Experimentation, innovation and agility are key ingredients for future
Prof. Dr. Clemens Fuest, President of the ifo Institute – Leibniz Institute for Economic Research at the University of Munich, was speaking at the ITB Berlin Convention Future Track
Prof. Dr. Fuest discusses the impact of the economy on the tourism industry and how companies in the sector can react in an exclusive interview with ITB Berlin News.
What are the main challenges facing the travel and tourism industry in 2023?
Inflation and rising interest rates are most likely to limit the available travel budgets. At the same time demand for travel will be high after the years of restrictions due to the Covid pandemic. The challenge will be to accommodate those needs.
How can companies prepare/navigate challenges which are out of their control?
By adjusting their way of operating and the products they offer. For instance, a possible reaction to tight budgets could be to offer the right mixture of short and exciting or longer and well-priced trips.
What opportunities does this present and how can companies capitalise on them?
The opportunity is to adjust more quickly and accurately to this new economic environment and to the needs of the market.
How important are digital technologies for the future of the travel industry and why?
Digital technologies have changed many aspects of the travel industry and will continue to do so. One of the key issues is that digitisation allows steady improvements in the matching between what companies offer and what consumers want.
How important are international events like ITB Berlin for mastering these changes?
Events like ITB are key for building new networks and for generating new ideas for improvements of business models and services.
The importance of tailoring tourism offers to customers
Prof. Dr. Clemens Fuest noted the importance of adapting tourism and travel offers to today’s changing market. One major trend he mentioned was baby boomers as a group. These travellers have money saved and increasing time for tourism. They are older and looking for more comfortable offers. This is a group travel companies can target specifically with adapted packages and marketing. Prof. Dr. Fuest underlined a certain polarisation of the market as on one hand are these baby boomer travellers, and on the other end of the spectrum, there are populations with less money to spend on travelling due to inflation, such as families. Prof. Dr. Fuest suggested that travel companies should offer a range of options adapted to different budgets including shorter stays or more basic accommodation. This year travellers in general are willing to spend more on their trips post-pandemic since they have had their travel plans blocked for so long, but Prof. Dr. Fuest suggested that this trend would only last a year or two and that travel companies should be ready for smaller budgets by providing suitable packages for them.
Photo: © ifo Institute – Romy Vinogradova