Holidays 2004 – shorter, more often, more expensive

Roland Berger: Flexible strategies to meet new trends

There are three main trends in the international tourism industry today: travelers are prepared to spend more money on holidays, people are taking holidays shorter but more often, and demand is definitely shifting towards older, wealthier consumers. Austria is well positioned to benefit from these trends, but has not got its act together completely. So it needs to market itself towards tourists more in line with what customers want and the resources that exist, rather than by region, as today, find Julian Pötzl and Veronika Kvarda, tourism experts at Roland Berger Strategy Consultants.

"With 2.3 visitors per head of population, Austria attracts more tourists than anywhere else in the world. The country is a model of how to run destinations, from profiling the brand right through to a consistent perception of what the country offers," says Pötzl. Even so, global tourism is undergoing important change, so something needs to be done. The trend is away from marketing regions as such to seeing things through the customer's eyes. "At present, Austria is focusing too much on regions, not on what they offer or what resources they have. But regions are increasingly interchangeable, so the local tourist industry has to look more at what actual and potential customers want. They also need to be clear how they can best use a region's existing resources – cultural, natural and historical heritage, mountains, lakes and hot springs," adds Kvarda, "They need an integrated strategy coordinating regional policy interests."

Another trend: people are spending less and less money getting where they want to go, but are spending more while they are there. In 1993, 40% of people's holiday budgets went on travel and bookings. By 2003, that figure had fallen to just 33%. Spending at destinations went up from 60% to 67% over the same period. "The low-cost airline boom means people are traveling more; even established carriers have cut their prices. So more people are traveling by air, instead of road or rail. Low-cost carriers boosted their market share from 4% in 1998 to 15% in 2003. We expect passenger numbers to be growing at around 11% a year by 2010," she adds.

For Austria, this means keeping the costs of getting there low. Which means finding a way out of the "vicious circle" of low-cost carriers. "It is also essential to maintain integrated strategies, to keep destinations attractive, giving customers what they want," Pötzl continues.

The trend is towards more expensive holidays

Once people get to where they're going, they are spending more than they did some years ago, as we mentioned above. "Lying on the beach and lazing around all day are passé. Now there have to be comprehensive sports facilities and cultural events to attract higher-spending tourists," the project manager says. Conventional seaside holidays may still be the favorite, with around 60% of the market, but this figure is not increasing. Sports holidays (up 9.5% p.a. since 1995) and cultural and circular tours (up 5% - 6% p.a.) on the other hand are growing rapidly.

Short breaks and city breaks

People are taking shorter holidays, but they may take two or even three holidays a year. They are looking for active holidays, more recreation in less time, more experiences on city breaks. "Instead of one long holiday a year, people are taking one long and one short holiday, or a number of short breaks. Between 2000 and 2003, the number of people taking just one long holiday a year fell from 56% to 49%. The number of people taking short breaks only increased by 13% over the same period," Kvarda claims. At almost 50%, city breaks are still the most popular form of short holidays, although their attraction is tailing off. The real growth is in sports holidays (up 6,5% p.a. between 2001 and 2003) and tours (up 5.9% p.a.), the main falls in educational and language tours (down 12.3% p.a.). Skiing holidays and wellness breaks remain where they are, with low market shares.

Austria is profiting well from the trend towards shorter breaks. City breaks have increased by over 7%, compared with 5.6% in Europe as a whole. "What they need to do is expand their existing range of sports facilities and tours and build on their reputation. In some areas, like spas, for example, there is a risk high costs will drive visitors abroad. So they must get the service and supply 100% right," the tourism expert claims.

The new target group: "wealthy retirees"

"Well-off over 50s are traveling more and more. They have the time, they have the money, they want quality and they're not too worried about the price," Pötzl says. As they get older, wealthy retirees go for more expensive holidays like study and sightseeing tours. "The average traveler spends 615 euros a year, the over 70s spend 850," are the figures Pötzl quotes.

Austria is very popular in this segment, especially with German tourists, but still has a very "dusty" image in places. Pötzl advises aiming at the "prosperous" over 50s through coming up with new ideas at the high end of the market, and doing more marketing directly itself. "This target group travels any time of year, so they could boost takeup in some areas considerably. But there could be a conflict of interests between younger and older visitors, which could keep other high-growth segments down," is how Pötzl assesses the opportunities and risks.