Special Report: Abta Travel Convention 2017 preview

Special Report: Abta Travel Convention 2017 preview

Leading advertising executive Rory Sutherland, vice-chairman of Ogilvy, warns lan Taylor of the dangers of ‘bucket-list’ travel

Ad chief cautions on tick-box tourism

Tick-box travel and bucket lists appal Rory Sutherland, who was due to tell the UK Travel Convention hosted by Abta why this week, but was unable to travel.

Sutherland, vice-chairman of advertising and marketing agency Ogilvy, is one of the UK’s leading advertising executives. He co-founded the agency’s behavioural sciences practice and writes a fortnightly column for the UK’s Spectator magazine.

Not afraid to express his views, Sutherland had been due to deliver a keynote speech on the opening morning of The Travel Convention in Ponta Delgada, in the Azores.

I managed to speak to him in advance. “The prospects for the travel industry are wonderful,” he said.

“Over the last 40-50 years spending on experiences has gone from 30%-40% of disposable income to 60%. The travel industry has a spectacular future because of the growth in the middle class all around the world. But some things terrify me.”

One of them is the impact of social media. Sutherland said: “Social media has increasingly caused travel to become a status ‘good’. Where you’ve been is more important than what you own, particularly for younger people.

“On Facebook, no one knows what car you drive, but they know where you’ve gone on holiday. Essentially, people send 300 postcards a day [on Facebook]. A large part of Facebook is saying you’re having a better time than anyone else.

“But when travel is done for bragging rights or there is little leisure time, it’s done by tick box or bucket list. It means Venice is uninhabitable and Florence is unbearable, but Lucca is empty.”

He describes it as “the Louvre effect” saying: “The Louvre [in Paris] only needs two signs. People only want to know where the Mona Lisa is and where the restrooms are.”

Sutherland suggests: “Mature travel consumers disperse themselves fairly well.” When talking about where they plan to go on holiday, he said: “They’ll tell you, ‘It’s a tiny, little place you won’t have heard of’.” But that is disappearing, he said.

He added: “A friend of mine worked for Norwegian Cruise Line, which attracts a lot of Japanese tourists. Everyone makes one visit. They want to see a fjord. Once they have seen one, they never go again.”

The result, he suggests, is that: “We’ll end up with a ludicrously uneven pattern of travel movement. Box-ticking in travel – the bid to get to as many countries in as possible – worries me. I don’t know what to do to counter it, although branding a route or a journey rather than a place has possibilities to disperse travel.”

America held back by two-week leave

Sutherland suggests travel’s biggest competitor is work. He said: “The competition isn’t other travel companies.

“Imagine if you could change America from a country where everyone has two weeks’ holiday to four weeks. I go on holiday to the US because they only have two weeks’ holiday.”

As a result, he said: “You find extraordinary places that aren’t crowded. Imagine if the Grand Canyon was in Spain. You wouldn’t be able to get into it.”

Sutherland argues: “If you could get the American holiday default from two weeks to four, the opportunities for cruise would be huge.”

He added: “I suspect a lot of people would like a cruise, but they are too scared to try it. The more people do something, the more variance there is in what they do. Variance increases with frequency.”

‘Trade to blame for teaching consumers to buy on price’

The travel industry is to blame for consumers buying on price, says Ogilvy’s Rory Sutherland – the travel industry in general and airlines in particular – and he argues technology is exacerbating the tendency.

Sutherland notes: “It is fiendishly difficult to make any money in travel.” That is because “a large part of the industry sells on price and has educated the consumer to buy on price”.

“Airline technology drives sales as a value-reduction game rather than a value-creation game. So if an airline increases leg-room [and therefore charges more for a seat] it more or less disappears off the first page of Skyscanner and probably goes bust by offering something a majority may be willing to pay for.”

Sutherland slams the Ryanair model, saying: “I don’t believe putting prices down increases demand. I would like airlines to experiment with free luggage [to see the impact of that], but they only experiment with price.

“Pricing is behavioural economics with all the variables set to zero.” He said: “The hotel industry has escaped this. If you choose accommodation on price, ultimately you may have a miserable time. Yet people choose airlines and increasingly cars on price, [and] travel websites may be making the industry worse by training everyone to buy on price.”

He warns the industry to “tread carefully on personalised pricing”, suggesting: “Consumers use price as a source of information. The second you start messing around with price, you jeopardise trust.”

He recalls the Coca-Cola chief executive in the late 1990s who proposed drinks machines should automatically raise prices in hot weather. Rival Pepsi responded ‘Trade to blame for teaching consumers to buy on price’ “Business is overweighted towards cost‑cutting and not value creation” with a campaign declaring such a move would “exploit consumers” and Coke was trashed.

Sutherland declares: “Business is overweighted towards cost‑cutting and not value creation. It is obsessed with things that fit on a spreadsheet and can be expressed numerically.”

As a consequence, he said: “Travel has been reduced to the language of shipping containers. It’s all about speed and efficiency.”

If airlines want to cut prices, he suggests: “I would rather an airline offered half price for kids, because travel becomes fiendishly expensive with more than two children. Why does no hotel offer a second room half price [for families]?”

Amid so much technological innovation, Sutherland adds: “There is a market for a really good travel agent.” He likens agents to bank staff at risk of being replaced by ATMs, saying: “I don’t need a human being to tell me my card balance, but my other questions may be more complicated.”

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