September 14, 2017
Excerpt from the upcoming new book Hospitality & Travel Strategy 2020 by Fred DeMicco, Ph.D. Marvin Cetron, Ph.D. & Owen Davies (2018)
Picture your next vacation as it might be in 2075. In early July, you and your family ride the space elevator to a port terminal 62,000 miles over the equator. There you join nearly 2,000 other budget-conscious tourists on an interstellar cruiser the size of an ocean liner. After a stately embarkation, you sail out through interplanetary space, past the giant storms of Jupiter, close enough to Saturn to walk on its rings, and on into the inky blackness beyond. Just four luxurious days later, you arrive at alpha Centauri, the star closest to our own sun, tour a small but spectacular system of planets, and get out at…
Er, well, probably at a theme park in Orlando, where the whole journey took place in a few hours of virtual reality. Sadly, the smart money in physics is still betting that Einstein was right about not going faster than the speed of light. Barring a discovery that overturns our most fundamental understanding of the universe, we will never travel to the stars unless we learn to hibernate and spend centuries en route.
Nonetheless, many other changes will come to the hospitality and travel industry over the next few decades. None will be as dramatic as stellar tourism, but some may be nearly as important to the participants.
What follows is a timeline of probabilities. Unlike the brief science-fiction scenario above, the developments below are rooted in today’s realities. A majority deal with new technologies, for obvious reasons: Technology changes a lot faster than social factors, and it often is the driver that eventually forces societal change. Our dates are “guesstimates;” they could be a few years off in either direction. Some of the more distant ones surely will be. We once examined the results of our forecasts and discovered that times beyond about fifteen years should be cut in half. By then, breakthroughs in theory or engineering—by nature unpredictable—had either brought them much closer or replaced them with better ideas. However, the concepts themselves were solid. We at Forecasting International will be surprised if many of the following predictions fail to materialize.
Let us begin with our picks for the most important technological (and other) developments for the next ten years in hospitality and travel. Then we can go on to some interesting possibilities. Many predictably involve new technologies. Yet, a surprising number do not. We have examined many of them before, either in Chapter 6 or in the market-specific chapters later in the book. In these cases, what follows is either a deeper dive into the topic or a reminder of things we believe are especially worth bearing in mind.
5) Virtual reality: So far, several factors are holding VR back. One is cost, which still makes VR headsets a toy for comfortable hobbyists. Another, more fundamental, is the lack of standards to make sure one company’s products work with another’s. These are not likely to be problems for much longer. The cost of hardware is coming down quickly; several industry groups have proposed standards or are developing them. One or more should be adopted within a few years, so one company’s VR experiences will work with software and displays from others. By the early 2020s, one of them will win out over the rest, and VR will become an expected feature of any mid-range or better entertainment system, with low-end models available at any Walmart.
Already, Google, Facebook, and YouTube offer their own variations. Many other sites provide a sort of “virtual VR” in which viewers can turn 360 degrees at any point in a tour and see what is around them, though only in 2D. This is enough to make VR and its near-equivalent useful in marketing and other applications. Tourist destinations like the Alamo and the Statue of Liberty National Monument already can be visited in virtual reality.
Hospitality and travel firms have been among the first to adopt VR, and with good reason. A company called YouVisit, which specializes in VR tours, reports that 13 percent of people who experience a virtual trip go on to book the real thing. Thus, Marriott Hotels and Resorts offers VRoom Service, delivering immersive travel stories to the guest’s room. Best Western Hotels & Resorts uses VR at all 2,200 of its North American locations to give its guests a guided look at the company’s other facilities. Carlson Rezidor Hotel Group uses VR BluPrint to demo its design process for investors and developers. Even Airbnb offers a VR preview of some high-end listings.
Ocean-going travelers enjoy similar benefits, with Carnival, Royal Caribbean, and many other companies offer VR tours of their ships so would-be cruisers can preview life aboard. Royal Caribbean even used VR to design its new 2,918-passenger Celebrity Edge, scheduled to make its first trip in autumn 2018. By the end of that year, half of the line’s vessels will be equipped with VR to explore the ship and plan shore experiences.
Even destination cities are beginning to create virtual experiences to market themselves. Predictably, one of the first VR tours comes from the Las Vegas Convention and Visitors Authority. Organization officials say it allows potential visitors to pack weeks of research into ten minutes of virtual touring. Over the next few years, these excursions will grow into full, real-time experiences, rather than simple introductions, and VR tours will become marketable “mini-vacations” for times when schedules or limited funds make it impossible to take the real thing.
These marketing efforts should pay off handsomely if they are carried out well. Jaguar’s 2016 VR campaign placed the company’s cars at the Wimbledon tennis tournament, distributed 20,000 Google Cardboard headsets through its dealerships, and made the experience available through installations at the Greenwood Festival of Speed car races and London’s Waterloo station. Users could pick the car that interested them, chose its color and features, and then get in to check out the interior. Marketers could even change the experience as they found out what most attracted customers. The campaign was “incredibly successful for driving purchases,” a company spokesman said.
Of course, all this is only the beginning. As technology improves and Internet service becomes ever faster, VR will evolve from a exciting novelty to routine, from a fairly new competitive method to standard practice. At that point, competition for the customer’s attention will quickly grow as intense in VR as it is in today’s social media. “VR marketer” will be a growing specialty, and one in high demand throughout hospitality and travel.
4) Augmented reality: This technology is often lumped together with virtual reality. Yet there are significant differences. Where VR replaces the world around you, AR enriches it. Picture spectacles that project information directly to your eyes, turning the entire world into a computer screen. Manufacturers already use primitive versions to give employees instructions while leaving their hands free. It is fast becoming standard in fields like aircraft maintenance, where the hardware is complex and a single mistake can cost lives.
For tourists, far more is possible. An iPhone app called WordLens could already translate street signs among any of thirty-six languages; Google Translate does it in thirty-seven. However, both require deliberately taking a picture of the sign. In the very near future, that annoying bit of friction will go away. Street and business signs will automagically appear in your native language. Places of interest will carry small icons to signal that information is available about them. Visit a restaurant, and a translated menu will take the place of the one you’d see without AR; blink, and you will be able to look at the meal before ordering. (Again, Google Translate and some other apps can handle these chores today, but not with anything like the same convenience.) Inside a museum or historical attraction, you will see as well as hear commentaries about the exhibits. In front, you may see a sculpture that exists only in AR, the image sent to your glasses by the museum’s AR system. Tracking down AR installations will be yet another destination activity for art-minded tourists.
Combining AR with social media will bring a whole new level of interaction and “stickiness.” Lay’s showed the way with its “Cheer of Champions” campaign for visitors to a shopping mall in Madrid. Soccer fans could take a photo of their team’s T-shirt, printed on potato-chip bags, then paste it over a selfie, add face paint and other accessories, and share the result on social media. So far, this kind of app is limited by internet bandwidth; AR and VR use a lot more data than 2D images. However, 5G wireless and gigabit broadband, both being rolled out slowly across the U.S. as of 2017, should make social-media AR and VR generally available by 2020 or soon after.
Early uses of AR in the hospitality industry will be mundane conveniences that might be delivered by some other technology, if not quite as easily or effectively. As time passes, they will get much more interesting.
3) Faster than a speeding Bullet Train. Ten years ago, we expected 500-mph maglev trains eventually to carry tourists around Japan, from Los Angeles to Las Vegas, and along other flat, high-density routes. Today, there is an even better technology: Elon Musk’s famous Hyperloop will run its trains through airless tunnels at 760 mph. The first is expected to begin operation in the United Arab Emirates, making the 99-mile trip from Dubai to Abu Dhabi in twelve minutes. Feasibility studies are under way for lines in Russia, Finland, The Netherlands, Switzerland, the U.S., and the U.K. Most ambitious to date: a proposed line from Beijing to Moscow and on to Western Europe. A Hyperloop train could make the trip in a single day.
2) See the world—from above: In the first decade of this century, nine space tourists spent $20 million or more for a visit to the International Space Station. That ended in 2010, when Russia enlarged its flight crews, leaving no room for tourists. This drought in space tourism could last a few more years, but it is unlikely to endure far into the 2020s. Several private companies have set out to bring space within reach of well-funded travelers, and it looks like one or two will succeed. Competitors include Elon Musk’s SpaceX; Virgin Galactic, founded by Sir Richard Branson; Blue Origin, from Amazon founder Jeff Bezos; and even Boeing, an old hand at aerospace. Here is a quick scan of current developments:
In February 2017, SpaceX founder Elon Musk announced plans to fly two space tourists around the moon in 2018. The trip, in a Dragon space capsule launched by the company’s Falcon Heavy rocket, is expected to take about a week. Unlike NASA’s flights in the 1960s, it will “skim the surface of the moon,” in Musk’s words, and sail perhaps 100,000 miles out into deeper space before gravity brings it home. The flight will be almost completely automated, so tourists will need to learn only emergency procedures, not the months of study required of previous travelers.
No one outside the company and the passengers know the ticket price for a lunar fly-by. Musk says it will be “comparable to, maybe a little more than, what the cost of a crewed mission to the space station would be.” More, in any case, than most of us can pay. Russia charges NASA about $80 million per seat for use of the three-person Soyuz vehicle. The space agency’s contract with SpaceX requires at least two, and up to six, flights to the International Space Station in the seven-passenger Dragon. At a total cost of $2.6 billion, that works out to at least $433 million, and up to $1.3 billion per seat. Two future tourists reportedly have already paid a “significant deposit” for their flight.
However, Musk has set a price for one follow-on project. SpaceX hopes eventually to make space travel a regular event, with one-hundred voyagers at a time journeying to Mars in cruise-ship comfort. If all goes according to plan, the price eventually will come as low as $100,000.
Virgin Galactic’s plans are for the nearer term. In August 2017, the company carried out its sixth glide flight of its second SpaceShipTwo space plane. The flight also was the first test of the craft’s hybrid propulsion system, to be used in future powered flights. Company founder Sir Richard Branson said not long before that he would be “very disappointed” if SpaceShipTwo is not in commercial service, carrying passengers on suborbital flights to the edge of space, in 2018. The company has not announced a price for the flight, but estimates put it between around $250,000 per passenger. Some 700 people already are on the waiting list. It seems a lot to pay for a trip that will go up only 62 miles and provide just six minutes of weightlessness, but no one is likely to complain about the view.
Blue Origin also hopes to carry its first tourists in the near future. The company has been gradually developing its launch vehicle, carrying out several successful test flights since late 2015. The company’s six-passenger New Shepard space capsule also has flown, returning to Earth under three large parachutes, much like the Russian Soyuz. Like SpaceShipTwo, it is intended for only brief suborbital trips: The whole journey 63 miles up and back is scheduled to take only eleven minutes. In October 2016, CEO Jeff Bezos said the company expected to make its first manned test flights by the end of 2017—only five months away as this is written—and to begin carrying tourists in 2018.
As for Boeing, CEO Jeff Muilenburg predicted in late 2016 that “the first person to step foot on Mars will arrive there riding a Boeing rocket.” Just when that might take place or what will come before is yet to be determined. Muilenburg sees space tourism closer to home “blossoming over the next couple of decades into a viable commercial market.”
Could be. But if it takes that long, a lot of would-be tourists will be severely disappointed.
1) Artificial Intelligence: Smart software will not eliminate human jobs in our industry as it will in others. Hospitality depends much too heavily on personal contact with caring humans for that. Yet it will change the way many routine tasks are carried out. Smart “chatbots” will be able to answer telephones, book airline flights, and even tours, on the phone, and suggest local attractions tailored to the guest’s personal interests. Intelligent systems will recognize returning guests as they arrive, select a room for the front-desk staff, and automatically tailor lighting and other amenities to their preferences. Lower-priority services like providing information at peak check-in times will be delivered by AI systems that understand questions in natural language and can give directions, explain hotel amenities, and suggest a good Somali restaurant in Amsterdam. The challenge will be to add convenience to the guest’s experience without subtracting human warmth.
So there they are, our nominations for the ten most important developments of the next decade in the world’s most vibrant industry. No doubt we will eventually look back on this selection and wonder how we missed some other novelty that has unexpectedly transformed the field. Yet, we are comfortable with this list. From Moscow to Mumbai and Fairbanks to Capetown, few participants in hospitality and travel will remain unaffected by these ten innovations for the next ten years.
The items below are slightly more speculative in that most of them depend on technologies that have yet to be developed. This is especially true of the forecasts beyond, say, 2020. Yet when we are wrong, it is likely to be because even bigger changes made these possibilities obsolete. When forecasters peer out into the further distances, our mistakes are usually failures of the imagination. The far future is always stranger than we can anticipate.
Swan Song of the Baby Boom generation: Wherever they have gone in life, America’s vast Baby Boom generation has dominated their world. Today, they are beginning to retire. This is the time of life when, on average, people in the developed world have the greatest wealth and freedom to travel. Their needs will dominate much of hospitality planning.
Many of the necessary adaptations are by now familiar. Facilities and services such as larger, elder-friendly signs and door and faucet handles (levers) are old news, but the need for them is still in its early days. Expect restaurants to provide spicier foods to delight less acute taste buds, but smaller portions suited to waning appetites; near-universal availability of specialty menus for guests with disorders such as Crohn’s disease, diabetes, and chronic kidney disease, all of which are more common in the elderly; tours with early-bird specials; and enhanced medical services on cruise ships and at resorts and other destinations.
It also will be necessary to provide a much wider range of activities for guests. When people are in their forties, reasonably good health can be more or less assumed. They may not be interested in tours that lead up and down steep hills for hours, but many will be capable of activities that in previous generations would have been limited to people a decade or two younger. In their sixties, and especially their seventies and beyond, people display a much wider range of abilities. The healthiest and most active may be nearly as capable as they were in their forties. Others will find less strenuous pursuits challenging, and some—a few at first, but more with each year of age—will be limited by health problems to brief excursions, motor tours where others would walk, and sedentary activities.
All these groups represent opportunity for tomorrow’s travel and hospitality businesses. A few destinations will prosper by catering to those at either end of the spectrum, providing challenging activities but with a “vibe” friendly to those who grew up with the Beetles. Others will specialize in interesting but sedentary activities for the infirm, with special menus and other options to suit. Yet, the majority will take the middle route, trying to offer something for everyone and counting on an outgoing and well-trained to make up for any deficiencies.
Rise of the Centennials: Forget the Millennials. Born between from 1977 through 1995 and even more numerous than the Boomers, they already are a major market for hospitality and travel. Next up are the Centennials, the oldest among them now in their early 20s. Think of them as super-Millennials.
As employees, the Centennials are highly individualistic, eager to work effectively and to accomplish whatever tasks their bosses set them so long as they understand why it is useful. However, they are likely to do it their own way, and that may not be what their managers expect. They have learned that in today’s economy no job is likely to be permanent, so preparing for the next one is a constant concern. The opportunity to learn therefore is a high priority for them. A job that does not offer it will feel like a dead end, to be put behind them as fast as possible.
As customers, Centennials can be equally hard to handle. They detest obvious salesmanship even more than their elders. Marketing to them requires a light hand, gradually building trust through social media and a reputation for corporate responsibility. Unfortunately, they also are likely to be painfully short of money. Millennials in their 20s already earned 20 percent less than the previous generation, on average. Many more today are taking low-paid retail jobs rather than having no job at all. As a result, young men in their 20s than the Millennials did a their age—about £12,500 less during their 20s, according to a study in the UK. They also are likely to be paying down college loans that range from big to crushing. For the next ten years and beyond, developing inexpensive products that feel like luxuries will be a priority for all segments of the hospitality industry.
The Centennials may be important in another role as well, as we are about to see.
Generations of entrepreneurs. Become an entrepreneur in hospitality and travel, and you will be one of a select few. According to the Organization for Economic Cooperation and Development, only 5.1 percent of men aged 15 to 24 and 3.6 percent of women are self-employed. (This includes both single-person contractors and more formal startups with multiple employees.) Italy and South Africa are tied for the greatest supply of male business-creators at just over 8 percent, while Greece leads in the number of female entrepreneurs at just less than 4 percent. The United States comes in well down the list—in thirty-second place among men, at around 3.4 percent, and thirty-fourth among women, at barely more than 1 percent.
There are fewer entrepreneurs every year, especially in the U.S., where business creation has slowed continuously for three decades and declined sharply in the last teen years. As a fraction of the total business population, about 15 percent fewer new American businesses appeared in 2016 than in 2007. Entrepreneurship is down even further in Germany, with around 24 percent fewer startups over the period, and Italy, about 37 percent. Contrast that with the United Kingdom, where business creation is up by nearly a third in the decade.
No one quite understands why entrepreneurship in the United States has slowed to half the pace seen in 1978. The problem is not excessive taxation, as many politicians would argue. Business creation in the U.S. was much higher in the 1970s and ’80, when taxes ate a much bigger share of income. Neither is it excessive regulation. Business creation turns out to be slightly faster in highly regulated industries than in others.
A Brookings study found that older companies have tightened their hold on their markets. Companies aged 16 years and older made up only 23 percent of the total in 1992 but 34 percent by 2011. Younger companies lost share, and failures among early-stage firms rose fastest of all. However, that gives us a bit more insight into what is happening. It still doesn’t explain why.
Two possibilities come to mind: the absorption of venture capital by the technology industry, leaving other sectors undersupplied; and, in the United States particularly, regulatory preference by both major parties for large, influential companies at the expense of others. The problem may be not how many regulations there but exactly what they are. We lack data to support these suspicions, however.
One factor clearly doesn’t help. Even the pre-Trump United States issued only about 100,000 green cards per year allowing skilled foreign workers to become permanent residents. An estimated 1.5 million wanted them. In 2005, some 52 percent of startups in Silicon Valley were founded by immigrants. By 2012, it had shrunk to only 44 percent. At that, a study the following year found that over 16 percent of first-generation immigrants start their own business—significantly more than among non-immigrants. If the new immigration restrictions proposed in mid-2017 take effect, foreign foreign-born entrepreneurship in the U.S. seems likely to collapse.
One more factor seems important, the generational transition from Baby-Boom dominance to Millennial ascendency. Half a century ago, the Boomers built a counterculture of rebellion and unrestrained individuality. Those attitudes remained with them, even after they “sold out” and entered the business world. Boomers have been the most prolific entrepreneurs in history. With retirement age either in sight or already behind them, their drive to build a business from scratch has not waned. According to the Kauffman Index of Entrepreneurial Activity, those from age 55 to 64 show the highest rate of entrepreneurial activity. Another study found that 20 percent of businesses in one year were started by founders aged 50 to 59, and 15 percent of entrepreneurs were 60 and over. The only age group starting more businesses per person over the last twenty years is those 55 to 65 years old.
Contrast this with the Millennials. Growing up in a period of stagnant incomes, they learned exactly the caution the Boomers had rejected. The collapse of the dot-com bubble around 2001reinforced that lesson, and the Great Recession made it all but impossible to throw off. In 2014, more than four people in ten aged 25 to 34 said fear of failure kept them from starting their own company.
Bad economic times also made it much harder to accumulate the kind of capital that would encourage them to leave an unsatisfying job in hope of building something better. The number of college students borrowing money rose 89 percent in the decade ending in 2014. The loans were bigger, too, up an average 77 percent over the period.
Predictably, Millennials are proving to be the least entrepreneurial generation in recent history. The share of people under 30 who own a business is 65 percent smaller than in the 1980s. Yet, it is too soon to count this generation out. Younger Millennials are still in their twenties, just getting into their prime first-business years. And nearly eight out of ten Millennial founders are the children of entrepreneurs. Those who would be first-generations entrepreneurs may just need a little more time to think about it.
Nearly all Centennials are still too young to start their own company. Yet, the early data looks promising. Even if fewer of them start companies, there are so many Centennials—about 26 percent of the U.S. population already, and by 2020 they will make up 40 percent of American consumers. Worldwide, there are about 1.3 billion Centennials. With numbers like those, they can hardly avoid starting more businesses than Millennials have done so far.
And they are thinking about leaving jobs behind. In a study by Northeastern University, 63 percent of Centennials said they believe entrepreneurship should be taught in college. They also may be thinking that jobs will leave them behind. Four in ten say they expect to work on their own at some point, whether they want to or not.
Among those in high school, the entrepreneurial spirit is even stronger. Some 72 percent say they want to own their own business; 76 percent would like to parlay their hobbies into full-time jobs.
It will help that Centennials almost universally are more frugal than their elders. Those now in college are less likely to take on debt than Millennials were, and 57 percent say they would rather save money than spend it. Even in a difficult economy, these are good attitudes for accumulating capital.
The Internet is likely to help as well. Almost everything entrepreneurs need to know is available in free courses at online schools or from more specialized websites. Programmers, logo designers, marketing personnel, and pretty much any other specialty help a business startup needs also are available via the Net, and much less expensive than they used to be. These are resources not even the Millennials had.
Those in other lands will have still more help. Throughout the world, incubators are multiplying to lend a hand to would-be entrepreneurs, and not all of them specialize in technology. China offers university students a “time out” when they can defer their studies to start a business. Spain’s government several years ago passed a law to help domestic businesses and attract foreign entrepreneurs. Honk Kong reported that there were nearly one-fourth more technology startups in 2016 than the year before, and the number owned by foreign investors dropped sharply. In all, if American Centennials skip the entrepreneurial challenge, their peers in other lands seem likely to accept it, and to flourish.
All this augurs well for hospitality and travel. In a period when growing numbers of vacationers will spread out across the world, new generations of entrepreneurs will be building destinations and creating activities to keep them entertained. Travel alone contributed over 10 percent of the world’s GDP in 2016, about $7.6 trillion and supported one in every ten jobs around the world. We expect those numbers to continue growing through the 2020s and beyond. For this, we can thank tomorrow’s entrepreneurs, many of them in hospitality and travel courses today.
End of immigration. Travel, and almost every land will open its arms to you. Threaten to stay, and you’ll be as welcome as a two-cent tip. Throughout the industrialized world, native citizens complain that guest workers and other immigrants are taking jobs, soaking up public resources, and refusing to integrate into the local culture. Strong anti-immigrant movements have grown up throughout the United States and Europe, and violence toward immigrants is all too common.
This is a problem for the hospitality industry, which depends heavily on first-generation immigrants. The supply of low-income workers to carry out necessary tasks in hotels especially is likely to tighten, pushing wages up in the years ahead. This will drive investment in automation and, where possible, development of new products and procedures that make manual chores quicker and easier. Coping with this trend will be a continuing issue for hospitality executives at least until the mid-2020s.
None of this should be necessary. By any objective measure, complaints against immigrants are nonsense. This is clearest in the United States, where data is readily available, but it appears equally true in other countries. Many of the jobs immigrants take are positions no one else would willingly accept. (Offer a native-born American a job picking crops under a baking sun for sub-minimum wages, and see what happens.) There is strong evidence, too, that immigrants after their first two years in the country contribute far more in taxes than they ever received in government support.
One anti-immigration argument holds a grain of truth, at least in Europe, though not much more. It is true that a tiny minority of Muslims become radicalized and commit, or at least provide support for acts of terrorism. Yet, even where the influx of refugees from the Middle East and Northern Africa has been greatest, and has provoked the strongest reaction, there is little evidence that immigrants are to blame for most terrorism. In the Paris attacks of November 2015, nearly all participants had grown up in Europe or had lived there for many years. So too a series of attacks in Germany in 2016. Many had become radicalized while living in Europe, left to join the Islamic State, and returned with new enthusiasm for jihad. In the United States, there has been exactly one terrorist attack by a foreign-born Muslim since 9/11, and he had long been a naturalized citizen. A counter-terrorism specialist with the United Nations summed it up in a report to the UN General Assembly: “While there is no evidence that migration leads to increased terrorist activity, migration policies that are restrictive or that violate human rights may in fact create conditions conducive to terrorism.”
Despite all this, immigration has long been a red-meat issue for the far right. Given that, it was all but inevitable that U.S. Pres. Donald Trump’s attempted ban on Muslim immigrants would be only the beginning. By mid-2017, he had proposed to cut even legal immigration by an estimated 41 percent. Under tomorrow’s policies, it seems that “your tired, your poor, your huddled masses yearning to breathe free” can darned well stay home, no matter how badly they are needed.
This is not a healthy development for companies that depend on a steady supply of low-wage workers for basic functions. It also is not good for an industry where opportunities for entrepreneurship are likely to be ripe for the picking in the 2020s.
Who are you? In the age of terrorism, governments want to know for sure. Today’s biometric passports and visas are only the beginning of identification technology. Future versions will carry records not only of your fingerprints but of retinal blood vessels and other permanent, unique proof that you are really you. In the long run—say, around 2030—we expect to see DNA readers provide quick, absolute proof of identity in the largest, best-equipped airports.
Condo cruising. The World, the first cruise ship with apartments owned by the passengers, set sail in 2002, circling the planet each year and picking its destinations by vote of the passenger/owners. In 2017, its 165 condominium apartments sell for between $2 million and $15 million, but not often. In fact, news that the three-bedroom Residence 801 was available in April 2017 was newsworthy enough to rate a page in Forbes. In addition to its apartments, The World offers a 7,000 square-foot spa and fitness center, a 12,000-bottle wine collection, and the only full-size tennis court afloat. Only 330 residents are ever aboard ship at one time, but there almost always are some empty apartments, their owners staying at one of their other homes.
At least two more condo cruise ships will soon join The World. The Utopia, will offer 190 spectacular units in sizes beginning at two-bedroom, 2.5-bath apartments of 1,439 square feet and ranging up to two three-bedroom, three-bath “Estates,” at 5,735 sq. ft. and 6,143 sq. ft. Unlike The World, it also will carry 165 hotel rooms. Planned itineraries will take well-heeled cruisers to events such as the America’s Cup races, the Cannes film festival, New Year’s Eve in Sydney, and Nagoya Basho, Japan’s annual sumo wrestling championship.
The Marquette, launching in 2019, will offer 185 condos with prices ranging from $310,000 for a small one-bedroom/one-bath, 492 sq. ft. apartment to $1.9 million for an 924 sq. of custom-designed luxury. The ship had sold 42 percent of its listings even before design and engineering were complete—this despite being limited to American rivers and the Intracoastal Waterway.
Both ships were originally scheduled for launch in 2017. Both have been delayed, and at mid-year their launch dates remain unannounced.
This has not discouraged other lines from offering condominium apartments. Crystal Cruises announced in mid-2015 that three new 1,000-passenger vessels—the line’s first new ships in decades—will carry up to 48 residences each. Apartments will be on the top deck, ranging from 600 to 4,000 sq. ft. and with nine-foot ceilings. Residents will have private amenities including their own restaurant. The ships will be designed to sail in polar waters. The first is due in late 2018.
Buying into a condo cruise ship is not the final cost, of course. Maintenance fees add another five to ten percent of the purchase price every year.
That can be enough to spend the entire year on a traditional cruise ship, and it turns out that not everyone needs a dedicated residential ship or apartment ownership to build a life aboard. Growing numbers of seniors are simply booking consecutive excursions on cruise lines, enjoying find dining, laundry and internet services, and medical care for less than the cost of an assisted-living facility. They can remain onboard for as long as their health allows. In February 2017, the New York Times told of an investment manager who has lived, and worked, almost continuously at sea for some twenty years at a cost of about $70,000 annually. He estimates that he has been on 950 cruises and spent 7,000 days on the world’s oceans. We expect this to be a major trend in the years ahead.
Superclothes. For adventurous vacationers headed to deserts, mountains, and other hostile areas—one of the hottest areas in tourism, often literally—industrial-strength couturiers are developing “active” attire that cools or warms the wearer, as needed. Some innovative attire even collects and stores solar energy to keep your GPS going without heavy batteries. Look for superclothes at trendy outfitters around 2021.
Reversing a Trend? Even in the early 2000s, it seemed that travel agents were “going, going, almost gone,” as we put it then. They were an endangered species, with the number of agencies falling rapidly. By 2016, there were only 11,500 in the United States, down from 35,000. The number of agents declined from a peak of 124,000 in 2000 to only 64,000 in 2012. The reason, of course, was the rise of Internet discounters. Only the cruise industry held out against them, believing that mass-market outlets would only harm the image of their high-end product. By 2016, online travel agencies like Expedia and Travelocity had yearly revenues of more than $15 billion, and Google’s booking service was growing rapidly. The Great Recession did not help. Bookings through traditional agencies fell by 23 percent in 2009 alone.
In 2017, it seems the collapse has run its course. The U.S. Bureau of Labor Statistics (BLS) estimates that there are 68,680 agents in the country—not a big increase from the bottom of the trough, but still moving in the right direction. Agency profits are up as well, from only 6 percent of revenue in 2005 to about 12 percent in 2015.
We see the same pattern in Britain. The number of travel agents was declining even before the Great Recession. Between 2009 and 2015, the industry recovered dramatically, with roughly 4,000 agencies, six straight years of growth, and 66,224 agents at the end of the period. The numbers anticipated for 2016 still did not bring the agent population back to the pre-collapse high, but it was close and expected to continue growing.
Why this unexpected recovery? Several reasons appear to figure in:
Travelers have begun to figure out that it’s a lot easier to call an agent than to spend time online with search engines that are not always as user-friendly as they could be.
The online discounters are good for booking a flight or hotel room. They are much less useful when your plans change and you need to re-book. Many American consumers discovered that in 2010, when some 10,000 Christmas-period flights were cancelled.
It helps that travelers increasingly want personal attention and experiences hand-picked for their tastes and interests. Agents often specialize in a certain field—cruises, say, or travel with a family—and they can make sure that you get the most rewarding experience available; if one agent feels a little weak in your chosen area, she will know which of her colleagues is better equipped to help. That kind of service is not available through an online booking platform.
And the big selling point of Internet discount sites is that they will find you the best available price for your travel requirements. The often don’t. In one test reported by the New York Times, agents consistently beat the online prices by anything from a few tens of dollars to several hundred.
The reporter gave a perfect example of where human agents shine. He tried booking a trip to eastern Europe, spending most of his time on the Adriatic coast but with a side trip to the country’s inland capital. It was a complicated itinerary, and the online sites choked. One of the largest quoted nearly $3,000 for bookings that met his needs. Checking with others eventually brought that down to $800, but only after much time spent shuffling dates and other requirements. A call to an agency specializing in the region instant brought advice that a special deal for a slightly different route would cost less than $500. Several similar tests yielded much the same result. Try getting that kind of service from a website.
Looking ahead brings mixed news for agents and agencies. The market’s U.S. revenues came to $15 billion in 2015. By 2020, they are expected to reach $17.33 billion. Yet, BLS estimates that the number of agents will decline some 12 percent by 2024. If this is not the best possible forecast, it still is clear that stories of the travel agent’s death were at best premature.
Demographic trends may even offer hope for better. In the years ahead Baby Boomers will be reaching retirement. At the same time, Millennials will enter their peak earning years, and the vast Centennial generation will build both families and economic stability. For all three groups, personal service and curated experiences are high priorities. They will not find either with the online search engines.
Build it, and they will come. A host of tourist attractions have proved it in recent years. These include the 60-story Burj Al Arab Hotel in Dubai, with a seafood restaurant submerged in the Red Sea; the fabulous Bibliotheque in Alexandria; and the ice hotels rebuilt each winter in Greenland and Swedish Lapland. By 2025, we expect to see at least 60 new destinations built. Most will have some unique appeal, but six of the world’s major cities will erect their own versions of the London Eye. China already is developing 13 tourist destinations outside the few—such as Beijing and the Great Wall—that Westerners are familiar with.
Vacation offer you can’t refuse. It’s a way of life in Europe. Cities empty in the summer as workers head off for a month of R&R that in some places is guaranteed by law. The day will come when American workers also enjoy shorter work weeks and mandatory vacations, despite the objections of politically influential employers. The reason: the jobs lost from manufacturing over the last twenty years or so are just the beginning. Automation and global competition will continue to squeeze jobs from the American economy until, in the long run, it becomes impossible to create useful work for all who need it. The only answer will be to cut the work week, add time off, and open new jobs to fill in for vacationing workers. The result will be a burst of growth in tourism like nothing the industry has ever seen.
Note that this is the most “iffy” forecast in this report. A combination of dramatically reduced birth rates, limited immigration, better public education, rapid economic growth, and other changes might conceivably forestall a job crisis indefinitely. Yet what the U.S. has experienced is high immigration, unexpectedly high birth rates, generally ineffectual public education, and the an economy that has proved itself to be relatively fragile. And thanks to AI and robotics, it seems likely that the day will come when few noncreative tasks still require human hands. At some point in the future, much-expanded leisure seems all but inevitable. Our best guess is that the transition will be clearly under way by the late 2020s, but corporate inertia could delay it until the mid-2030s.
Hybrid airliners. Today’s jet aircraft spew vast quantities of greenhouse gases into the upper atmosphere, and the amount is expected to triple in less than twenty years. NASA, Boeing, Airbus, Siemens, and others are working on an alternative, a hybrid power system that will use optimized turbine engines to deliver power to electric motors that actually drive the aircraft. The combination is expected to be 30 percent more efficient than today’s jet airliners, saving airlines operating costs and sparing the environment nearly a third of the emissions it would receive with today’s best aircraft. Automating flight controls will add a few percent more efficiency by eliminating the weight and aerodynamic friction of the cockpit and hardware required by human pilots. Airline fleets will not have changed over to hybrid or automated aircraft by 2030 owing to the long lead time for purchases and manufacturing, but the first demonstrators will have shown where the industry is headed.
Eco-backlash. The tourists who trample the Arctic tundra and other fragile environments already alarms committed environmentalists. Having hundreds more of them descend on the world’s few wild places will be even less welcome, even if the vacationers do travel by eco-friendly aircraft. Global protests against this perceived despoiling of our common heritage will quickly give rise to stringent limits on the number of tourists who can visit what little true wilderness remains in the world.
Beanstalk to the stars. The science fiction scenario that began this chapter contained one bit of future reality: the space elevator. First envisioned in 1895, the elevator will climb an enormous cable, like Jack up the beanstalk, to a terminal where passengers and cargo can board spacecraft for the trip further out. Until recently, this was just a fantasy; there were no materials strong enough to build the cable. Today, so-called carbon nanotubes up to 20 times stronger than steel are approaching mass production, and engineers say a space elevator could be completed within 15 years. Unfortunately, economic and political factors probably will double that lead time. Some estimates say the first space elevator could be built for about $10 billion, but we are betting it would be much more. Cost for a trip to space would be $200 per pound or less, compared with $40,000 per pound for the Space Shuttle. At that price, the space elevator will make space tourism routine. It will not be completed in the 2030s, but we expect the project to begin in that decade.
Room service? When we wrote this text’s first edition, there was only one hotel under the sea, the two-bedroom Jules Underwater Resort in Key Largo, FL, and just two restaurants. In 2017, well-off travelers have a variety of subsea destinations to choose from. The luxurious Atlantis The Palm hotel in Dubai offers two luxurious rooms with enormous windows under the surface of a giant aquarium stocked with some 65,000 sea creatures. Resort World Sentosa, in Singapore, offers eleven two-story townhouses with bedrooms also submerged in an ocean aquarium with 40,000 fish. At Ithaa Undersea Restaurant, at the Conrad Maldives Rangali Island Hotel, diners sit inside sixteen feet below the surface, water views to the left, right, and overhead. The Aquarium Restaurant even brings subsurface dining to a shopping mall in Nashville, Tennessee. And Subsix Bar, some twenty feet below the Indian Ocean and accessible only by boat, is a full-fledged club with dining, DJ, and dancing. In fact, there are so many underwater destinations that in July 2016 Conde Nast Traveler ran a photo feature titled “11 Coolest Underwater Hotels in the World.” A separate story covered seven submarine restaurants.
Twenty-five years ahead, underwater hotels and restaurants will be almost common. Most will appear, like today’s, in shallow water, where sunlight penetrates to illuminate abundant life; the most spectacular will be located on Australia’s Great Barrier Reef, assuming any of it is left. However, at least one small, spartan, and incredibly expensive hotel will provide accommodations more than five miles down, where uncommonly daring guests can view forests of giant tube worms, ”volcanoes” of hot, mineral-rich water, and luminescent fish.
Think it, and they may not come after all. Scientists have dreamed for years of building computers that understand our thoughts and send data directly into our brains. But that means a kind of artificial telepathy. Think into your computer in San Francisco, and someone in Bangalore will “hear” the thought over the Internet. And this offers the ultimate virtual reality. If one person swims in the sea, walks on the moon, or runs a three-minute mile, the rest of us eventually may be able to share the experience from the comfort of our own living rooms. A small minority of good observers who respond strongly to their surroundings will make a spectacularly good business of traveling for us as we see the world, and beyond, through their eyes.
It brings up the obvious question, of course. Why leave home at all? One answer is snob appeal. The ultimate virtual reality will be good enough for many, but the rich will display their wealth by taking the time, and spending the money, to go in person.
You too can be the man in the moon. Or at least on it. NASA says a small, permanent moon base could be built by 2022 at a cost of $10 billion. Instead, it is not likely to appear until the 2030s. A decade later, it will be capable of accommodating up to 350 people, including 50 tourists. However, private launch services are likely to take visitors to the moon first.
When the first space elevator begins operation, a lunar jaunt will become relatively affordable. When business justifies it, a space elevator on the moon will make the return trip easier, bringing the total price down to a tenth the cost for surface-to-surface rockets.
Easy forecast: For hospitality executives and staff, these hotels will provide the most challenging, and exciting, jobs in the hospitality industries.
One world after all. Four decades ahead, the dollar and Euro are likely to be supplanted by a single computer-based monetary unit similar to Bitcoin, ending exchange problems forever. Biometric identity cards will be issued soon after birth, with the data stored in banks accessible by any government, and probably many corporations. This will make it nearly impossible for terrorists and lesser criminals to move around undetected, but routine tracking of our daily movements will further erode what little is left of old-fashioned privacy.
Universal English. Even the most accurate translation software will be useful for only 35 years or so. English already is the de facto language of business, as French once was the language of diplomacy. By 2050, 90 percent of the people in the developed world will speak English, at least as a second language. In major tourist destinations, the number will be even higher.
Jobs aplenty. Today, an estimated 14 percent of the world’s people work in the hospitality industry. Several decades on, it will be 25 percent. In part, we will owe this dramatic growth to the explosion of leisure time when shorter work weeks and forced vacations spread from Europe to the rest of the world. But this also is in the nature of industry. Forty years from now, most operations will be so heavily automated that personal service could be the only job category that still requires human workers.
Meet and greet. With a global Internet, lifelike virtual reality, and even computerized telepathy available to all, who needs in-person meetings? Nearly everyone, as it turns out. Full-contact telecommunications will do for routine conversations, but to meet new business associates, conduct difficult negotiations, or just build relationships over a round of golf, people will need to “press the flesh” for so long as people remain human. The meetings and expositions segment will continue to struggle with economic, social, and technological issues far into the future. But there will be more corporate and industry-wide meetings in 2060 than in 2006.
Water, water everywhere. At least in the low places of the world. At the rate things are going, climate change will raise the seas by two to three feet in the next 75 years. That will mean hard times for lands like Bangladesh and the Louisiana lowlands, which are barely above sea level even now and are sinking even as the water rises. It will also modify our travel habits, as temperatures and rainfall patterns change. Expect what is left of Florida to turn into baking jungle, while crops bloom in parts of Canada and Siberia that today hold only tundra.
Atoms in space. Nuclear power is banned from space by international treaty. Nonetheless, by 2075 long-range space tugs powered by nuclear reactors will be ferrying cargo and very patient tourists out to Mars, the asteroid belt, and even beyond. Travel time: about 3 months each way for Mars, more than a year for Jupiter.
Oldies but goodies. Some of the hottest destinations tomorrow, and some of the most crowded, would be familiar to today’s travelers. As we have seen, fast, overwhelming technological change will bring a host of new options for tourism. However, it also will strengthen our taste for old, familiar things and our need to reconnect with the past. Crowds will still surround the Taj Mahal, the Great Wall of China, and the pyramids; visit the Grand Canyon and Old Faithful; tour the fjords, the Yangtze River dam, and the Amazon; and throng the halls of the Hermitage and the Acropolis.
Old friends as well. Whatever other changes buffet the hospitality industry, it will still need the same fundamental services that all industries need: somewhere to gather to make contacts and win contracts, someone to provide job-related education, common standards, and certification. These are the province of industry associations, which can bring competitors together on common ground. In 2075, hospitality associations, many of them well known today, will still be helping their members to manage one of the largest industries in the world.