise up to 2050 will be in just nine countries,” according to Ipsos (2020, p. 11). As the number of people increase in certain regions of the world, many pursue opportunities in other locations. Conflict, climate change, economic challenges, persecution and other factors also result in refugees seeking safe havens.
These demographic and population shifts are expected to result in dramatic changes to the social and economic landscape. Some of these changes are generating earlier noted trends such as the rise in populism and protectionist policies. Implications for the tourism industry include a growing need to address the challenges of a multicultural workforce, including preconceptions related to customer service and management, and retaining or hiring older employees. It’s important for diverse teams to be able to work well together and to communicate well with visitors and guests.
Growing Inequality and Some Opportunities
Global prosperity is increasing. However, behind the improvements (generally) in living, housing and food, division between the wealthy and the poor is increasing (Ipsos, 2020). Growing numbers of younger generations are perceiving that they will be worse off than their parents at similar ages (Ipsos, 2020). Wealth is being concentrated in the hands of the few, resulting in population unrest.
At the same time, opportunities are coming available. More liberal policies are providing opportunities for women and the education gap is slowly shrinking between men and women (Ipsos, 2020). Women remain generally disadvantaged, especially in developing countries, but there have been significant improvements. More needs to be done though, to eliminate disparities.
Consuming Experiences
During the late 1990s, Joseph Pine and James Gilmore introduced the concept of the Experience Economy (Pine & Gilmore, 1998). They suggest that economies have progressed beyond commodities (raw material), goods, and services. Instead, people seek a higher level of engagement and stimulation from their purchases. These economic offerings are internalized, creating intensely personal events, which only exist in the minds of the consumers (Pine & Gilmore, 1998). A focus on experiences allow the supplier to be more memorable and often charge a premium. While this shift has been occurring for some time, the full implications are still being explored and felt in the tourism and hospitality industry.
Technology Trends
For many years, technology has been strongly tied to tourism, as the industry has looked to take advantage of developments and changes, opening destinations and providing new products and services. From the early days of Thomas Cook’s first recognized tours, offering train rides to the seaside, to the adoption of mobile technology today, tourism and hospitality has incorporated technological advances into all aspects of the industry. Three key technology trends affecting tourism and hospitality today and into the foreseeable future are mobile technology, smart tourism, and immersive technology.
Mobile Technology
Mobile technology and wireless connections affect many aspects of the tourism industry on a global scale. Since the release of the iPhone in 2007, consumers have become more and more reliant on their “hand-held computers” to provide information about the world around them (Kim & Kim, 2017). Mobile technology allows people increased freedom to negotiate their day-to-day lives remotely while staying connected (Dickinson, Ghali, Cherrett, Speed, Davies, & Norgate, 2014). Online user-generated content, whether through social media (e.g., Facebook, Snapchat) or travel-rating sites (e.g., TripAdvisor, Zagat), is shaping where people go, where they stay and eat, and the types of activities they engage in. Mobile technology can also be used to better understand the impacts, positive and negative, that tourism and hospitality are having on destinations (Kim & Kim, 2017).
Smartphones and applications (or apps) provide access to information and the ability for tourists to shape their travel en route, affecting tourism travel decisions and behaviours in a more fluid way than ever before (Chung & Koo, 2015). Travellers can book hotels instantly, searching for the best deals available. Mobile apps are replacing the hotel concierge by providing up-to-date information, along with maps and directions, for many of the desired activities at destinations. Rating sites guide travellers towards recommended attractions and away from others (Mehraliyev, Choi & King, 2020).
Wireless technology has also given rise to location-based advertising, allowing product or service providers to market themselves when travellers are in the general area (Hopken, Fuchs, Zanker, & Beer, 2010). Attraction alerts and special offers, often triggered by applications, provoke the user’s attention to elicit an immediate response. These “geo-fenced” advertisements can be more effective in encouraging same-day and even delayed purchases than “non-geo-fenced” marketing, especially with impulse products and services (Fang, Gu, Luo & Xu, 2015).
Free internet access has become a standard requirement for accommodations, ranking it ahead of privacy, swimming pools, beaches, restaurants and fitness centres (Bachman, 2016). The importance of mobile technology and applications is expected to increase as travellers become more independent and less reliant on packaged options (Buhalis & Law, 2008). Proponents of technology suggest that traditional ways of providing tourism and hospitality information will disappear as mobile technology becomes even more prevalent (Dickinson et al., 2014).
Smart Tourism
Tourism destinations and organizations are now interacting with data on a real-time basis, better understanding how tourists are interacting with their locations. Smart tourism describes the increasing dependence by destinations, industry and tourists on technology, and is an important element of smart cities (Tripathy, Tripathy, Ray & Mohanty, 2018). In particular, large quantities of data are gathered to better understand how destinations and services are consumed, and then turned into value propositions (experiences) (Gretzel, Sigala, Xiang & Koo, 2015). In a hyper-connected world, technology allows for the gathering and transmission of data through a variety of means (e.g. RFID, NFC, 5G, Internet of Things). The ever-present mobile technology (discussed above) that tourists are increasingly relying on also collects and exchanges a range of information about the users including locations, activities, search terms, purchases and interests. In turn and aided in some cases by artificial intelligence (AI), this “big data” is processed and analyzed to model, optimize and visualize the use of the destinations, and increase the engagement of locals and visitors with the location (Tripathy, Tripathy, Ray & Mohanty, 2018). Smart cities strive to apply this information and improve a variety of destination aspects such as resource use, governance, sustainability and quality of life (Gretzel, Sigala, Xiang & Koo, 2015). As technology advances and interconnectivity increases, even more data will become available.
Immersive Technology
The rapid advance of technology is providing electronic immersive experiences through such things as augmented reality (AR) and virtual reality (VR), with the potential to change how people travel (Loureiro, Guerreiro, & Ali, 2020). While these two technologies are very different in the feelings provider to the user, they can provide technology-enhanced views of destinations, products and services. VR provides a more immersive and stimulating perspective of reality through stereoscopic head-mounted displays, headphones and controllers. AR adds virtual elements to the world, allowing the viewer to interact with both the real and imagined objects through see-through displays (García-Crespo, González-Carrasco, López-Cuadrado, Villanueva, González, 2016). Both AR and VR can be used in a variety of means before, during and after a visit, for activities such as marketing, education and entertainment. The tourism and hospitality industry is still discovering the range of possibilities for these technologies.
Legal Trends
The legal element of a PESTLE analysis considers the impacts of the legal and regulatory climate, and whether they help or hinder the organization. The legal environment can determine what can and cannot be done, and establishes the rules by which the tourism and hospitality industry must operate in. However, these rules are not stagnant or uniform around the world, so producers and consumers must remain current with rules and regulations in the locations they do business. Two legal trends are discussed below – an increased focus on privacy and security, and the impacts of technology.
Privacy and Security
Data breaches have become too common as systems become more interconnected and more information goes online. People have become reliant on their mobile devices (discussed above), creating more opportunities for data to be left unprotected or stolen for malicious intent (Swinhoe, 2020). In the past 20 years, billions of user accounts have been exposed or hacked, including approximately 500 million from Marriott International, 538 million from Sina Weibo (China’s equivalent to Twitter), 3 billion from Yahoo, and 165 million from LinkedIn (Swinhoe, 2020). With all of these data breaches, organizations have been put under increasing pressure to provide adequate protection to their data systems. As well, liability insurance is becoming more common as a means to protect organizations from the financial implications of a data loss (Brooks, 2020).
Technology and the Legal Landscape
Similar to many other industries, the legal environment is being impacted by and impacting technology. Advances in technology are automating certain aspects of the legal system, turning it into a commodity, which lowers the price and increases access to more users. The emergence of artificial intelligence (AI) and predictive algorithms are improving legal processes and providing efficiencies (Brooks, 2020). These emerging technologies are having a positive impact on the legal industry by opening opportunities and expanding territories. Law offices can now provide services to more distant clients, increasing competition, and decreasing costs for users.
The legal world is also working hard to keep up with changes in technology, as innovation moves faster than new regulations. For example, rules around drones and autonomous vehicles continue to adapt to new uses and capabilities (LexisNexis 2020). Meanwhile, cannabis laws are also changing as locations adopt different perspectives on its development and use. Climate change may also create new legal challenges in the coming years.
Environmental Trends
In 2018, a young Swedish activist, Greta Thunberg, became one of the most visible figures in the fight against climate change. Her protest, Fridays for Future (FFF), have inspired students around the world to boycott school on Fridays to promote the 2015 Paris Agreement on Climate Change. Her actions and the subsequent growing support have moved organizations and nations to re-evaluate society’s consumption patterns and their impacts on the world (Nevett, 2019). One obvious impact on the tourism and hospitality industry of this movement is “flight shaming” or discouraging people from using planes due to their carbon footprint.
Climate change is a serious challenge facing the world. The United Nations Intergovernmental Panel on Climate Change (IPCC), created in 1988, has produced irrefutable evidence that climate change is human-made. We are already witnessing significant shifts in weather patterns, and climatic events such as tornadoes, drought, and flooding are occurring with greater frequency and impact. Yet dependence on a global economy fuelled by population growth and ever-increasing demand for consumer goods has led to significant debate as to how to respond to climate change, although action is clearly required.
Impacts from and on the Environment
From a tourism and travel perspective, we have seen examples throughout the chapters of this textbook of how climate change is impacting tourism and how tourism is impacting climate change. In the transportation sector, drastic temperature changes from sudden ice thaws to heatwave conditions affect highways and runways, landslides close road systems, and rising sea levels threaten infrastructure such as airports and cruise ship wharves. In the accommodations sector, coastal storms impact resorts, summer water shortages put pressure on resort communities, and unpredictable snowfalls close ski resorts. Food and beverage operators are facing increased food costs as drought conditions make growing certain crops more and more expensive. In the recreation and entertainment sector, both natural and built attractions are threatened by unpredictable weather patterns. And travel services providers struggle to stay abreast of the effects of superstorms and polar vortexes. Chapter 10 explored some of the impacts that the tourism and hospitality industry have on the environment and climate, as well as some of the mitigation tactics for reducing those impacts (e.g. carbon offsetting, responsible consumption).
So what can we do? World-renowned scientist Jane Goodall provides a suggestion, “Each and every one of us of us must do our part in creating a better world, for though the small choices we make each day — what we buy, what we eat, what we wear — may seem insignificant, the cumulative effect of billions of people making ethical choices, will start to heal the natural world” (Gonzalez, 2019).
UN Sustainable Development Goals
The United Nations (UN) approved the 2030 Agenda for Sustainable Development on September 25, 2015 (Tourism for SDGS, 2020). This agreement contained the Sustainable Development Goals (SDGs) with 17 goals and 169 targets to be achieved by 2030. These goals are interconnected, ambitious, and cover a wide variety of global issues including the eradication of poverty (Goal #1), quality education for all (#4), gender equality (#5), sustainable cities and communities (#11), and climate action (#13). The SDGs were developed as a global partnership to improve life in a sustainable way for the future. The tourism and hospitality industry has recognized its role in helping to achieve the UNSDGs, and in particular, have targeted goals 8, 12 and 14 (decent work and economic growth, responsible consumption and production, and the sustainable use of oceans and marine resources respectively).
Take a Closer Look: The United Nations Sustainable Development Goals (SDGs)
According the UN these goals are a universal call to action that will ultimately protect the planet putting an end to poverty and bringing about a more peaceful and prosperous world. To learn more, watch the video “The Sustainable Development Goals – Action Towards 2030” or visit the Sustainable Development Goals web page.