Appendix A: 55 Trends Shaping the
Future of the Hospitality Industry, and the World
Hospitality
and Travel 2015 by
M.
Cetron, F.J. DeMicco & O. Davies
POPULATION TRENDS
1. The world’s population will grow to 9 billion by
2050.
Early versions of this report predicted that
the world’s population would double by 2050, and population growth has
proceeded almost exactly on schedule. However, even this estimate may be too
low. According to the Center for Strategic and International Studies, most
official projections underestimate both fertility and future gains in
longevity. Unfortunately, the greatest fertility is found in those countries
least able to support their existing people. Populations will triple in the Palestinian Territories
and Niger between 2000 and
2050 and will more than double in Yemen ,
Angola , the Democratic
Republic of Congo, and Uganda United States
Assessment: Demographic
trends such as this are among the easiest to recognize and most difficult to
derail. Barring a global plague or nuclear war—wildcard possibilities that
cannot be predicted with any validity—there is little chance that the
population forecast for 2050 will err on the low side.
Implications: Rapid
population growth in the United States
compared with its industrialized competitors will reinforce American domination
of the global economy, as the European Union falls to third place behind the United States and China
To meet human nutritional needs over the
next forty years, global agriculture will have to supply as much food as has
been produced during all of human history.
Unless fertility in the developed lands
climbs dramatically, either would-be retirees will have to remain on the job,
or the industrialized nations will have to encourage even more immigration from
the developing world. The third alternative is a sharp economic contraction and
lower living standards.
A fourth alternative is the widespread automation of service jobs as well as manufacturing, to accomplish the work needed to support accustomed living standards. However, this requires development of a means other than wages to distribute wealth and to provide both a living income and a fulfilling occupation for workers and would-be workers displaced by machines and software.
Barring enforcement of strict immigration
controls, rapid migration will continue from the Southern Hemisphere to the
North, and especially from former colonies to Europe .
A growing percentage of job applicants in the United
States and Europe will
be recent immigrants from developing countries.
Implications
for Hospitality and Travel: Rapid population growth, compared with other developed lands, will
preserve America ’s place at
the top of the global economy, with China
2. Population of
the developed world is living longer.
Each
generation lives longer
and remains healthier than the last. Since the beginning of the twentieth
century, every generation in the United States Australia , Japan ,
and Switzerland
Assessment: See the Assessment:
for Trend 1.
Implications: Global demand for products and services aimed at the
elderly will grow quickly in the immediate future, but this trend may pass as
geriatric medicine improves the health of the elderly.
Developed countries may face social instability as a
result of competition for resources between retirement-age Boomers and their
working-age children and grandchildren. At the present rate of growth, public
spending on retirement benefits in the United States and other developed
countries could be one fourth of GDP by 2050, even as the number of workers
available to support each retiree declines sharply.
Barring dramatic advances in geriatric medicine, the
cost of health care is destined to skyrocket throughout the developed lands.
This could create the long-expected crisis in health-care financing and
delivery. However, dramatic advances in geriatric medicine are all but
inevitable. Paying the high cost of new drugs, technologies, and therapies will
reduce the overall cost of caring for patients who otherwise would have
suffered from disorders delayed, eased, or cured by such advances. In the end,
these reductions will offset many of the expected increases, leaving the
average health-care bill in the developed lands much lower than the doomsayers
predict.
Any practical extension of the human life span will
prolong health as well and will reduce the incidence of late-life disorders
such as cancer, heart disease, arthritis, and probably Alzheimer’s disease.
This would dramatically reduce demand for products and services in the senior
market, at least in the developed world. FI believes this development is nearer
than even many researchers expect.
Healthier aging in the developed world may offer new
hope to the world’s poorer, sicker lands. Faced with declining growth in their
pharmaceutical industries, western nations—and particularly the United States —are likely to subsidize research
and treatment for diseases that burden the poor countries of Africa and Asia . This will give those lands their first real
prospects for economic growth and improved quality of life.
Implications for
Hospitality and Travel: In the developed lands, aging represents the
opportunity to accumulate wealth, and the elderly are the wealthiest segment of
society. Healthier lifestyles and better geriatric medicine ensure that wealthy
seniors are as interested in travel as they are able to afford it. Aging Baby
Boomers—already the largest segment of cruisers—will be a ready market, both
for traditional high-end cruises and for adventure travel and other niche
vacation activities that would have been beyond the physical abilities of
earlier generations. Well into their 70s, they will retain their youthful
interest in pastimes such as skin diving, hiking, and other low-impact
activities with high “experience value.”
Catering to the growing population of older travelers
will require adaptation from the hospitality and travel industries—doors and
plumbing with handles easily operated by arthritic hands; large, easy-to-read
signs and menus; foods with strong flavors to stimulate failing palates; and
fire and security systems that flash lights for the hard-of-hearing; and
comprehensive medical facilities, especially for cruiseships.
Special tours and other activities should be ranked for
the amount of walking, energy, or agility they require, so that older customers
can easily choose pastimes within their abilities. It may also be necessary to
increase staffing slightly to provide older guests with extra help in checking
in, coping with luggage, arranging for local transportation, and dealing with
other chores that younger patrons could handle on their own.
Mature travelers tend to be experienced travelers. Many
are unforgiving of lapses in service, inferior facilities, or excessively
familiar tours and activities. They also want to feel that they are recognized
(especially if they are repeat customers), respected, and catered to.
Despite their relative wealth as a group, many seniors
are extremely careful with their money. This will further raise the demand for
vacation packages that are comfortable, staffed by attentive personnel, and
cheap. Seniors also represent a valuable workforce that hospitality and travel
businesses will tap, with considerable benefit. Post-retirement workers tend to
be diligent, well spoken, and habitually courteous to guests—unlike some
younger workers, who need to hone their grammatical skill or practice in
traditional good manners.
3. The elderly
population is growing dramatically throughout the world.
Worldwide,
the elderly (age 65 and over) numbered 440 million and represented 6 percent of the global population in 2002.
Their numbers will nearly double by 2020 (and form nearly 9 percent of the
total population) and more than triple by 2050 (becoming nearly 17 percent.) In the developed world, people age 60 and over
made up one-fifth of the population in 2000 and will grow to one-third in the
next half century. Throughout the developed world, population growth is fastest
among the elderly. In the United
States United States , and Japan
Assessment: Again, this
is a demographic trend, difficult to derail and unlikely to change while the
massive Baby Boom generation remains on the scene.
Implications: Not
counting immigration, the ratio of working-age people to retirees needing their
support will drop dramatically in the United
States , Germany ,
Italy , Russia , Japan
In the next two to three decades, shortages of health
workers will loom large in “aging vulnerable” countries. The United States in
particular will need at least twice as many physicians specializing in
geriatrics as its current 9,000, as well as half a million more nurses by 2020.
Suburban communities are likely to face a growing demand
for social services such as senior day-care, public transportation, and other
programs for the elderly. This will place a growing strain on local government
budgets.
In the developing countries, where the elderly have
traditionally relied on their children for support, this system will begin to
break down as middle-aged “children” find themselves still supporting their
parents while anticipating their own retirement.
Implications for
Hospitality and Travel:
Seniors are not only the fastest growing segment of the population, they are
the wealthiest. Few will be up to making an assault on Mt. Everest
As the older populations grow, the travel industry can
only expand with them. In the process, it is likely to become more stable and
less seasonal. Unlike the rest of us, most seniors can travel whenever the
impulse strikes. Often, they do so when prices are down and crowds are thinner.
In recent years, their off-season travel has begun to smooth the cyclical
downturn typical of the hospitality and travel industry. Seniors will never
eliminate seasonality, but the industry will find it less painful than in the
past.
4. Mass migration
is redistributing the world’s population.
There are nearly 100 million international migrant
workers in the world, according to the United Nations. About 30 million live in
Europe, 20 million in Africa, and 18 million in North
America . These figures include only the workers themselves, not
their dependents. About 4 million people immigrated permanently to the
countries of the Organization for Economic Cooperation and Development in 2005,
10.4 percent more than the year before. Immigration to Western Europe from Eastern
Europe, North Africa, the Middle East , and the
Indian subcontinent continues despite controls enacted in the wake of terrorist
attacks. Immigration is quickly changing the ethnic composition of the U.S. U.S.
Assessment: As native workforces shrink in most industrialized
lands, economic opportunities will draw people from the developing world to the
developed in growing numbers. Thus, this trend will continue for at least the
next generation.
Implications: Impoverished migrants will place a growing strain on
social-security systems in the industrialized countries of Europe and North America . Similar problems will continue to afflict
the urban infrastructures of China
and India
Significant backlashes against foreign migrants, such as
the skinhead movement in Europe , will be seen
more frequently in the years ahead. They will appear even in the most peaceful
lands. For example, in Scandinavia , resentment
against foreign workers is strong, in part because they can return to their
native lands after three years of employment and collect a pension equal to the
minimum wage for the rest of their lives.
• Since the terrorist attacks of September 11, 2001, and
the rail bombings in London and Madrid , the large number of Muslim immigrants in Britain , France
• Unfortunately, suspicion is to some extent justified.
A tiny minority of Muslim immigrants have proved to be linked to terrorist
groups, and some have plotted or carried out terrorist attacks. So have
native-born Muslims and converts to Islam.
Implications for
Hospitality and Travel:
Barring enactment of strict immigration controls, rapid migration will continue
from the southern hemisphere to the north, and especially from former colonies
to Europe . A growing percentage of job
applicants in the recipient lands will be recent immigrants from developing
countries. This will compensate for a declining supply of entry-level and
low-wage workers in the developed economies. Unlike post-retirement
job-seekers, however, most new arrivals will be limited to relatively menial,
behind-the-scenes jobs until they master the local language and adapt to the
dominant culture of their new homes.
The market for relatively short-distance international
travel should grow significantly in both the United
States and Europe ,
thanks largely to their expanding foreign populations visiting their former
homes. Routes between the United States
and Mexico and Latin America
will grow fastest, while those between Europe and the former colonies of Africa
and the Middle East will not be far behind.
In the United States
and Europe, foreign-born residents represent significant new markets for
well-prepared foods from Latin America and the Middle East .
Supplying this demand will fall to small restaurateurs at first, but the major
chains can be expected to enter this field as soon as they are sure it will
repay their investments.
This trend will serve an aging population well, because
it promises to introduce strong new flavors suited to the failing taste buds of
older diners.
5. Important
medical advances will continue to appear almost daily.
Research into human genetics, stem cells, computer-aided
drug design, tissue transplants, cloning, and even nanotechnology promise to
ease or cure diseases and injuries that do not respond to today’s medicine.
Radical new treatments for diabetes, Parkinson’s disease, perhaps Alzheimer’s,
and many other disorders are expected to arrive within the next five to ten
years. Scientists even are beginning to understand the fundamental processes of
aging, bringing the possibility of averting the diseases of old age, and
perhaps aging itself.
Assessment: The flow of
new medical advances will not slow in the next 40 years, and probably not in
the next 75.
Implications: In the next
ten years, we expect to see more and better bionic limbs, hearts, and other
organs; drugs that prevent disease rather than merely treating symptoms; and
body monitors that warn of impending trouble. These all will reduce hospital
stays.
Outside the United States
Expect also the first broadly effective treatments for
viral diseases, experimental regeneration of lost or damaged human tissues, and
effective ways to prevent and correct obesity.
By 2025, the first nanotechnology-based medical
therapies should reach clinical use. Microscopic machines will monitor our
internal processes, remove cholesterol plaques from artery walls, and destroy
cancer cells before they have a chance to form a tumor.
Forecasting International believes that cloning and
related methods will be accepted for the treatment of disease, though not to
produce identical human beings.
Even without dramatic advances in life extension, Baby
Boomers are likely to live much longer, and in better health, than anyone now
expects. However, this trend could be sidetracked by the current epidemic of
obesity, which threatens to raise rates of hypertension, diabetes, heart
disease, and arthritis among Boomers if a cure is not found quickly enough.
However, a significant extension of
healthy, vigorous life—to around 115 or 120 years as a first step—now seems
more likely than no extension at all. The most significant question remaining,
other than the scientific details, is whether it will arrive in time for the
Baby Boom generation to benefit or will be limited to their children and
descendents.
High development and production costs for designer
pharmaceuticals, computerized monitors, and artificial organs will continue to
push up the cost of health care far more rapidly than the general inflation
rate. Much of these expenses will be passed on to Medicare and other
third-party payers. Severe personnel shortages can be expected in high-tech
medical specialties, in addition to the continuing deficit of nurses.
A growing movement to remove barriers to stem-cell
research in the United
States America
Implications for
Hospitality and Travel: This trend is responsible for the
growing number of older, fitter seniors who remain able not only to travel, but
to participate in relatively vigorous activities at their destination. Their
numbers will grow rapidly as the Baby Boom generation reaches their retirement
years. Accommodating the needs of healthy seniors will be a major priority for
the hospitality and travel industry in the coming decades.
This trend also is a major source of medical tourism, in
which travelers combine a vacation with low-cost, high-quality medical care in
places such as India , Thailand , South
Africa , or Eastern Europe .
Medical tourism will bring India
6. The physical culture and
personal-health movements are improving health in much of the world, but they
are far from universal.
During the 1990s,
health in the United States Europe .
For example, a recent poll found that two-thirds of Britons now spend more to
maintain a healthy lifestyle than they did a decade ago, and three out of four
say they enjoy leading a healthy lifestyle. Unfortunately, much of the developing
world still worries more about eating enough than about eating well.
Assessment: This trend
always seems a case of two steps forward, at least one step back. We expect it
to continue for at least the next generation.
Implications: As the
nutrition and wellness movements spread, they will further improve the health
of the elderly. Better health in later life will make us still more conscious
of our appearance and physical condition. Thus, health clubs will continue to
boom, and some will specialize in the needs of older fitness buffs.
Diet, fitness, stress control, and
wellness programs will prosper. States will continue to mandate insurance
coverage of mammography. By 2012, they will begin to require coverage of
sigmoidoscopy and colonoscopy. By 2015,Congress will add coverage of many
preventive-care activities to Medicare. The cost of health care for American
Baby Boomers and their children could be much lower in later life than is now
believed.
However, Asia faces an
epidemic of cancer, heart disease, emphysema, and other chronic and fatal
illnesses related to health habits. Like tobacco companies, producers of snack
foods, liquor, and other unhealthy products will increasingly target markets in
developing countries where this trend has yet to be felt. Continuing health
improvements in the industrialized world will be accompanied by a dramatic rise
in heart disease, diabetes, cancer, and other such “lifestyle” disorders in the
developing lands. Chronic diseases related to obesity burden national economies
and could thwart economic progress in developing countries.
Implications for
Hospitality and Travel: Most cruise lines, high-end hotels,
and resorts already have adapted to their guests’ wish for nutritious,
low-calorie meals, exercise facilities, and tobacco-free areas, particularly in
the United States
This trend also means that hospitality and travel
operators will be receiving more guests who are older, wealthier, and fitter,
still able to indulge in vigorous activities that their counterparts of an
earlier era would not have considered.
Societal Trends
7. Societal
values are changing rapidly.
Industrialization
raises educational levels, changes attitudes toward authority, reduces
fertility, alters gender roles, and encourages broader political participation.
This process is just beginning throughout the developing world. Witness the
growing literacy, declining fertility, and broad voter turnout seen in India
Assessment: This trend
will continue for at least the next two decades in the industrialized lands and
two generations in the developing world.
Implications: The growing influence of the post-BabyBoom generations
will tend to homogenize basic attitudes throughout the world, because
Generation Xers and especially the Millennials around the globe have more in
common with each other than with their parents.
The highly polarized political environment that has
plagued the United States
As national security concerns have
begun to lose their immediacy, family issues are regaining their significance
in American society: long-term health care, day care, early childhood
education, antidrug campaigns, and the environment.
Concerns about health care, education, and the
environment already are shaping the 2008 presidential campaign.
Demand for greater accountability and transparency in
business will be crucial for countries that wish to attract international
investors.
Implications for
Hospitality and Travel:
Vacations also are becoming more active and participatory, as tourists become
less interested in “go-and-see” and more eager to go-and-do. This is the trend
behind the growth of adventure tourism and ecology-oriented travel.
The trend is toward extreme quality, and convenience.
Customers want constant pampering, luxurious accommodations, and fresh meals
that seem like labors of love—all at a price that will not wound the consumer’s
conscience.
“Authenticity” is another key
value. Tourists who go to see other lands, rather than surf their beaches, want
to find unique natural and cultural features that survive as close as possible
to their original form. Travel experiences that remind guests of Navajo Indian
blankets with “Made in China
8. Privacy, once a defining right for Americans, is dying quickly.
Internet
communications, a basic part of life for many people, are nearly impossible to
protect against interception, and governments around the world are working to
ensure their unfettered access to them. Corporate databases are collecting and
marketing data on individual credit-worthiness, incomes, spending patterns,
brand choices, medical conditions, and lifestyles. While privacy regulations
bar distribution of much personal information in the European Union,
restrictions in the United
States
Assessment: Pessimists
could say that privacy already is a thing of the past; society is merely coming
to recognize its loss. We believe that enough effective privacy survives
outside the most authoritarian countries to justify noting its continued
erosion. However, this trend could easily reach its logical conclusion within
ten years.
Implications: In the future, privacy is likely to be
defined, not by the ability to keep information truly secret, but by the legal
power to restrict its distribution. Even this limited form of privacy will be
eroded as both government and private organizations find legal justification
for their interest in personal information. Once access is granted to any type
of information, it is unlikely ever to be rescinded.
Most surveillance provisions of the USA Patriot Act will
survive, even if the law itself is repealed or modified.
In the absence of a major terrorist event, most
Americans will continue to consider privacy a “right,” and privacy-related
lawsuits are likely to proliferate as more people feel violated or
inconvenienced by surveillance. However, courts will be unsympathetic to such
suits for so long as conservative appointees dominate the bench.
In large and medium-size cities around the world, spaces
that remain unwatched by video cameras will continue to shrink.
Growing numbers of companies, and
even private citizens, will encrypt their computer data.
The number of criminal cases based on surveillance will
grow rapidly in countries with the required technological sophistication and
infrastructure.
Private citizens increasingly will use similar
technologies to watch over government abuse, as in cases where bystanders have
recorded police misconduct with their cell-phone cameras.
Implications for
Hospitality and Travel:
Hospitality and travel operators are likely to find themselves facing more
demands to watch for suspicious activities in travel destinations, or even to
provide security agencies with information about their guests.
9. Time is
becoming the world’s most precious commodity.
In
the United States Britain China India
are beginning to report the same job-related stresses, particularly when they
work on U.S.
Assessment: This trend
is likely to grow as changing technologies add the need for lifelong study to
the many commitments that compete for the average worker’s time. As it matures
in the United States China and India
Implications: Time pressures will grow even more intense as
companies squeeze even more productivity from their existing workforce rather
than hiring new people in the face of the current global recession.
Stress-related problems affecting employee morale and
wellness will continue to grow. Companies must help employees balance their
time at work with their family lives and need for leisure. This may reduce
short-term profits but will aid profitability in the long run.
As time for shopping continues to evaporate, Internet
and mail-order marketers will have a growing advantage over traditional stores.
That 64 percent said they were never late and were intolerant of other people’s
tardiness suggests a new cultural challenge to the traditional Chinese concept
of a leisurely existence.
Implications for
Hospitality and Travel:
Work pressure is eroding vacation time throughout the industrialized world.
One-third of Americans take 50 percent or less of the vacation time their jobs
theoretically allow. In Britain Japan
For those with little time, but
adequate funds, multiple, shorter vacations spread throughout the year will
continue to replace the traditional two-week vacation.
For the most well-off travelers, time pressure is a
strong incentive to use travel agents and shop for packaged tours, rather than
doing their own vacation planning. This is the one force that tends to preserve
a market niche for the minority of travel agents who survive the transition to
Internet booking. Less wealthy vacationers will continue to speed the task of
making travel arrangements and broaden their selection of affordable vacation
packages by doing their shopping on the Internet.
Anything destinations and tour operators can do to save
time for their customers will encourage repeat visits.
10. The
women’s equality movement is losing its significance, thanks largely to past
successes.
According to some,
though not all, studies, women have nearly achieved pay parity with men in the United States
This is true even in societies such as India and Japan
Assessment: This trend is valid only in
the developed lands. In the developing world, the movement toward women’s
equality is barely beginning. In the United States
Implications: In most of the developed
world, whatever careers remain relatively closed to women will open wide in the
years ahead. Japan
Women’s increasing entrepreneurialism will allow the
formation of entrenched “old girl” networks comparable to the men’s
relationships that once dominated business. The fraction of women entering the
American labor force has leveled off in recent years. The percentage of female
workers is likely to remain approximately stable until some force appears to
begin a new trend.
Demand for child care, universal
health coverage, and other family-oriented services will continue to grow,
particularly in the United
States United States
There is little sign of progress for women in much of
the developing world. India
Implications for hospitality
and travel: There are
relatively few implications for these industries. Hospitality and travel
operators have traditionally depended on women for much of their workforce, and
especially in critical guest-contact roles. As a result, they have been relatively
willing to pay women well and promote them into management positions comparable
to those occupied by men.
11. Despite
some xenophobic reactions to immigrants, there is growing acceptance of
diversity.
Migration is mixing
disparate peoples and forcing them to find ways to coexist peacefully and
productively. Because of this, the interaction of diverse cultures will
continue to grow, both internationally and intra-nationally, throughout much of
the world.
The Internet and other technologies
promote long-distance communication and build links between distant, and
disparate, people. The globalization of business is having a similar impact.
However, in many countries there are powerful reactions against these changes.
The growth of the German neonazi movement after unification in 1992 is one
obvious example. American hostility toward undocumented aliens may be viewed as
another.
Assessment: This trend applies most
clearly to the West, where it will continue for as long as we can foresee. In
other regions, including Japan
Implications: Groups with highly varied
customs, languages, and histories of necessity will develop ways to coexist
peacefully. Nonetheless, local conflicts will continue to erupt in societies
where xenophobia is common.
Companies will hire ever more
minority workers and will be expected to adapt to their values and needs. Much
of the burden of accommodating foreign-born residents will continue to fall on
employers, who must make room for their languages and cultures in the
workplace.
Public schools and libraries must
find more effective ways to educate this future workforce.
Implications for hospitality and travel:
Growing contact between countries and cultures in the United States and Europe
should stimulate further demand for travel to foreign lands, where visitors can
learn more about the cultures they have met, and begun to accept, at home.
Companies in all industries,
including hospitality and travel, will hire ever more minority workers and will
be expected to adapt to their values and needs. Much of the burden of
accommodating foreign-born residents will continue to fall on employers, who
must both help them adapt to their new environment and make room for their
languages and cultures in the workplace.
The more prosperous immigrant
groups, such as those from Asia and the Middle East in the U.S. United States
12.
Tourism, vacationing, and travel (especially international) continue to grow
with each passing year.
International
tourism grew by more than 6 percent in the first half of 2007, thanks in part
to global prosperity. By 2020, international tourist arrivals are expected to
reach 1.6 billion annually, up from 842 million in 2006. By 2020, according to
the World Trade Organization, 100 million Chinese will fan out across the
globe, replacing Americans, Japanese, and Germans as the world’s most numerous
travelers. Some 50 million Indian tourists will join them.
Assessment: Travel
seems to be in the DNA of the middle and upper economic classes. This trend
will continue so long as national economies continue to generate new prosperity
for the formerly poor.
Implications:
Travel will grow by at
least 5 percent per year for the foreseeable future.
The tourism industry will create 3.3 million new jobs
worldwide. Jobs dependent on tourism will comprise
nearly 14 percent of the global workforce.
Direct
employment will not grow quite as quickly, but it will be up 1.7 percent annually, to nearly 87.5 million jobs,
while indirect employment will account for some 260 million jobs around the
world.
This will bring major opportunities for national
economies in Southeast Asia and Africa , where
Chinese and Indian tourists can take quick, inexpensive vacations.
Implications for
hospitality and travel: Tourism offers growing opportunities
for out-of-the-way destinations that have not yet cashed in on the boom. This
will make it an important industry for still more developing countries.
American domestic tourism will continue to grow by an average of 2.3 percent
per year through at least 2011.
The fastest growth will be seen in pioneering regions.
Intranationally, air travel in China Europe . In the longer run, the fastest
growth, and by far the greatest, will flow to Europe and the United States , thanks to vacationers from the
newly prosperous middle classes of China
and India
The cruise segment is expected to grow at approximately
the same rate as the travel market at large. By 2015, even India and China
Cruise ships will continue to lure retirees. Some liners
are offering full-time residency—creating new options for assisted living
arrangements.
Travel is said to broaden the mind. It surely broadens
palates. As Generations X and Dot-com visit out-of-the-way destinations, they
are bringing home tastes for foreign cuisines their more traditional elders
never sampled. Over the next 20 years, trend is itself the result of other
trends: the world’s growing prosperity, the continuing heath of seniors well
into old age, and others all are building a world of habitual travelers, both
for business and for pleasure. As a result, all parts of the travel and
hospitality industry are growing rapidly. Built as it is on such a firm
foundation, this trend suggests that all segments of the hospitality and travel
industry will continue to expand well into the future.
13)
Education and training are expanding throughout society.
Rapid changes in
the job market and work-related technologies will require increased training
for almost every worker, just as knowledge turnover in the professions requires
continuous retraining and lifelong learning. Thus, a substantial portion of the
labor force will be in job retraining programs at any moment. All of the
fastest growing occupations require some form of advanced training and
continuous updating of job skills. In the next 10 years, close to 10 million
jobs will open up for professionals, executives, and technicians in the highly
skilled service occupations. In order to give those who cannot attend their
classes a chance to educate themselves, the Massachusetts Institute of
Technology has put its entire curriculum on the Internet, including class
notes, many texts, and sometimes videos of classroom lectures. Other
institutions are following suit.
Assessment: This is
another trend at the beginning of its life.
Implications: Over the
next two decades, the growing demand for education and training is likely to
transform our working lives and educational systems around the world. In order
to keep up with growing demands for education, schools will train both children
and adults around the clock.
The academic day will stretch to seven hours for
children so as to enable students to compete with their peers in other
countries, who already devote much more of their time to learning, with
predictable results.
Adults will use much of their remaining free time to
prepare for their next job. In knowledge-based economies, a region’s growth
prospects depend on its ability to generate and use innovation. This correlates
roughly with the number of collegeeducated adults living there. Throughout the
industrialized countries, this gives cities an advantage over rural and
suburban areas. It is one reason upwardly mobile adults tend to move to the
cities.
Skills are the most important factor in economic success
today. Unfortunately, the people who need them most, the poor and unemployed,
cannot afford schooling and therefore are least able to obtain them. Helping
people overcome this disadvantage is a natural role for government.
As the digital divide is erased and minority and
low-income households buy computers and log onto the Internet, groups now
disadvantaged will be increasingly able to educate and train themselves for
high-tech careers.
Even the smallest businesses must learn to see employee
training as an investment, rather than an expense. Motorola estimates that it
reaps $30 in profits for each dollar it spends on training. Both management and
employees must get used to the idea of lifelong learning. It will become a
significant part of work life at all levels.
Implications for
hospitality and travel: Hotels and restaurants are likely to
find this trend particularly difficult to cope with. Both need large numbers of
relatively unskilled workers for both maintenance tasks and customer contact.
Yet they have few opportunities to provide the kind of generally applicable
training that most entry-level workers have come to recognize as the key to a
better future. This is likely to make it difficult to compete with other
industries for young, low-wage workers. Creating learning opportunities for
young job seekers or finding some other way to motivate them will be a
difficult challenge for the hospitality and travel industries, but this is a
problem they urgently need to solve.
14.
Advanced communications technologies are changing the way we work and live.
Telecommuting is
growing rapidly, thanks largely to e-mail and other high-tech forms of
communication. About 80 percent of companies worldwide now have employees who
work at home, up from 54 percent in 2003. The number of telecommuters in the United States
However,
Millennials already have abandoned e-mail for most purposes, instead using
instant messaging and social-network Web sites to communicate with their peers.
These and other new technologies, such as podcasting, are building communities
nearly as complex and involved as those existing wholly in the real world.
Assessment: Again, this
trend has only just begun.
Implications: E-mail
promised to speed business. Instead, it absorbs more time than busy executives
can afford to lose. Expect the nascent reaction against e-mail to grow as many
people eliminate mailing lists, demand precise e-communications rather than
open-ended conversation, and schedule only brief periods for dealing with mail.
Instant messaging is likely to be even more destructive of time for the
under-thirty set.
However, e-mail is a major contributor to globalization
and outsourcing, because it eliminates many of the obstacles of doing business
across long distances and many time zones. Unfortunately, e-mail and other
modern communications techniques also have made possible a variety of crimes,
from online fraud to some forms of identity theft.
They also make it virtually impossible to retract
ill-considered statements or embarrassing online activities. Once something
exists on the Internet, it is all but immortal and nearly impossible to hide.
Implications for
hospitality and travel: All the benefits and evils of e-mail,
instant messaging, and other communications technologies apply as much to
hospitality and travel as to other industries. They may be particularly
significant for both large, multinational operators, who would find it
difficult to coordinate their activities across time zones without rapid
communications, and the smallest destinations, which could not compete
effectively for customers in the industrialized lands without access to the
Internet.
GENERATIONAL & FAMILY TRENDS
15. Family
structures are becoming more diverse.
In periods of economic difficulty, children and
grandchildren move back in with parents and grandparents to save on living
expenses. Many bring their own children with them. In the United States United States United States
Same-sex households also are gaining new acceptance. At
least five American states now permit same-sex marriage or have enacted
domestic-partnership laws that provide similar protections. In this, they join
such countries as Denmark , Germany , the Czech
Republic , the United
Kingdom , and most recently Switzerland
Many grandparents are raising their grandchildren
because drugs and AIDS have left the middle generation either unable or
unavailable to care for their children. This trend is strongest in sub-Saharan Africa , where there will be 25 million AIDS orphans by
2010.
Assessment: This trend
will remain in effect for at least a generation in the United States
Implications: Where many
European countries have largely adjusted to this trend, the United States
Tax and welfare policies need adjustment to cope with
families in which heads of households are retired or unable to work. Policies
also need modification for those who receive Social Security and work to
support an extended family.
In the United
States
Implications for
hospitality and travel: Gays, lesbians, singles, single
parents, and multigenerational families all have become lucrative markets for
specialty cruises, group tours, and other niche services. They can only grow
increasingly significant in the years ahead.
Throughout the 1990s—effectively, their entire adult
lives— Generation Xers, Dot-coms, and Millennials knew only good economic
times. The economic downturn at the turn of the century seemed to them a
confusing aberration rather than a predictable part of the business cycle. The
current global recession is a frightening wake-up call. Yet, most expect to see
growing hardship on a national level, but they both want and expect prosperity
for themselves. In the United
States
Assessment: This trend
appeared with the Baby Boom generation and has strengthened with the later
cohorts. It will be interesting to see what develops among the children of the
Millennials, something we find difficult to predict with any confidence.
Implications: Disappointed
ambitions will be a major source of political unrest in the United States
Entrepreneurialism will be a global trend, as members of
Generation X and the Millennials throughout the world tend to share values.
Generation X and Millennial entrepreneurs are largely responsible for the
current economic growth in India
and China India China , the
democratic fervor that spawned Tiananmen Square
has been replaced by capitalist entrepreneurialism.
If younger-generation workers find their ambitions
thwarted, they will create growing pressure for economic and social reform. If
change does not come fast enough in the developing world, disappointed
expectations will raise the number of young people who emigrate to the
developed lands. In the United States, pressure will grow to provide more, and
less burdensome, economic assistance to qualified high school graduates who
cannot afford to go on to college.
Pressure also will grow to make sure that all American
students have access to an education capable of preparing them for college or a
rewarding career.
Implications for
hospitality and travel: Young people concerned with economic
success may be even less willing to accept entry-level jobs, yet under-equipped
to take on more demanding roles. This is likely to increase job turnover, even
in non-menial positions. The most important asset for motivating and keeping
these potential workers will be a strong training program that gives them a
clear path for advancement. Unfortunately, this may be difficult to provide.
17.
Generation X, the Dot-Coms, and the Millennials are gaining social and
organizational influence.
Members
of each group—ranging from nearly 50 to the 20-somethings—have much more in
common with their peers than with their parents. Their values and concerns are
remarkably uniform throughout the world. Socially and in business, they are
nearly color-blind and gender-blind. Generation X is starting new businesses at
an unprecedented rate, and the Millennial generation is proving to be even more
business-oriented, caring for little but the bottom line. They will work for
others, but only on their own terms.
Generation
X and the Millennials thrive on challenge, opportunity, and training—whatever
will best prepare them for their next career move. Cash is just the beginning
of what they expect. Employers will have to adjust their policies and practices
to the values of these new and different generations, including finding new
ways to motivate and reward them.
However,
they also have a powerful commitment to society. Gen Xers are mainstays of
“voluntourism,” spending part of their vacations on volunteer work. In a recent
survey, 60 percent of respondents said they would be interested in doing
scientific or environmental work while on vacation. Even more would be willing
to teach English or another academic subject.
Assessment: As trends
go, this is an evergreen. In ten years or so, we will simply add the next new
generation to the list.
Implications: In values,
cultural norms, political issues, and many other ways, this change of
generations will be every bit as transforming as the transition from the World
War II generation to the Baby Boomers.
Employers will have to adjust virtually all of their
policies and practices to the values of these new and different generations,
including finding new ways to motivate and reward them. Generation X and the
Millennials thrive on challenge, opportunity, and training—whatever will best
prepare them for their next career move. Cash is just the beginning of what
they expect.
For these generations, lifelong learning is nothing new;
it’s just the way life is. Companies that can provide diverse, cuttingedge
training will have a strong recruiting advantage over competitors that offer
fewer opportunities to improve their skills and knowledge base.
Generations X and Millennial are well equipped for work
in a high-tech world, but they have little interest in their employers’ needs.
They have a powerful urge to do things their own way. As both customers and
employees, they will demand even more advanced telecommunications and
Internet-based transactions.
Implications for
hospitality and travel: These generations have hard noses.
Young business travelers may put up with delays when a massive snow storm
arrives as they were ready to leave. They won’t like waiting for hours because
the airport’s departure schedule is overbooked. Scheduling problems, faulty
service, and other down-checks that today’s consumers would accept with minor
grumbling will have to be fixed, or tomorrow’s travelers will plaster their
disgust all over the Internet.
Millennials especially can be demanding. When they have
a problem at an airline, they do not just bother the people at the airport
ticket desk. They grab their cell phones and call or text the frequent flier
department to apply pressure for a favorable resolution. Satisfying such
customers will be a constant challenge. We have seen them arrive at a hotel
without a reservation only to find that no rooms are available. Rather than
accepting the situation, they called the chain’s frequent-visitor program to
complain and ask whether a room might be available after all.
These generations will have no problem spending online
sums that would have stopped their parents cold. They will not accept obstacles
to their habit of shopping online and clicking “Buy” the instant their decision
is made.
This is especially important for the cruise market. If
one cruise line is too stodgy to enable online booking—and stodgy, not
exclusive, is how they will be perceived—then a more up-to-date operator will
get their business.
Baby Boomers rebelled in the early-‘60s, then adopted
their parents’ materialism and took it to whole new levels. Generation X, and
particularly the Dot-coms and Millennials, have taken another path. They enjoy
a Manhattan
The new generations mean changes for restaurants as
well. Although younger travelers are bringing home tastes for new cuisines, it
may not be the foods of Uruguay
or Nepal Algeria
The new generations could add a few points to the growth
rate for hospitality and travel. They are enthusiastic travelers, willing to
drop everything when a friend suggests an adventure. This may not make them the
ideal employees by traditional standards, but it does make them great
customers.
Expect major growth in eco-tourism and “voluntourism,”
thanks to under-40 vacationers.
18. Two-income couples are becoming the norm in most of the industrialized
lands, although in the U.S.
The percentage of working-age women who are employed or
are actively looking for work has grown steadily throughout the industrialized
world. In the United States Japan
In the United
States
Assessment: In the
industrialized nations, this trend has just about played out, as the number of
two-income households has begun to stabilize. However, it will be a growing
force in India
Implications: This
emphasis on work is one big reason the richest 25 to 50 percent of the U.S.
Demand for on-the-job child care, extended parental
leave, and other family-oriented benefits can only grow. In the long run, this
could erode the profitability of some American companies, unless it is matched
by an equal growth in productivity. This also promotes self-employment and
entrepreneurialism, as one family member’s salary can tide them over while the
other works to establish a new business.
Expect to see many families that usually have two
incomes, but have frequent intervals in which one member takes a sabbatical or goes
back to school to prepare for another career. As information technologies
render former occupations obsolete, this will become the new norm.
Implications for
hospitality and travel: Two-career couples can afford to eat
out often, take frequent short vacations, and buy new cars and other such
goods. And they feel they deserve whatever luxuries they can afford. This is
quickly expanding the market for travel and leisure activities. It will
continue to skew the travel and hospitality markets away from traditional
two-week vacations and toward three-day weekend getaways, “cruises to nowhere,”
and other forms of short-term pampering for pressured couples in need of a
break.
ECONOMIC TRENDS
19. The
economy of the developed world is growing steadily, with only brief
interruptions.
When the United States United States
Looking abroad, we can see effects
of America China ,
Australia , India , Japan ,
and Russia
Throughout the world, governments
are scrambling to shore up lending institutions, stem the tide of foreclosures,
restore the flow of credit, and provide jobs for the newly unemployed. These
efforts will continue through 2009.
At that point, global economic growth
will resume its accustomed rate, a bit more than 5 percent per year as of 2007.
Assessment: These
trends have been revised many times since they were first codified in the late
1980s. Some trends have fallen off the list as they matured or as circumstances
came along to change them. Others have been added as they were recognized. This
trend has remained a constant, and with each revision its effective period has
been extended. To invalidate this trend would take a catastrophe on the order
of the loss of Middle Eastern oil from the Western economies. No such dramatic
reversal of global fortune can be foreseen.
Implications: New growth
among all these trading partners should create a “benevolent cycle,” in which
the health of each partner helps to ensure the continued health of the rest at
least through 2014. According to the World Bank, global growth is expected
should come in at 2.5 percent in 2008, but only 0.9 percent in 2009, rebounding
to 3 percent in 2010.
Any interruptions in economic growth should be
relatively short-lived. By 2012 or so, India
will expand faster than any other market in the world, with China
In the long run, the newly capitalist lands of the
former Soviet Union should be among the fastest growing new markets,
particularly if the oil industries of Kazakhstan and its neighbors, Kyrgyzstan
and Uzbekistan, can be developed promptly. Labor markets will remain tight, particularly
in skilled fields. This calls for new creativity in recruiting, benefits, and
perks, especially profit sharing. This hypercompetitive business environment
demands new emphasis on rewarding speed, creativity, and innovation within the
workforce.
Implications for
hospitality and travel: American business will be cutting back
ruthlessly in 2008 and early 2009, allowing only the most necessary trips. All
but the most comfortable vacationers will stay close to home until they are
convinced the recession is over and their jobs are secure. We expect to see air
travel drop by 15 percent or more in 2008 and recover slowly through 2010. At
the same time, consumers will be cutting back from high-end hotels to
mid-priced chains and from mid-priced to economy; eating at home or at
fast-food outlets rather than pricier restaurants; and—for those who still
vacation abroad—favoring cheap destinations such as Mexico, Portugal, and
Eastern Europe over Paris and London.
Only the high end of the cruise market will be relatively
unaffected: The wealthy remain able to pay for luxuries even in the worst of
economic times, and 2008 will be as mild a downturn as the U.S.
The flip side is that the euro and other world
currencies buy much more in the States than they do at home. Europeans can hop
on a plane for New York or Miami, shop ‘til they drop— their packages, at
least—enjoy a few nights out, and return home carrying loot they could not have
paid for at local prices. Many of them are doing so. These bargain hunters are
bringing needed profits to the American hospitality and travel industry. At the
same time, they are helping to maintain demand in the cruise market and in
traditional European destinations.
By late 2009, most of these aberrations will pass, and
Americans again will be contributing their accustomed share to the global
hospitality and travel markets.
As formerly poor residents of China
and India
20. The
global economy is growing more integrated.
By some counts, only half of the world’s one hundred
largest economies are nation-states. The rest are multinational corporations.
In the European Union, relaxation of border and capital controls and the
adoption of a common currency and uniform product standards continue to make it
easier for companies to distribute products and support functions throughout
the Continent. The Internet also brings manufacturers effectively closer to
remote suppliers and customers. Companies are increasingly farming out
high-cost, low-payoff secondary functions to suppliers, service firms, and
consultants, many of them located in other countries. Companies in high-wage
countries also are outsourcing management and service jobs to low-wage
countries. An estimated 3.3 million U.S.
jobs are expected to migrate to India
and China
Assessment: This trend
will continue for at least the next two decades.
Implications: The growth
of e-commerce enables businesses to shop globally for the cheapest raw
materials and supplies. In niche markets, the Internet also makes it possible
for small companies to compete with giants worldwide with relatively little
investment. This has brought new opportunities for quality-control problems and
fraudulent cost-cutting by suppliers, as seen in the recent spate of tainted
food and other products coming from China
The Net also has created a generation of “e-preneurs”
whose businesses exist largely on the Internet, with production, fulfillment,
and other functions all outsourced to specialty firms.
Demand will continue to grow for employee incentives
suited to other cultures, aid to executives going overseas, and the many other
aspects of doing business in foreign countries.
However, rising demand for foreign-language training is
likely to be a temporary phenomenon, as more countries adopt English as part of
their basic school curricula.
Western companies may have to accept that proprietary
information will be shared not just with their immediate partners in Asian
joint ventures, but also with other members of the partners’ trading
conglomerates. In high technology and aerospace, that may expose companies to
extra scrutiny due to national-security concerns.
Establishing overseas branches mitigates this concern by
keeping trade secrets within the company, even while gaining the benefits of
cheaper foreign labor and other resources. Economic ties can give richer, more
powerful countries considerable influence over their junior partners. Thus far,
China
Implications for
hospitality and travel: Online B2B sales and services will
play a growing role in minimizing costs for all hospitality and travel
businesses. For the same reason, some out-of-sight functions such as accounting
may increasingly be outsourced to services in India ,
China , and Eastern
Europe . However, most customer service operations will remain in
the firm’s home country, where quality is easier to oversee.
21.
Consumerism is still growing.
Consumer advocacy
agencies and organizations are proliferating, promoting improved content
labels, warning notices, nutrition data, and the like on packaging, TV, the
Internet, and even restaurant menus. On the Internet, shoppers themselves have
access to a growing universe of information about pricing, services, delivery
time, and customer satisfaction. Japan ,
China , and other markets are
beginning the same revolution that has replaced America
Assessment: This trend
seems likely to remain healthy for the at least the next 15 years.
Implications: Consumer
advocacy agencies and organizations will continue to proliferate, promoting
improved content labels, warning notices, nutrition data, and the like on
packaging, TV, the Internet, and even restaurant menus.
Europe, Japan ,
China , and other markets are
undergoing the same revolution that has replaced America
However, the cultural and political power of farmers and
small shop owners has slowed this trend in some areas, particularly in Japan
Thanks to recent contamination of food imported from China
As prices fall to commodity levels and online stores can
list virtually every product and brand in their industry without significant
overhead, service is the only field left in which marketers on and off the
Internet can compete effectively. Branded items with good reputations are even
more important for developing repeat business.
Consumer debt may be an even greater problem for
Millennials than it has been for their elders.
Implications for
hospitality and travel: Fliers increasingly will expect
quality service to go with their cheap seats. Airlines therefore will have to
do a better job of getting their planes into the air on time, even if that
means scheduling them for odd hours. Meals can remain optional, but if
customers choose to buy them, they had better be good. And so on. We believe
the consumerism of the past will prove to have been no more than prologue for
the greater demands to come.
A good example is the new Terminal 5 at Heathrow, where
nearly everything is bigger, better, and more luxurious. Check-in kiosks
scattered throughout the spacious facility mean that waiting lines are no more
than two or three deep. There are six lounges, a luxurious travel spa, more
bathrooms than in older terminals, even showers for travelers.
There are 22 places to eat, from simple snack shops to
high-end restaurants. There are designer clothing stores, a luggage shop and a
luxury leather store, a computer shop, bookstore, six newsstands, and even a
Harrod’s. When Terminal 5 is fully operational, 80 percent of passengers at
Heathrow will pass through it. Chances are that they will be glad to do so.
Travelers are likely to be happier still when other air terminals are as
convenient and comfortable as Terminal 5.
Cruise lines increasingly face similar pressures. The
prestige-oriented days of booking through a travel agent are coming to an end.
Today’s consumers want value and convenience when buying a cruise package just
as they do in any other form of shopping. That means picking through all the
tours that seem appealing, selecting the one that gives the best possible value
for the price, and buying it then and there.
In a networked, consumerist society, a respected brand
is any chain’s most important asset. This will be particularly significant for
hotels and restaurants. A reputation for comfortable accommodations, pleasant
surroundings, and top-notch service requires constant effort to establish and
maintain. It can be lost in moments if a disappointed customer complains in the
Internet’s many forums and chat rooms. More than ever before, quality and
service are all-important.
Consumer legislation and “bills of rights” are no more
than reminders of business basics. The travel and hospitality industries exist
to serve their guests. Companies that do it brilliantly will continue to
prosper. Those that do not will find many new, fast-growing competitors eager
to build a customer base at their expense. The essence of a consumer society
turns out to be intense, endless competition to be the best in the industry.
22.
Research and development play a growing role in the world economy.
Total
U.S. outlays on R&D have grown steadily in the past three decades. In 2006,
the United States spent about $330 billion on R&D. China has taken second
place in the world’s R&D spending, with a budget estimate at $136 billion
in 2006. China says it will raise its R&D spending from about 1.23 percent
of GDP in 2004 to 2.5 percent in 2020. R&D outlays in Japan have risen
almost continuously, to nearly 3 percent of GDP, some $130 billion in 2006.
R&D spending in the European Union (EU-15) amounted to $230 billion in
2006, about 1.9 percent of GDP. The European Commission has set a goal of
raising R&D spending to 3 percent of GDP by 2010. In Russia, R&D
funding is roughly 1.5 percent of GDP, up from just 0.7 percent in 1997; this
amounted to about $26.25 billion in 2006. These figures do not include whatever
clandestine military research escapes notice.
Assessment: This trend
is stabilizing as developed nations, particularly the United States, devote
more of their resources to less productive activities. We believe this is a
temporary phenomenon. The trend will regain momentum in the years ahead. It
will not fall off this list before the middle of this century.
Implications: This is a
significant factor in the acceleration of technological change. The demand for
scientists, engineers, and technicians will continue to grow, particularly in
fields where research promises an immediate business payoff.
Low-wage countries such as China once took only low-wage
jobs from advanced industrialized countries such as the United States. Today
higher-paid jobs in science, technology, and the professions also are at risk.
Countries like India, China, and Russia once suffered a
brain drain as those with high-tech skills emigrated to highdemand, high-wage
destinations. Today, many students and professionals spend time in the West to
learn cutting-edge skills, and then return to their native lands to work, start
companies, and teach. This promotes the growth of some developing countries
while reducing the competitive advantages of the developed world.
Implications for hospitality
and travel: Trend 22 is responsible for much of
the acceleration in technological advances seen in Trend 34.
23.
Services are the fastest-growing sector of the global economy.
Service
jobs have replaced many of the well-paid positions lost in manufacturing,
transportation, and agriculture. Most of these new jobs, often part time, pay
half the wages of manufacturing jobs. On the other hand, computer-related
service jobs pay much more than the minimum—for workers with sound education
and training. Service industries provide 79 percent of the GDP in the United
States, 77 percent in France, 74 percent in Britain, 73 percent in Japan, and
70 percent in Germany. In each case, services are growing rapidly, other
sectors less so, and they provide substantial majorities of private non-farm
employment. Production and less-skilled jobs, in contrast, are disappearing. By
2014, the United States is expected to have more chief executives than machine
tool operators, more lawyers than farm workers.
Assessment: There is no foreseeable end to this trend.
Implications: In the
United States, the growth of service industries is helping to deplete the
middle class, as well-paid jobs in manufacturing are replaced by relatively
ill-paid service positions, leaving a country of “have-a-lots” and many
“havenots,” but relatively few “have-enoughs.”
Services are now beginning to compete globally, just as
manufacturing industries have done over the last 20 years. By creating
competitive pressure on wages in the industrialized lands, this trend will help
to keep inflation in check.
The growth of international business will act as a
stabilizing force in world affairs, as most countries find that conflict is
unacceptably hard on the bottom line.
Implications for
hospitality and travel: This trend brings the opportunity to
spin off peripheral functions to service firms that specialize in them. For
example, there is no longer any reason for a major hotel to do its own laundry,
wash its own cutlery, or even operate its own food service. All these functions
can be farmed out to other companies and treated as an operating expense
comparable to utilities. Many more such opportunities will appear in the years
ahead, bringing still greater efficiency to the industries’ core
customer-service functions.
24. Women’s
salaries are approaching equality with men’s—but very slowly.
In the 1980s and
‘90s, women’s overall income in the United States was catching up with that of
their male co-workers. More recently, it has stagnated. In 1995, university
educated women earned 75.7 cents for every dollar earned by men, on average.
In 2005, it had fallen to 74.7 cents. During the same
period, lower-income women continued to gain on their male peers, though very
slowly. One reason may be that women are less interested than men in working 70
hours or more per week during their prime reproductive years, and growing
numbers have chosen to stay home and rear their children. Women also appear to
be less likely to choose and pursue a career on the basis of income. Studies
that attempt to compensate for differences in factors such as education,
occupation, experience, and union membership find much smaller income
differences than others. One reported that women receive about 91 percent as
much as men. Another held that incomes are virtually equal when measured with
appropriate rigor. Some studies also suggest that the pay gap has largely
disappeared for women in the newest cohort of workers. This would make sense,
given the nearly total gender blindness of the Millennials.
The same trend is visible in most other industrialized
countries. According to the European Commission, women on the Continent earn 15
percent less than men, on average, down from 17 percent in 1995. In Britain,
the gap was 20 percent, down from 26 percent. Japan is an exception to this
trend. The gender gap there remains near 35 percent.
Assessment: In the
United States, this trend may be in its last generation, thanks to the
gender-blind values of the Millennials. In other countries, and particularly
Japan, it may have another 30 years to run.
Implications: The fact
that women’s salaries are lagging despite higher academic achievement than men
suggests that many college-educated women may be underemployed. Whether this is
by their choice or occurs for some other reason has yet to be determined.
More new hires will be women, and they will expect both
pay and opportunities equal to those of men.
Women’s average income could exceed men’s within a
generation. College graduates enjoy a significant advantage in earnings over
peers whose education ended with high school. In the United States, some 65
percent of young men and women enroll in college after high school, but women
are more likely to graduate. About 58 percent of college graduates are women.
To the extent that experience translates as prestige and
corporate value, older women should find it easier to reach upper-management
positions. This will blaze the trail and help raise the pay scale for women
still climbing the corporate ladder.
Competition for top executive positions, once
effectively limited to men, will intensify even as the corporate ladder loses
many of its rungs.
The glass ceiling has been broken. One-fourth of upper
executives today, and nearly 20 percent of corporate board members, are women—far
more than in any previous generation. Look for more women to reach
decision-making levels in government and business.
However, the remaining obstacles to women’s advancement
may explain why women now start businesses at roughly twice the rate of men.
Implications for
hospitality and travel: This trend has fewer implications for
hospitality and travel than for most other industries. Barriers to women’s
advancement have been relatively small in hospitality and travel for many
years, and women’s pay has been much nearer to that of men in similar positions
that is common in other fields.
WORK & LABOR FORCE TRENDS
25.
Specialization continues to spread throughout industry and the professions.
For doctors,
lawyers, engineers, and other professionals, the size of the body of knowledge
required to excel in any one area precludes excellence across all areas. The
same principle applies to artisans. Witness the rise of post-and-beam
homebuilders, old-house restorers, automobile electronics technicians, and mechanics
trained to work on only one brand of car. Modern information-based
organizations increasingly depend on teams of task-focused specialists. For
hundreds of tasks, corporations increasingly turn to consultants and
contractors who specialize more and more narrowly as markets globalize and
technologies differentiate.
Assessment: This
process will continue for at least another 20 years.
Implications: In an
information age, each new level of specialization provides greater
efficiencies, reducing the cost of doing business even as it creates new
opportunities. This should continue to make global business more productive and
profitable for so long as it continues.
This trend creates endless new niche markets to be
served by small businesses and individual consultants. It also brings more
career choices, as old specialties quickly become obsolete, but new ones appear
even more rapidly.
Implications for
hospitality and travel: Again, the Implications for these industries parallel the common experience:
greater business efficiency and the rapid proliferation of small businesses
designed to provide the best possible service to niche markets.
26. The
traditional age of retirement is losing its significance.
Organization for
Economic Co-operation and Development (OECD) data show that people are retiring
earlier in the developed world. In 2004, less than 60 percent of the 54 to 60
age group in the OECD countries had a job. This varied from 50 percent in the
earliest-retiring nations to 76 percent in the latest. According to Pew
Research, as of 2006 the average American worker planned to retire at age 61
but actually did so at 57.8. These “retirements” may not be permanent.
Americans in particular often return to work and delay complete retirement for
several years. About one in five people, and 40 percent of seniors, say they
plan to continue working until they die.
Assessment: In the
United States, this trend will be complete in a generation. Where social safety
nets are stronger, it is likely to continue through at least 2030.
Implications: Given the
widespread shortage of retirement savings and investments, most Americans will
delay retirement until they can no longer work, whether they wish to or not.
Since the penalty on earnings of Social Security
recipients has been rescinded, more American retirees will return to work, and
those not yet retired will be more likely to remain on the job.
This trend will spread to other industrialized countries
as the retirement-age population grows and the number of active workers to support
them declines.
People increasingly will work at one career, “retire”
for a while (perhaps to travel) when they can afford it, return to school,
begin another career, and so on in endless variations.
True retirement, a permanent end to work, will be
delayed until very late in life.
By 2015, we expect the average retirement age in the
United States to be delayed well into the 70s. Benefits may also continue their
decline, and they will be given based on need, rather than as an entitlement.
Even though the Social Security program has been the “third rail” of American
politics, within five years, the retirement age will be moved back at least to
70 for early retirement and full benefits at 72.
Retirees will act as technical aides to teachers,
especially in the sciences. In the long run, it may prove impossible to
maintain the tradition of retirement, except through personal savings and
investment.
Implications for
hospitality and travel: Divide seniors into three groups:
• Those who can afford to do so are likely to retire
early. They will spend much of their time traveling, eating out, and otherwise
enjoying life. They will be a prime source of business for high-end hotels,
resorts, and cruise lines.
• Those who are not quite so well-to-do but still can retire
on time also will travel regularly but are likely to economize on
accommodations, generally taking a trip to Orlando, rather than Paris, or a
relatively brief Caribbean cruise, rather than a round-the-world trip.
• There will be many as well who really cannot afford to
retire completely. These 0lder workers will partially make up for any future
shortages of entry-level employees. The chance to remain in the workplace will
reduce the risk of poverty for many elderly people who otherwise would have had
to depend on Social Security to get by.
27. Second
and third careers are becoming common, as more people make mid-life changes in
occupation.
Americans born at
the tail end of the Baby Boom (1956 to 1964) held an average of ten jobs
between ages 18 and 38, according to the U.S. Bureau of Labor Statistics. These
job jumpers continue with short-duration jobs even as they approach middle age:
70 percent of the jobs they took between ages 33 and 39 ended within five
years. In the United States, 23 percent of workers surveyed in 2004 reported
being dissatisfied with their careers and considering a change of occupation.
Seventy percent of Irish workers surveyed in 2004 also said they hoped to make
a career change soon. Women and the 26-to-35 age group were most likely to
report the desire to change careers. "Personal fulfillment" was the
biggest reason cited for making the change.
Assessment: This trend
will not disappear unless the pace of technological change slows
dramatically—or we reach the so-called “singularity,” when man’s inventions
grow so intelligent themselves that they entirely displace human beings from
the workforce.
Implications: Boomers and
their children will have not just two or three careers, but five or six, as
dying industries are replaced by new opportunities.
“Earn while you learn” takes on new meaning: Most people
will have to study for their next occupation, even as they pursue their current
career.
In many two-earner couples, one member or the other will
often take a sabbatical to prepare for a new career.
Self-employment is becoming an increasingly attractive
option, as being your own boss makes it easier to set aside time for career
development. This is especially true for Generation Xers and Millennials.
Growing numbers of retirees will start their own businesses, both to keep
occupied and to supplement their meager savings with new income. This trend has
already begun. Retirement plans must be revised so that workers can transfer
medical and pension benefits from one career to the next—a change that has long
been needed. We believe this will occur soon after the Baby Boom generation
begins to retire in 2011.
Implications for
hospitality and travel: These industries have obvious appeal
for mid-life career changers. These first-time entrepreneurs start a
substantial fraction of new one-off restaurants, travel destinations,
bed-and-breakfasts, and business services. They will continue to be a source of
creativity for hospitality and travel.
28. The
work ethic is vanishing.
More than one-third of U.S. workers reported calling in
sick when they were not ill at least once in the past 12 months, and 10 percent
had done so at least three times, according to a 2004 survey by
CareerBuilder.com. Job security and high pay are not the motivators they once
were, because social mobility is high and people seek job fulfillment. Some 48
percent of those responding in a recent Louis Harris poll said they work
because it “gives a feeling of real accomplishment.” Fifty-five percent of the
top executives interviewed in the poll say that erosion of the work ethic will
have a major negative effect on corporate performance in the future.
Assessment: There is
little prospect that this will change until the children of today’s young
adults grow up to rebel against their parents’ values.
Implications: Both
employers and voters must do their best to find candidates who can be trusted,
but must expect to fail in their search. This makes safeguards against
wrongdoing, both at work and in public lives, more important than ever.
The new generation of workers cannot simply be hired and
ignored. They must be nurtured, paid well, and made to feel appreciated or they
will quickly look for a friendlier, more rewarding workplace.
Training is crucial. Without the opportunity to learn
new skills, young people will quickly find a job that can help them prepare for
the rest of their many careers.
Implications for
hospitality and travel: This trend will make it more difficult
to ensure a high level of customer service in all industries. Since this is the
core of hospitality and travel, they are likely to be hit harder than others by
any decline in their employees’ diligence.
29. Labor
unions are losing their power to secure rights for workers and to shape public
policy in regard to workplace issues.
Union membership
has been falling for the past two decades. In the United States, some 20
percent of workers were union members in 1983. In 2006, just 12.0 percent of
employed wage and salary workers were union members, down from 12.5 percent a
year earlier. In Britain, where the Thatcher government broke union power in
the 1980s, union membership has declined almost continuously, to 28.4 percent
in December 2006. In South Korea, where organized labor once was invincible, no
more than 11 percent of workers are union members. One reason for this decline
is that companies are freely seeking and finding nonunionized workers around
the world. They also contract out a growing proportion of business activities
to nonunion firms.
Assessment: In spite of
determined, and occasionally successful, recruiting efforts in formerly
non-union industries, union memberships and power will continue to decline for
the next 15 years—until organized labor is little more than a fringe
phenomenon. The trend will be reversed only if Washington and other national
governments rescind pro-business labor laws and policies enacted in the last
20-plus years.
Implications: For large
companies, this trend promises continued stability in employee wages and
benefits.
Unions eager to regain their membership will target any
substantial industry or firm with less-skilled employees to organize. This
could raise labor costs for companies that unions once would have considered
too small to organize.
In ten to 15 years, American labor unions will compete
with AARP to lead the battle for the rights of late-life workers and for secure
retirement benefits. They face an inherent conflict between the interests of
workers in what once would have been the retirement years and those of younger
members, who rightly see the elderly as having saddled them with the cost of
whatever benefits older generations enjoy. Unions’ political strength is also
diminishing and is increasingly being surpassed by powerful blocs such as AARP,
Hispanics, and African Americans. The old paradigm of unions vs. corporations
is obsolete. In today’s economy, workers negotiate alongside management,
winning shared bonuses.
Implications for
hospitality and travel: Nonunion segments of these industries
represent an appealing “market” for union organizers desperate to shore up
their memberships. Any major company in hospitality and travel can expect
unions to focus on workers who have yet to be organized.
ENERGY TRENDS
30. Despite
efforts to develop alternative sources of energy, oil consumption is still
rising rapidly.
The world used only
57 million barrels of oil per day in 1973, when the first major price shock
hit. By 2004, it was using 83 million barrels daily, according to the U.S.
Energy Information Administration. Consumption is expected to reach 97 million
barrels daily by 2015 and 118 million by 2030. Much of this increase will be
due to China, which is the second-largest user of oil in the world, and the
fastest growing.
Assessment: Nothing is
likely to reverse this trend in the next 25 years.
Implications: Oil prices
now are high enough to provide an incentive to develop new fields, such as the
Arctic National Wildlife Refuge and the deep fields under the Gulf of Mexico.
Environmentally sensitive areas will be developed using new drilling
techniques, double-walled pipelines and other precautions, that make it
possible to extract oil with less damage to the surroundings. Any prolonged
rise of oil prices to triple digits will erode support for environmental
protections in the United States, leading to widespread development of whatever
energy sources are most readily available, regardless of the long-term
consequences.
Implications for
hospitality and travel: For airlines, the rising price of oil
has become a crushing burden.
This more than any other single factor has driven the
wave of industry consolidation in the last few years. It will continue to do so
until prices stabilize.
For other hospitality and travel operators, energy costs
represent a relatively small expense—significant, but much less so than staff
paychecks and benefits. High oil prices are a problem that most of them can
live with, at least temporarily.
31.
Contrary to popular belief, the world’s confirmed oil supply is growing, not
declining.
As a result of
intensive exploration, the world’s proven oil reserves climbed steadily since
the 1980s and now hover at over 1.3 trillion barrels. Natural gas reserves
stood at about 6.2 trillion cubic feet in 2007, about 1 percent more than a
year earlier. Recent discoveries of major oil fields in Canada, Brazil, and
under the Gulf of Mexico have substantially increased the world's known oil
reserves.
Assessment: Talk of
“peak oil,” the suggestion that crude production has topped out, or soon will,
is unjustified and, in FI’s view, unjustifiable. Our best estimate is that the
world has used about one-fourth of its recoverable oil, and almost certainly no
more than one-third. This trend will remain intact until at least 2040.
Implications: Higher oil
prices should make it cost effective to develop new methods of recovering oil
from old wells. Technologies already developed could add nearly 50 percent to
the world’s recoverable oil supply.
OPEC will continue to supply most of the oil used by the
developed world. According to the U.S. Department of Energy, OPEC oil
production will grow to about 57 million barrels of oil per day by 2020.
Russia and Kazakhstan will be major suppliers if the
necessary pipelines can be completed and political uncertainties do not block
investment by Western oil companies. Russia will grow into the world’s
second-largest oil producer by 2010.
Alternative energy sources face problems with economic
viability. Barring substantial incentives, this will inhibit efforts to stem
global warming for the foreseeable future.
A generalized war in the Middle East after the United
States leaves Iraq could drastically reduce the region’s oil output. This is
unlikely, but the probable impact of such a conflict is so great that the
possibility cannot be ignored.
The spread of fundamentalist Muslim regimes with a
grudge against the West also could keep OPEC oil out of the American market. If
the United States loses access to Middle Eastern oil, it will buy even more
from Canada and Venezuela, tap the Arctic National Wildlife Reserve, and
develop the deepwater fields under the Gulf of Mexico much faster than
expected.
In a prolonged energy emergency, America also would be
likely to develop its vast reserves of oil shale, which have long been
economically viable at crude prices over $40 per barrel. New technology
reportedly makes it profitable at any price over $17 per barrel. With enough
shale oil to supply its own needs for 300 years, the United States could become
one of the world’s largest petroleum exporters.
Developing shale would devastate the environment, but
with crude oil prices in triple digits during a Mid-East war, the environment
would be considered expendable.
Implications for
hospitality and travel: There is at least some hope that oil
prices will stabilize at livable levels within the next few years.
32. When
not perturbed by greater-than-normal political or economic instability, oil
prices average around $65 per barrel.
New
energy demand from the fast-growing economies of China and India has raised the
floor that until 2004 supported oil in the $25 per barrel range. Nonetheless,
the spike in prices to nearly $150 per barrel in mid-2008 was an aberration. At
least four factors contributed to the bubble in energy prices: Perhaps 30
percent of the increase in oil prices to their June 2008 high stemmed from the
long-term decline in the value of the U.S. dollar on foreign exchange markets.
Another $10 to $15 per barrel represented a “risk premium” due to fears of
instability triggered by the Iraq war and Washington’s threats to attack Iran.
Without those two factors, $145 oil would have been $100 oil. A worldwide
shortage of refinery capacity helped to drive up the cost of gasoline, fuel
oil, and other energy products. It appears that rampant futures speculation in
the energy markets also helped to spur oil prices. None of these factors was
permanent.
Assessment: Given the
condition of the American dollar, it might be better to denominate oil prices
in euros—though this could be even more devastating for the American economy in
the event of future episodes of instability. Aside from that, the long-term
trend toward stable energy prices can only strengthen as the West reigns in
consumption and alternative energy technologies become practical.
Implications: Barring an
American invasion of Iran, oil prices of more than $100 per barrel cannot be
sustained. New refineries in Saudi Arabia and other countries scheduled to come
online by 2010 will ease the tight supply-demand balance for oil, and by then
the Iraq war should be winding down. At that point, we can expect to see oil
prices retreat gradually to around $65 per barrel. In response to high (by
American standards) gas prices, the U.S. government probably will boost
domestic oil production and refining to increase the reserve of gasoline and
heating oil. This stockpile would be ready for immediate use in case of future
price hikes. This will make it easier to negotiate with OPEC.
A key step in controlling oil prices, and an indicator
of Washington’s seriousness about doing so, would be development by the
government of at least four new refineries around the country, probably for
lease to commercial producers. To avoid problems with neighbors, the refineries
could be located on former military bases, which the government already owns.
We rate the odds at no more than 50:50.
In the long run, the United States almost certainly will
drill for oil in the Arctic National Wildlife Reserve, though efforts will be
made to minimize environmental damage. For example, drilling will take place
only in the winter, when the tundra is rock hard. This small new supply of oil
will have negligible effect on oil prices.
By 2020, the new fields under the Gulf of Mexico will
come online, putting even more pressure on oil prices.
Implications for
hospitality and travel: Air carriers are facing difficult
times as their largest single expense continues to climb. Many have added fuel
surcharges to ticket prices, but rising prices eventually make it harder to
fill seats. This puts an even greater premium on efficiency and cost-cutting.
It also is likely to trigger more cooperation among competing airlines, with
many sharing planes when passenger demand cannot fill separate flights.
Despite these and other efficiencies, we will not be
surprised if fuel expenses alone ground one or two of the weakest carriers
before the price of jet fuel stabilizes. For the rest, the worst should be over
in another two or three years.
Like the airlines, cruise operators are being forced to
adopt fuel surcharges to maintain their profit margins. This will not seriously
affect luxury cruiselines, but if oil prices remain in triple digits it could
begin to erode the family and economy cruise markets. Again, the crunch should
pass relatively soon.
For the hotel sector, energy costs are an important
expense, but far from the largest. So long as the price of oil does not go much
higher, it should have only a modest effect on the bottom line. of hotels and
other lodging facilities.
In the United States, some hotels may find that high gas
prices inhibit drive-in traffic, particularly in family-oriented markets
dependent on long-distance travel. This should be only a minor problem.
In Europe, oil shortages caused by temporary closure of
Russian pipelines could cause periodic price spikes that inhibit travel for
brief periods. We do not expect such problems to last any longer than it takes
Moscow to make its political points. By 2015 or so, Europe will have developed
other petroleum sources, making the unreliability of supplies from Russia much
less troublesome.
While no one likes paying more for gas and electricity,
high oil prices should have a relatively modest effect in the restaurant
sector, where personnel costs trump all others. The greatest danger is that the
price of gasoline will combine with other economic uncertainties to discourage
dining out. If so, the pain should ease once the American economy begins to
recover in late 2008.
At this point, consumers seem to be largely inured to
the idea of paying more for their fuel than they once expected. Americans are
cutting back temporarily while the U.S. economy is in decline, but travel will
recover quickly once GDP growth returns to positive territory. Elective travel
should be one of the most inelastic markets, declining rapidly when prices
follow costs higher. In recent years, it has proved to be much more comfortable
with rising costs than many observers might have imagined.
33. Growing competition from other energy sources also will help to limit
the price of oil. Nuclear power is growing rapidly.
In Russia, plans
call for construction of twenty-six more nuclear plants by 2030, when 25
percent or more of the nation’s electricity will be nuclear. China plans to
build thirty reactors by 2020, quadrupling its number and bringing nuclear
energy consumption from 16 billion kWh in 2000 to 142 billion kWh. Even the
United States is weighing the construction of new reactors.
For transportation, ethanol is the most useful
alternative to petroleum. Brazil already gets more than 40 percent of its fuel
for cars from ethanol made from sugar cane.
Renewable sources such as wind and solar power also are
growing rapidly, but they are unlikely ever to make up more than a small
fraction of the world’s energy supply, save in areas where natural resources
are plentiful. Iceland’s drive to develop geothermal power is one example.
Assessment: This trend
will remain in effect for at least 30 years.
Implications: Though oil
will remain the world’s most important energy resource for years to come, two or
three decades forward it should be less of a choke point in the global economy.
We should feed our stomachs before we feed our cars. Producing ethanol from
switchgrass would cut the cost of corn by 20 percent, according to the
Worldwatch Institute. This would significantly ease the global food crisis.
Solar, geothermal, wind, and wave energy will ease power
problems where these resources are most readily available, though they will
supply only a very small fraction of the world’s energy in the foreseeable
future.
Declining reliance on oil eventually could help to
reduce air and water pollution, at least in the developed world. By 2060, a
costly but pollution-free hydrogen economy may at last become practical.
Fusion power remains a distant hope. Cold fusion also
remains a long shot for practical power, but FI believes it can no longer be
discounted. If the U.S. Navy’s reports of successful experiments can be
corroborated, power plants based on the process could begin to come on line by
2030.
Implications for
hospitality and travel: Save where there is an abundance of
alternative energy resources, operators will continue to depend primarily on
oil for their power. This will render them vulnerable to oil price shocks until
a major alternative fuel source, such as fusion, becomes available.
TECHNOLOGY TRENDS
34.
Technology increasingly dominates both the economy and society.
New technologies are surpassing the previous state of
the art in all fields. Laptop computers and Internet-equipped cell phones
provide 24/7 access to e-mail and Web sites. Flexible, general-service personal
robots will appear in the home by 2015, expanding on the capabilities robotic
vacuum cleaners and lawn mowers. New materials are bringing stronger, lighter
structures that can monitor their own wear. By 2015, artificial intelligence
(AI), data mining, and virtual reality will help most organizations to
assimilate data and solve problems beyond the range of today’s computers. The
promise of nanotechnology is just being explored, but real possibilities range
from high-powered super-batteries to cell-sized health monitors. Ultimately,
speculations that we are approaching the “singularity,” the time when our
artifacts become so intelligent that they can design themselves and we cannot
understand how they work, may prove correct. At that point, humanity will be
largely a passenger in its own evolution as a technological species.
Assessment: Technologically
related changes in society and business seen over the last 20 years are just
the beginning of a trend that will accelerate at least through this century.
Implications: New
technologies should continue to improve the efficiency of many industries,
helping to keep costs under control.
However, this increased productivity has retarded United
States job creation since at least 2002. Other developed countries are likely
to feel the same effect in the future.
Technology made international outsourcing possible. It
will continue to promote outsourcing to the benefit of the recipient countries,
but to cause painful job losses in the donor lands.
New technologies often require a higher level of
education and training to use them effectively. They also provide many new
opportunities to create businesses and jobs.
Automation will continue to cut the cost of many
services and products, making it possible to reduce prices while still
improving profits. This will be critical to business survival as the Internet
continues to push the price of many products to the commodity level.
New technology also will make it easier for industry to
minimize and capture its effluent. This will be a crucial ability in the
environmentally conscious future.
In 1999, a team at the technology organization Battelle
compiled a list of the ten most strategic technological trends for the next 20
years. The list is available at the Battelle Web site at http://www.battelle.
org/SPOTLIGHT/tech_forecast/ technology2020.aspx. Key technologies for 2020, as
forecast by Battelle:
• Gene-based medical care, from custom-tailored
pharmaceuticals to cloned organs for transplantation;
• High-powered energy packages such as advanced
batteries, cheap fuel cells, and micro-generators;
• “Green integrated technology” to eliminate
manufacturing waste and make products completely recyclable;
• Omnipresent computing with computers built into
consumer products, clothing, and even implanted under the skin;
• Nanomachines measured in atoms rather than millimeters
that do everything from heating and cleaning our homes to curing cancer;
• Personalized
public transportation that integrates our cars into a coordinated transport
network, automatically picking the fastest routes and bypassing traffic jams;
• Designer foods and crops genetically engineered to
resist disease and pests and be highly nutritious;
• Intelligent goods and appliances such as telephones
with built-in directories and food packaging that tells your stove how to cook
the contents;
• Worldwide inexpensive and safe water from advanced
filtering, desalination, and perhaps even extraction from the air;
• Super senses that use implants to give us better
hearing, long-distance vision, or the ability to see in the dark.
Implications for
hospitality and travel: Air travel will benefit more, and more
immediately and directly, from new technologies than any other segment of
hospitality and travel. New safety systems over the next decade are likely to
include improved heads-up displays, en-route collision-avoidance equipment, and
automated airport routing, both in the air and on the ground.
Better sensors will tighten airport security by
recognizing explosives that slip past today’s detectors. However, this
equipment will not be installed until another Lockerbie-style bombing or a
major hijacking renews up public demand for greater safety.
These innovations will not be cheap. In-airplane safety
systems will be mandated at the company’s cost, while external equipment such
as new satellites for the GPS system will be paid for by user fees.
New materials that sense their own condition are
beginning to appear, particularly from nanotechnology research. They will be
incorporated into critical aircraft components such as engine mounts by 2020.
Soon after, skin alloys will alert mechanics to fatigue and incipient cracks.
By 2018, the first supersonic business jets will take to
the air, with 20-passenger models likely to appear around 2025. By 2030,
efficient supersonic travel will replace first-class sections on long routes
over water.
Cruise lines face changes, too. Online travel agencies
will account for only 9 percent of cruise sales in 2009, according to
PhoCusWright. That will not long be true. Over the next decade, the most
important technological development for cruise lines will be the continued
growth of online booking. Early suggestions that cruise travel was too complex
and expensive to book without human contact are fast proving to have been
wrong. Carnival, Princess, Disney, and others have set up convenient and
successful online booking systems for Net-savvy cruisers. Operators with less
efficient sites, or none at all, will find themselves at a growing competitive
disadvantage. Five years from now, the tradition of booking through a travel
agent will have vanished, save in the extreme high end of the market—and there
is room to wonder how long agents can survive to serve the luxury market after
losing the rest.
Cruise lines hoping to do well in an increasingly
Net-savvy marketplace will have to pay scrupulous attention to their
reputation. Tales of poor service and disappointed travelers go a long way in
online forums, chat rooms, and blogs, and they can take forever to disappear.
An impeccable brand is the only assurance the online shopper has that his
cruise investment will be money well spent.
The Internet has changed the cruise market in another
way that dismays some operators. Bright European buyers are starting to check
prices online and then buy from American agents, often at considerable savings.
In one example, a trip through the Western Caribbean on the Costa Mediterranea
cost £514 for a Class 1 inside cabin, or about $1,010, when booked through an
agent in the U.K. Buying from an American Web site, the price was $569, or
about £289. Thus far, some cruise lines are attempting to protect their profits
by refusing to accept bookings except through agents in the customer’s home
country. That tactic is unlikely to work for very long.
For hotels, the biggest techno-trend is well recognized
already. As database systems grow more sophisticated, operators are able to
capture ever more detailed information about hotel patrons, from their choice
of rooms to their dining preferences and local itinerary. This enables hotel
staff to give returning patrons a highly personalized experience and all but
guarantees return visits. This technology is quickly raising the level of play
in the battle for customer loyalty. Cruise lines, resorts, and other
destinations are quickly copying these methods.
On the negative side, long distance calling through the
hotel telephone system once was a significant profit center. Cell phones have
seriously eroded this business. The last of it can be expected to vanish now
that the major cell providers all are offering unlimited calls for just $100
per month.
Probably the biggest development for most sectors will
be the growing use of RFID (radio-frequency identification) chips to track
supplies, automate ordering, and make delivery more efficient, and therefore
cheaper.
One nascent restaurant chain in California features
orderentry computers at each table. Customers use the terminal to read the
menu, view each menu item, and place their order. They see human staff only
when handing over their credit cards—before ordering—and when the food is
delivered. Computerized ordering will not soon penetrate high-end restaurants
or fast-food chains, but it will be welcome at midrange family restaurants,
where savings are sorely needed. Also expect to see innovation at self-bussing
restaurants, where patrons will deliver their plates and tableware directly to
the maw of the automated washers.
Some of the most interesting new technologies for
restaurants and food services will operate far behind the scenes. In
laboratories around the world, scientists are building artificial “tongues” and
“noses” more sensitive than human organs. Models now in development can
distinguish among closely related wines, various cheeses and breads, and
coffees. In the near future, food producers will use them to guarantee product
quality. This innovation will provide restaurants with better, more consistent
materials and give diners more predictable, and probably more satisfying,
meals.
35. The
United States is ceding its scientific and technical leadership to other
countries.
“The scientific and
technical building blocks of our economic leadership are eroding at a time when
many other nations are gathering strength,” the National Academy of Sciences
warns. “Although many people assume that the United States will always be a
world leader in science and technology, this may not continue to be the case
inasmuch as great minds and ideas exist throughout the world. We fear the
abruptness with which a lead in science and technology can be lost—and the
difficulty of recovering a lead once lost, if indeed it can be regained at
all.”
Although R&D spending is growing in raw-dollar
terms, when measured as a percentage of the total federal budget or as a
fraction of the U.S. GDP, research funding has been shrinking for some 15
years. In 2005, the United States spent about 2.68 percent of its GDP on
R&D, down from 2.76 percent in 2001. Washington has often reduced the
post-inflation buying power of its R&D funding request. In the FY 2007
budget, for the first time, it cut R&D funds in absolute dollars as well.
Washington’s neglect of basic science is being felt in many ways. Only half of
American patents are granted to Americans, a number that has been declining for
decades. Only 29 percent of the research papers published in the prestigious
Physical Review in 2003 were by American authors, down from 61 percent in 1983.
More than half of American scientists and engineers are
nearing retirement. At the rate American students are entering these fields,
the retirees cannot be replaced except by recruiting foreign scientists.
Between 25 percent and 30 percent of high school graduates who enter college plan
to major in science or engineering. Fewer than half of them receive a degree in
those fields. The number of U.S. bachelor’s degrees awarded in engineering in
2005 was nearly 15 percent below the peak 20 years earlier
Assessment: This trend
emerged from a wide variety of ill-conceived political decisions made over the
last 30 years. It will take at least a generation to reverse.
Implications: If this
trend is not reversed, it will begin to undermine the U.S. economy and shift
both economic and political power to other lands. According to some estimates,
about half of the improvement in the American standard of living is directly
attributable to research and development carried out by scientists and
engineers.
The Bureau of Labor Statistics predicts that the number
of job openings in science and engineering will grow by 47 percent in the five
years ending 2010—three times as fast as nontechnical fields. The United States
will not produce nearly enough home-grown technical specialists to fill them.
Demand to import foreign scientists and engineers on H-1B visas also will
continue to grow.
Publicity about the H1-B program, and about the
offshoring of R&D to company divisions and consulting labs in Asia, in
turn, will discourage American students from entering technical fields. This
has already been blamed for shrinking student rolls in computer science.
In 2005, China for the first time exported more IT and
communications goods ($180 million) than the United States ($145 million.) Its
lead has grown each year since then.
Implications for
hospitality and travel: In the short run, this suggests that a
growing fraction of the new technologies adopted by hospitality and travel
businesses will originate with companies outside the United States. In the
longer term, this trend could begin to reduce the relative wealth of Americans
compared to the rest of the world. This may eventually cause a decline in
per-capita spending by Americans on hospitality and travel, particularly
outside the U.S. Loss of science-based prestige also could reduce America’s
appeal for some foreign travelers, discouraging tourism to the United States.
36.
Transportation technology and practice are improving rapidly.
The newest
generation of aircraft, such as the Boeing 787 and future Airbus A350 XWB, are
using lightweight materials and more efficient engines to cut fuel costs,
stretch ranges, and increase cargo capacity. In the United States, two
companies have even announced plans to build supersonic business jets and have
them in the air by 2013 or so. One has already taken deposits for several dozen
aircraft. At the same time, rail travel is getting faster. The new TGV Est
line, which runs 300 km (180 miles) from Paris to Frankfurt, operates at 320
kph (198.8 mph) inside France, compared with 300 kph on other parts of the TGV
system. China has begun to install a network of highspeed trains to compensate
for its shortage of regional air transportation.
Assessment: These
advances will continue at least through mid-century.
Implications: One of the
fastest-growing transport industries is trucking, thanks to the expanded use of
just-in-time inventory management and Internet-based companies that rely on
trucks to deliver their products. This field will grow more efficient as
GPS-based truck tracking, RFID-based cargo management, more efficient engines,
and other new technologies spread through the industry.
To reduce the number and severity of traffic accidents,
trucks on the most heavily used highways will be exiled to carfree lanes, and
the separation will be enforced.
New hybrid car models will begin to gain significant
market share from traditional gas guzzlers between 2010 and 2015.
By 2010, smart-car technologies will begin to reduce
deaths due to auto accidents in Europe and, a few years later, the United
States.
Cities increasingly will struggle to reduce auto
congestion by limiting the use of private automobiles, as in Munich, Vienna,
and Mexico City; by taxing auto use in congested areas, as in London; or by
encouraging the development and use of mass transit, as in Copenhagen and
Curitiba, Brazil.
Technology may offer other alternatives. One proposal is
“dual-mode transportation,” in which private cars would be used normally on
short hauls but would run on automated guideways for long-distance travel.
Implications for
hospitality and travel: The arrival of lightweight aircraft
with high-efficiency engines should help to reduce the impact of fuel costs on
airlines, making it possible to profit in this industry without charging
excessively high ticket prices or leaving travelers feeling that they are being
“nickel-and-dimed” to death by fees that once were included in the basic ticket
cost.
Following European practice, even “legacy” air carriers
in the United States will begin to replace the spokes of their existing
hub-and-spokes system with high-speed trains for journeys of 100 to 150 miles.
By 2015, improved technologies and concerns about the
long-term cost of energy will lead even the rail-resistant United States to
begin modernizing its train system.
New aircraft navigation and safety technologies will
reduce the number and severity of crashes.
37. The
pace of technological change accelerates with each new generation of
discoveries and applications.
In fast-moving
engineering disciplines, half of the cutting-edge knowledge learned by college
students in their freshman year is obsolete by the time they graduate. The
design and marketing cycle—idea, invention, innovation, imitation—is shrinking
steadily. As late as the 1940s, the product cycle stretched to 30 or 40 years.
Today, it seldom lasts 30 or 40 weeks. Almost any new consumer product can be
exactly duplicated by Chinese factories and sold on e-Bay within a week after
it is introduced. The reason is simple: Some 80 percent of the scientists,
engineers, technicians, and physicians who ever lived are alive today—and
exchanging ideas real time on the Internet.
Assessment: This trend
will continue for many years. However, we may grow less able to perceive it.
Implications: Subjectively,
change soon will move so rapidly that we can no longer recognize its
acceleration, save as an abstract concept.
All the technical knowledge we work with today will
represent only 1 percent of the knowledge that will be available in 2050.
Industries will face much tighter competition based on new technologies. Those
who adopt state-of-the-art methods first will prosper. Those who ignore them
will eventually fail.
Products must capture their market quickly, before the
competition can copy them. Brand names associated with quality are becoming
even more important in this highly competitive environment.
Lifelong learning is a necessity for anyone who works in
a technical field—and for growing numbers who do not. In what passes for the
long run—a generation or two—the development of true artificial intelligence is
likely to reduce human beings to managers. Rather than making new discoveries
and creating new products, we will struggle to understand and guide the flow of
novelties delivered by creations we cannot really keep up with.
Implications for
hospitality and travel: As new technologies arrive,
hospitality and travel operators will be forced to hire more technology
specialists and train other employees to cope with new demands.
The next major development will be the spread of RFID
chips throughout the hospitality and travel industry. Airlines, hotels, and
restaurant chains all will need to hire technicians with experience in RFID to
set up and monitor new, automated inventory and ordering systems, while
everyone from chefs to warehouse personnel will need training in their use.
38. The
Internet continues to grow, but at a slower pace.
In
mid-2007, Internet users numbered about 1.173 billion, up just less than
one-fourth in three years. Most growth of the Internet population is now taking
place outside the United States, which is home to only 19 percent of Internet
users. In mid-2007, the most recent available data showed 162 million Internet
users in China (12.3 percent of the population), 42 million in India (3.7 percent),
and 86.3 million in Japan (67.1 percent.)
The
growth of e-commerce also is slowing, with 2007 sales coming in at $116 billion
Sales growth, as much as 25 percent per year in 2004, is expected to slow to 9
percent annually by 2010. The current recession may trim up to 2 percent off
that pre-2009 forecast, but growth will continue at its expected pace
thereafter.
Assessment: Internet
growth will continue until essentially no one in the world lacks easy access to
e-mail and the Web, about 30 years by our best estimate.
Implications: Americans
will continue to dominate the Internet so long as they produce a substantial
majority of Web pages—but that is not likely to be very long.
Analysts believe that Internet growth will not
accelerate again until broadband service becomes less expensive and more widely
available. This is a matter of government policy as much as of technology or
basic costs.
Demands that the United States relinquish control of the
Internet to an international body can only gain broader support and grow more
emphatic as Americans make up a smaller part of the Internet population.
B2B sales on the Internet are dramatically reducing
business expenses throughout the Internet-connected world, while giving
suppliers access to customers they could never have reached by traditional
means.
The Internet has made it much easier and cheaper to set
up a profitable business. An online marketing site can be set up with just a
few minutes’ work at a cost of much less than $100. This is fostering a new
generation of entrepreneurs.
Internet-based outsourcing to other countries has only
just begun. Growth in this field will accelerate again as overseas service
firms polish their English, French, and German and find even more business
functions they can take on.
Cultural, political, and social isolation has become
almost impossible for countries interested in economic development. Even
China’s attempts to filter the Internet and shield its population from outside
influences have been undermined by hackers elsewhere, who provide ways to
penetrate the barriers.
Implications for
hospitality and travel: Continued growth of the Internet will
continue to bring these industries the same benefits others enjoy—lower
business expenses, greater efficiency, and easier access to customers even for
the smallest operators. Online marketing will grow even more significant for
destinations as China and India grow more prosperous and travel-prone.
Social networking sites like Facebook, MySpace, and
Twitter are one of the hottest online phenomena of recent years. Now
hospitality and travel firms are getting into the act. KLM, one of the earliest
adopters and still among the most impressive, offers its customers three
invitation-only communities where they can meet like-minded colleagues, one for
people doing business in China, one for Africa hands, and one for golfers.
Fliers can make contacts, meet offline at club events sponsored by the airline,
and set up their own real-world meetings. Forty percent of users have been
logging in an average of once a month, which KLM rates as a success. Similar
offerings are available from a growing host of specialty sites. Virgin America
even put a social networking system into seat-back computers to help people
connect with fellow passengers.
Internet savants also are starting to talk about the
“semantic Web,” a natural-language interface to the Net’s vast stores of
information. Picture a Web site where you can ask for “a week for two in South
America next February. We want to explore a rain forest but spend at least
three days on the beach at a luxury resort. We can spend $2,500 each, including
air fare from Miami.” By 2012, travel sites will be able to understand the
question, search their databases, offer a choice of vacation plans, and make
reservations as soon as the customers make their decision.
39.
Technology is creating a knowledge-dependent global society.
More and more
businesses, and entire industries, are based on the production and exchange of
information and ideas rather than exclusively on manufactured goods or other
tangible products. At the same time, manufacturers and sellers of physical
products are able to capture and analyze much more information about buyers’
needs and preferences, making the selling process more efficient and effective.
The number of Internet users in the United States more than doubled between
2000 and 2007, to nearly 231 million, or 69 percent of the population. Yet the
percent of the population online has remained almost unchanged since 2004. And
while the percentage of Internet users in China is smaller than in the U.S.,
the number of users there passed the U.S. early in 2008.
Assessment: This trend
will not reach even its half-way mark until the rural populations of China and
India gain modern educations and easy access to the Web.
Implications: This trend
is raising the level of education required for a productive role in today’s
workforce. For many workers, the opportunity for training thus is becoming one
of the most desirable benefits any job can offer.
Even entry-level workers and those in formerly unskilled
positions require a growing level of education. For a good career in almost any
field, computer competence is mandatory.
Knowledge workers are generally better paid than less
skilled workers, and their proliferation may raise overall prosperity.
However, data and communications technologies also are
exposing workers in the developed world to competition from low-wage countries.
It is not yet clear at what pay level these competing forces will balance.
This trend also is enlarging the income gap between well
educated workers and those with a high school degree or less. That gap will
continue to grow.
In ten years, most digital devices will combine
multimedia communication functions and real-time voice translation, so that
conversations originating in one of seven or eight common languages can be
heard in any of the others. These technologies will enable even more people to
become knowledge workers or, at least, knowledge-enhanced workers.
Telecommuting will make many companies more efficient,
cutting their expenses in the process. New technologies create new industries,
jobs, and career paths, which can bring new income to developing countries. An
example is the transfer of functions such as technical support, and more
recently R&D, to Asian divisions and service firms.
For some developing countries, computer skills are
making it faster and easier to create wealth than a manufacturing economy ever
could. India, for example, is rapidly growing a middle class, largely on the
strength of its computer and telecom industries. Other lands will follow its
example.
Implications for
hospitality and travel: For both marketing and management,
this trend is changing all segments of hospitality and travel. Online sales have
grown into a major outlet for airlines and hotels, severely eroding the market
for travel agencies. This trend will accelerate in the years ahead, as
Generation X and—especially—the Millennials bring their computer skills to
travel shopping. Within five years even the cruise industry, which has been
committed to sales through travel agencies, will be substantially dependent on
Internet sales.
This also levels the field for smaller and less well
known destinations, which now can get their message to potential guests on the
same basis as larger operators. As a result, we will see a steady proliferation
of small travel businesses throughout the world for at least the next 20 years.
In hospitality management, the greatest technological
change in the next five years will be the arrival of RFID—radio frequency
identification—chips. Combining a small piece of computer memory with a tiny
radio transmitter, RFID chips can remotely identify and track whatever object
they are attached to. This dramatically reduces the manpower required for
inventory and order functions and cuts inventory requirements. Just-in-time
ordering will streamline procedures for hotels, restaurants, cruiselines, and
most other hospitality and travel operations.
Information technologies also are raising the level of
technical skill required for many hospitality-industry functions.
Cruise ships today require complete network management
staffs for their Internet systems as well as for vessel controls, and crews
tech-savvy enough to help guests with onboard computers, HDTV, and other
increasingly complicated hardware.
ENVIRONMENTAL TRENDS
40. People
around the world are becoming increasingly sensitive to environmental issues as
the consequences of neglect, indifference, and ignorance become ever more
apparent.
The World Health Organization (WHO) estimates that 3
million people die each year from the effects of air pollution, about 5 percent
of the total deaths. In the United States, an estimated 64,000 people a year
die of cardiopulmonary disease caused by breathing particulates. In sub-Saharan
Africa, the toll is between 300,000 and 500,000 deaths per year.
Pollution-related respiratory diseases kill about 1.4 million people yearly in
China and Southeast Asia. And contaminated water is implicated in 80 percent of
the world’s health problems, according to WHO. An estimated 40,000 people
around the world die each day of diseases directly caused by contaminated
water, more than 14 million per year.
Though some debate remains about the cause, the fact of
global warming has become undeniable. At Palmer Station on Anvers Island,
Antarctica, the average annual temperature has risen by 3 to 4 degrees since
the 1940s, and by an amazing 7 to 9 degrees in June—early winter in that
hemisphere.
Anticipating a three-foot rise in sea levels, the
Netherlands is spending $1 billion to build new dikes.
Assessment: A solid
majority of voters throughout the developed world, and even some in the
developing lands, now recognize the need to clean up the environment, and especially
to control greenhouse warming. They will keep this trend intact for at least
the next 30 years.
Implications: Throughout
most of the world, polluters and private beneficiaries of public assets will
increasingly confront restrictive regulations designed to serve the interests
of the community at large.
CO2 will remain a problem for many years to come. If air
pollution were halted instantly, it would take an estimated 200 years for
carbon dioxide and other greenhouse gases to return to pre-industrial levels.
Impurities in water will become an even greater problem
as the population of the developed countries ages and becomes more susceptible
to infectious diseases.
Recent analyses say there is a 90 percent chance that
the planet’s average annual temperature will rise between 3 and 9 degrees
Centigrade over the next century. This will cause severe dislocations both for
plant and animal populations and for many human activities.
Environmental policies will provoke a political backlash
wherever they conflict with entrenched interests, as they have long done in the
American West.
Implications for
Hospitality and Travel:
Hospitality operators throughout most of the world can expect many more legal
mandates for cleaner facilities and practices.
Once the airline industry’s current economic problems
have been survived, aviation will face more demands to reduce emissions linked
to global warming.
Cruise lines found to be avoidably polluting the seas,
whether deliberately or by accident, will be penalized especially harshly.
In the long run, incentives for “green” practices will
take some of the financial pain out of making the necessary changes. So will
long-term savings on energy, waste disposal, and expendables.
Eco-friendly travel will continue to be one of the
fastest growing segments of the industry for the next 15 years. After that, it
will simply be the way things are done.
41. Water shortages will be a growing problem for much of the world. In many regions, they are severe
already.
The northern half
of China, home to perhaps half a billion people, already is short of water. The
water table under Beijing has fallen nearly 200 feet since 1965. Australia’s
Murray-Darling river system, which supplies water for 40 percent of the
country’s crops and 80 percent of its irrigation, no longer carries enough
water to reach the sea without constant dredging. Salinity in the Murray is
rising so quickly that the water is expected to be undrinkable in 20 years.
There is worse to come. According to U.N. studies, at least 3.5 billion people
will run short of water by 2040, almost ten times as many as in 1995. Ten years
later, fully two-thirds of the world’s population could be living in regions
with chronic, widespread shortages of water.
Assessment: This trend
will remain with us for the very long term.
Implications: Providing
adequate supplies of potable water will be a growing challenge for developing
and developed countries alike.
Such problems as periodic famine and desertification can
be expected to grow more frequent and severe in coming decades.
In many lands, including parts of the United States,
growing water shortages may inhibit economic growth and force large-scale
migration out of afflicted areas.
Climate change is expected to reduce the flow of
Australia’s parched Murray River by a further 5 percent in 20 years and 15
percent in 50 years.
Water wars, predicted for more than a decade, are a
threat in places like the Kashmir: much of Pakistan’s water comes from areas of
Kashmir now controlled by India.
Other present and future water conflicts involve Turkey,
Syria, and Iraq over the Tigris and Euphrates; Israel, Jordan, Syria, and
Palestine over water from the Jordan River and the aquifers under the Golan
Heights; India and Bangladesh, over the Ganges and Brahmaputra; China,
Indochina, and Thailand, over the Mekong; Kyrghyzstan, Tajikistan, and
Uzbekistan over the Oxus and Jaxartes rivers; and Ethiopia, Sudan, and at least
six East African countries, including Egypt, over the Nile.
In the United States, repair of decayed water systems is
likely to be a major priority for older cities such as New York, Boston, and
Atlanta. Cost estimates for necessary replacement and repair of water mains
range up to $1 trillion.
Implications for
hospitality and travel: In the American Southwest, northern
China, Australia, and other parched regions, water supplies will be a growing
concern for hotels, restaurants, and other destinations. This is not likely to
ease in the foreseeable future.
As water become ever more scarce throughout much of the
developing world, regional instability could put otherwise attractive
destinations off limits for Western travelers. Parts of the Middle East are the
obvious candidates for future avoidance.
42.
Recycling has delayed the “garbage glut” that threatened to overflow the
world’s landfills, but the problem continues to grow.
Americans now
produce about 4.5 pounds of trash per person per day, twice as much as they
threw away a generation ago. Seventy percent of U.S. landfills will be full by
2025, according to the EPA. Japan expects to run out of space for industrial
waste as soon as 2008 and for municipal solid waste by 2015. In London and the
surrounding region, landfills will run out of room by 2012.
Recycling has proved to be an effective alternative to
dumping. As of 2005, Germany recycled 60 percent of its municipal solid waste,
65 percent of manufacturing waste, 80 percent of packaging, and 87 percent of
construction waste, according to the Environment, Nature Conservation, and
Nuclear Safety. Largely as a result, the number of landfills for domestic waste
has been reduced from about 50,000 in the 1970s to just 160.
Assessment: The
challenge of dealing with garbage will grow for so long as the world’s middle
classes continue to expand or until technology finds ways to recycle virtually
all of the materials used in manufacturing and packaging. This trend will
remain intact through at least 2050.
Implications: Recycling
and waste-to-energy plants are a viable alternative to simply dumping garbage.
This trend will push the development of so-called life-cycle design, which
builds convenient recyclability into new products from their inception.
Expect a wave of new regulations, recycling,
waste-to-energy projects, and waste management programs in the United States
and other countries in an effort to stem the tide of trash. In the United
States, it will of course begin in California, a jurisdiction often cited by
policy forecasters as a bellwether of change.
State and local governments will tighten existing regulations
and raise disposal prices in Pennsylvania, South Carolina, Louisiana, and other
places that accept much of the trash from major garbage producers such as New
York. Trash producers in the developed world will ship much more of their
debris to repositories in developing countries. This will inspire protests in
the receiving lands.
Beyond 2025 or so, the developing countries will close
their repositories to foreign waste, forcing producers to develop more
waste-to-energy and recycling technologies. Ultimately, it may even be
necessary to exhume buried trash for recycling to make more room in closed dump
sites for material that cannot be reused.
Waste-to-energy programs will make only a small
contribution to the world’s growing need for power.
Implications for
hospitality and travel: Hotels, resorts, restaurants, and
other large-scale waste generators can expect to face the same kind of
recycling requirements that many private homeowners have been complying with
for years. This will increase handling expenses for recyclable bottles, cans,
plastics, and paper, but it should ultimately reduce the cost of disposal.
This may bring even more scrutiny to cruise lines. Any
ship caught dumping waste at sea can expect to bring its company catastrophic
publicity, with a risk of boycotts. The rest may profit from advertising their
“green” credentials, especially if they donate to ocean-oriented environmental
groups.
43.
Preference for industrial development over environmental concerns is fading
slowly in much of the developing world.
The Pew Research Center reports that less than
one-fourth of respondents in any African country rated environmental problems
as the world’s most important threat. In Ethiopia, where desertification is at
its worst and drought is a constant threat, only 7 percent did so. Beijing has
made repairing the environment a national priority. Yet 70 percent of the
energy used in China comes from coal-burning power plants, few of them equipped
with pollution controls. The country intends to build over five hundred more
coal-fired plants in the next ten years. Even Germany has committed to building
more power plants fired by high-sulfur brown coal.
Assessment: View this
as a counter-trend to Trend 40. It will remain largely intact until the poor of
India and China complete their transition into the middle class, around 2040.
Implications: Broad
regions of the planet will be subject to pollution, deforestation, and other
environmental ills in the coming decades.
Acid rain like that afflicting the United States and
Canada will appear wherever designers of new power plants and factories neglect
emission controls.
In India, an area the size of the United States is
covered by a haze of sulfates and other chemicals associated with acid rain.
Look for this problem to appear in most other industrializing countries.
Diseases related to air and water pollution will spread
dramatically in the years ahead. Already, chronic obstructive pulmonary disease
is five times more common in China than in the United States. As citizens of
the developing countries grow to expect modern health care, this will create a
growing burden on their economies.
This is just a taste of future problems, and perhaps not
the most troublesome. Even the U.S. government now admits that global warming
is a result of human activities that produce greenhouse gases. It now seems
that China and India soon will produce even more of them than the major
industrialized nations. Helping the developing lands to raise their standards
of living without creating wholesale pollution will require much more aid and
diplomacy than the developed world has ever been willing to give this cause.
Implications for
hospitality and travel: All these problems will make the worst
afflicted areas much less attractive to travelers in the coming years. They
also will subject hotels, resorts, cruise lines, and other segments to new
regulations designed to minimize their use of energy and to promote recycling
and other environmentally friendly practices.
44. Concern
over species extinction and loss of biodiversity is growing quickly.
An estimated 50,000
species disappear each year, up to 1,000 times the natural rate of extinction,
according to the United Nations Environmental Program. By 2100, as many as half
of all species could disappear. Eleven percent of birds, 25 percent of mammals,
and 20 percent to 30 percent of all plants are estimated to be nearing
extinction. Some 16,118 species are now listed as threatened (7,925 animal
species and 8,393 plant and lichen species), according to the 2006 Red List of
the International Union for Conservation of Nature and Natural Resources. This
is an increase of nearly 2,700 in four years. The real list is likely much
larger, as the group has evaluated only 40,000 of the 1.5 million species on
its list. The chief cause for species loss is the destruction of natural
habitats by logging, agriculture, and urbanization.
Assessment: This trend
has at least three decades to run.
Implications: Saving any
significant fraction of the world’s endangered species will require much more
effort and expense than many governments find acceptable. For species such as
corals, if the loss is attributable largely to climate change, it may not be
possible.
Species loss has a powerful negative impact on human wellbeing.
Half of all drugs used in medicine are derived from natural sources, including
fifty-five of the top one hundred drugs prescribed in the United States. About
40 percent of all pharmaceuticals are derived from the sap of vascular plants.
So far, only 2 percent of the 300,000 known sap-containing plants have been
assayed for useful drugs. Most of the species lost in the years ahead will
disappear before they can be tested.
The Indonesian economy loses an estimated $500,000 to
$800,000 annually per square mile of dead or damaged reef.
Australia may lose even more as degradation of the Great
Barrier Reef continues. The U.N. Intergovernmental Panel on Climate Change
predicts that the Reef will be “functionally extinct” by 2030.
Diverse ecosystems absorb more carbon dioxide than those
with fewer species. Loss of biodiversity thus is a potential cause of global
warming.
Implications for
hospitality and travel: For the near term, environmentally
conscious travelers will flock to endangered regions such as the Galapagos, the
Great Barrier Reef, and the Amazon rain forests to witness their biological
diversity while it is still available. However, in the long run the loss of
coral and other extinction events will destroy the tourist appeal of some of
the world’s favorite destinations for environmental and adventure tourism.
45.
Urbanization, arguably the world’s oldest trend, continues rapidly.
Forty-eight percent
of the world's population currently lives in cities, according to the
Population Reference Bureau's 2006 World Population Data Sheet. By 2030, that
figure will grow to 60 percent, as some 2.1 billion people are added to the
world’s cities.
Cities are growing fastest in the developing world. In
1950, there were just eight megacities, with populations exceeding 5 million,
in the world. By 2015, there will be fifty-nine megacities, forty-eight of them
in less developed countries. Of these, twenty-three will have populations over
10 million, all but four in the developing lands.
Natural increase now accounts for more than half of
population increase in the cities; at most, little more than one-third of urban
growth results from migration.
Assessment: After
surviving for some 3,500 years, this trend is unlikely to disappear in the next
50.
Implications: Cities’
contribution to global warming can only increase in the years ahead. As the
world’s supply of potable water declines, people are concentrating in those
areas where it is hardest to obtain and is used least efficiently. This trend
will aggravate water problems for so long as it continues. Many more people
will die due to shortages of shelter, water, and sanitation. Epidemics will
become still more common as overcrowding spreads HIV and other communicable
diseases more rapidly.
Since urban growth is now due more to natural increase
than to migration, programs designed to encourage rural populations to remain
in the countryside may be misplaced.
Education and family planning seem more likely to rein
in the growth of cities.
Implications for
hospitality and travel: Many cities in the developing world
will become even more congested and polluted, reducing their appeal even when
historical arts and artifacts might otherwise draw tourism.
MANAGEMENT TRENDS
46. More
entrepreneurs start new businesses every year.
In
the United States, about 9 percent of men and 6 percent of women are
self-employed. These fractions have been growing in about two-thirds of the
OECD countries. Many women are leaving traditional jobs to go home and open
businesses, even as they begin a family. At least half of the estimated 10.6
million privately held firms in the United States are owned by women, employing
19.1 million people and generating $2.46 trillion in sales annually.
For
the 14 years ending in 2003, the most recent period for which data is
available, small businesses (those with less than five hundred employees)
created 92 percent of the net new jobs in the United States, according to the
Census Bureau. The smallest companies, those with fewer than twenty employees,
created 85 percent. However, jobs also disappear fastest from small companies,
which are much more likely to fail than larger concerns. Though big-company
layoffs have gotten the most publicity in the current recession, losses from
smaller firms are likely to be even more severe.
Assessment: This is a
self-perpetuating trend, as all those new service firms need other companies to
handle chores outside their core business. It will remain with us for many
years, not only because it suits new-generation values but because it is a
rational response to an age in which jobs can never be counted on to provide a
stable long-term income.
Implications: It is
driven as well by the attitudes and values of Generation X and the Millennials
and by the rapid developments in technology, which create endless opportunities
for new business development.
Specialty boutiques will continue to spring up on the
Internet for at least the next 15 years.
This trend will help to ease the poverty of many
developing countries, as it already is doing in India and China.
Implications for
hospitality and travel: We can expect a wave of new
hospitality and travel businesses to appear in the years ahead. Many will be
new destinations in areas where the travel industry is just beginning to grow.
Others will be specialty tour operators focused on either niche sports and
other activities or on consumer groups with special needs, such as
non-English-speakers, religious or cultural minorities, seniors, or all-female
tour groups.
47.
Information-based organizations are quickly displacing the old
command-and-control model of management.
The typical large
business has reshaped itself or is struggling to do so. Soon, it will be
composed of specialists who rely on information from colleagues, customers, and
headquarters to guide their actions.
Upper management is giving fewer detailed orders to
subordinates. Instead, it sets performance expectations for the organization,
its parts, and its specialists and supplies the feedback necessary to determine
whether results have met expectations.
Assessment: This is a
well-established trend. At this point, many large corporations have
restructured their operations for greater flexibility, but many others still
have a long way to go.
This trend will continue in the United States for at
least the next 15 years. The developing world may largely bypass this step in
its new organizations and go straight to networked management structures.
Implications: This
management style suits Generation Xers and Millennials well, as it tends to let
them work in whatever fashion suits them so long as the job gets done.
Downsizing has spread from manufacturing industries to
the service economy. Again, this process encourages the entrepreneurial trend,
both to provide services for companies outsourcing their secondary functions
and to provide jobs for displaced employees.
Many older workers have been eliminated in this process,
depriving companies of their corporate memory. Companies have replaced them
with younger workers whose experience of hard times is limited to the
relatively mild recession since 2000. Many firms may discover that they need to
recruit older workers to help them adapt to adversity.
This too is driving the entrepreneurial trend. Many
older workers find themselves self-employed by default, as they need income and
cannot find work in their accustomed fields.
Implications for
hospitality and travel: The growing demand for specialists to
join in task-oriented teams will reduce the number of broadly experienced
industry generalists needed by large hospitality and travel operators.
Unfortunately, by relying on specialists for their expertise in relatively
narrow aspects of company operations, it also will make it difficult to train
promising staff members in the broad range of skills needed for promotion to
higher management positions.
48.
Organizations are simplifying their structures and squeezing out personnel.
Computers and
information-management systems have stretched the manager’s effective span of
control from six to twenty-one subordinates. Information now flows from
frontline workers to higher management for analysis. Thus, fewer mid-level
managers are needed, flattening the corporate pyramid.
The span of control could stretch again if computer
science finally delivers on its long-delayed promise of artificial
intelligence. Opportunities for advancement are shrinking, because they come
within the worker’s narrow specialty, rather than at the broader corporate
level. By 2001, only one person in fifty was promoted, compared with one in
twenty in 1987.
Assessment: In the
United States, downsizing, restructuring, reorganization, and cutbacks of
white-collar workers will continue at least through 2025. Its pace will not
slow unless technology ceases to deliver new ways to replace human workers with
faster, cheaper, more reliable hardware and software.
Implications: The current recession will be filled by another
“jobless recovery” as companies squeeze still more productivity out of their
existing workforce, rather than hiring new employees.
A typical large business in 2015 will have fewer than
half the management levels of its counterpart in 1995, and about one-third the
number of managers.
Information-based organizations have to make a special
effort to prepare professional specialists to become business leaders. Broad
experience of the kind needed by a CEO no longer comes naturally during an
executive’s career.
Top managers must be computer-literate to retain their
jobs and must make sure to oversee the increased spans of control that computers
make possible.
Finding top managers with the broad experience needed to
run a major business already has become difficult. It can only grow more so as
the demand for specialization grows. This will reduce promotion from within and
encourage companies to seek upper-level execs from other firms, and even
industries.
Executives increasingly will start their own companies,
rather than trusting the old-fashioned corporate career path to provide
advancement.
Ultimately, this trend will require a wholesale rethinking
of the social contract, as it becomes difficult or impossible to create enough
fulfilling, well paid jobs for human workers to support the population. The end
of salaried work is not yet near, but it could arrive within the lifetimes of
today’s younger generations.
Implications for
hospitality and travel: This trend could endanger the
hospitality and travel industries’ tradition of promoting from within. Because
there will be fewer opportunities for promotion, it will be difficult to
provide employees with the breadth of experience required of top executives.
Thus, high-level managers are likely to come increasingly from competitors and
from other industries. This is likely to increase the turnover of management
personnel, who can no longer look forward to the rewarding careers that these
industries once offered.
This also will force corporate managers to develop new
ways to motivate their employees and provide them with the kind of experience
needed to fill the few positions remaining at upper levels of the company.
49.
Government regulations will continue to take up a growing portion of the
manager’s time and effort.
In 1996, the U.S.
Congress passed regulatory reform laws intended to slow the spread of
government regulations. Nonetheless, by 2001 more than 14,000 new regulations
were enacted. Not one proposed regulation was rejected during this period. The
Brussels bureaucrats of the European Union are churning out rules at an even
faster rate, overlaying a standard regulatory structure on the national systems
of member countries.
This is not all bad. A study by the Congressional Office
of Management and Budget estimated that major federal regulations enacted in
the decade ending September 2002 cost between $38 billion and $44 billion per
year. However, the estimated benefits added up to between $135 billion and $218
billion annually.
Assessment: If the
future holds an end to this trend, it is not yet in sight.
Implications: Regulations
are necessary, unavoidable, and often beneficial. Yet it is difficult not to
see them as a kind of friction that slows both current business and future
economic growth.
The proliferation of regulations in the developed world
could give a competitive advantage to countries such as India and China, where
regulations that impede investment and capital flow are being stripped away,
and health, occupational safety, and environmental codes are still rudimentary
or absent.
However, there is a significant penalty for the kind of
risk that comes from inadequate regulation. China pays an estimated risk
penalty of 6.49 percent for international borrowing. Per capita GDP, access to
capital, foreign direct investment, and other measures of a country’s economic
health all decline directly with a rising Opacity Index, which is heavily
influenced by the lack of effective regulations to guarantee a level playing
field for those doing business there. As a result, lands such as Russia will
remain at a competitive disadvantage until they can pass and enforce the
regulations needed to ensure a stable, fair business environment.
Implications for
hospitality and travel: Airlines regulations will focus on
safety and customer convenience. The most costly would be installation of an
effective bomb detection system for checked luggage. It will be required only
if an American flight is bombed. (It is far from impossible. Officials at the
U.S. Transportation Safety Administration worry that a bomb could still be
smuggled aboard as tiny parts, then assembled for use.) Other rules are likely
to demand installation of more crashworthy seating, new user fees, and
switching schedules to relieve peak-hour congestion.
A regulation proposed in February would require
foreign-flagged cruise ships leaving from the U.S. to spend at least two days
in a foreign port before returning, and at least one day in a foreign port for
every two in an American port. The rule, proposed to limit competition for two
American-flagged ships operated out of Hawaii by Norwegian Cruise Lines, would
change itineraries for thousands of cruises. It might also devastate profits at
American home ports. Juneau, Alaska, alone would lose an estimated $68 million
in one summer. Forecast: This regulation is unlikely to pass scrutiny. If
enacted, it will be rescinded quickly.
Hotels already are so well regulated that this sector
should be relatively immune to new government-mandated complications.
Relatively. Of course, any new rules that apply to restaurants will apply to
hotel-based eating establishments just as they do to free-standing outlets.
Restaurant operators trying to avoid cluttering their
menus with nutrition information are fighting a losing battle. Calorie counts,
fat content, and other unpleasant details soon will be there for patrons to see
when choosing their meals. And that sausage and pepperoni pizza will have a
warning label that could scare the customer into a heart attack. This could
easily sink the market for some traditionally popular—but unhealthy—dishes and
raise demand for fish (omega-3 fatty acids), cruciferous vegetables (cancer
fighters), and other “healthy” alternatives. We can expect significant menu
revisions in the next few years.
The biggest regulatory changes ahead for travel are the
global move to biometric passports, prompted largely by Washington’s fear of
another major terrorist attack, and—within the U.S.—the REAL ID program.
According to plan, anyone seeking to enter the United
States—including American citizens who have been out of the country—will need a
biometric passport to get in. Countries from Switzerland to Singapore have
adopted them in recent years. However, delays in pulling the American program
together have forced Washington to waive the scheme for some travelers.
Under REAL ID, before granting a driver’s license,
states must carry out extensive checks to confirm the applicant’s identity. By
2014, anyone under 50 living in a state that does not provide compliant
licenses will be unable to board an airliner or enter a federal building. Those
over 50 can fly until 2017. Several states have said they will not comply with
the program, and their citizens now face being unable to travel by air.
Thus far, the Department of Homeland Security has backed
down from a possible confrontation with these states, but we believe the REAL
ID program eventually will be enforced.
INSTITUTIONAL TRENDS
50.
Multinational corporations are uniting the world and growing more exposed to
its risks.
The continuing
fragmentation of the post-Cold War world has reduced the stability of some
lands where government formerly could guarantee a favorable—or at least
predictable—business environment. The current unrest in Iraq is one example.
One risk now declining is the threat of sudden, extreme currency fluctuations.
In Europe, at least, the adoption of the euro is making for a more stable
financial environment.
Assessment: This trend
will continue for at least the next 30 years, as companies in the developing
world diversify into less developed markets.
Implications: It is
becoming ever more difficult for business to be confident that decisions about
plant location, marketing, and other critical issues will continue to appear
wise even five years into the future. All long-term plans must include an even
greater margin for risk management. This will encourage outsourcing rather than
investment in offshore facilities that could be endangered by sudden changes in
business conditions.
Countries that can demonstrate a significant likelihood
of stability and predictable business outcomes will enjoy a strong competitive
advantage over neighbors that cannot. Witness the rapid growth of investment in
India now that deregulation and privatization have general political support,
compared with other Asian lands where conditions are less predictable.
Although Russia has continued to attract Western investment,
particularly in its energy industry, increasingly autocratic governance by the
Putin regime and any successors could eventually discourage foreign companies
from doing business there or require much more favorable terms to justify
accepting the associated risks.
Major corporations also can help to moderate some risks
in unstable countries, such as by threatening to take their business elsewhere.
Implications for
hospitality and travel: Unfortunately, multinational
operations bring risks beyond those of national stability, or its absence. Some
western firms have cut back or abandoned their operations in Russia, concluding
that Moscow’s capricious treatment of foreign concerns could be too costly to
ignore. Others have found it difficult to deal with autocratic government and
petty corruption in China. Primitive banking and legal systems, poor
communications and infrastructures, and other such problems in developing lands
can make it difficult for western firms to operate in the developing world. No
industry is so exposed to these problems as hospitality and travel.
51.
Consumers increasingly demand social responsibility from companies and each
other.
Companies
increasingly are being judged on how they treat the environment, their workers,
and their customers. Many are changing their business practices as a result.
For example, home-improvement retailers Home Depot and Lowe's have stopped
buying wood from countries with endangered forests, while Nike now publishes
its discoveries of worker abuse by offshore suppliers. Costco offers much
better benefits than its competitors and has half the employee turnover rate as
a result. In a 2005 survey of nearly 1,200 companies, 81 percent— and 98
percent of large firms—said corporate citizenship is a priority; 84 percent
said that being socially responsible has improved profits. Once the
business-friendly Bush administration leaves Washington, government
intervention will rebound in sectors from finance to industrial chemicals. To
avoid political backlash from the right, regulation is likely to be carefully
targeted and limited, at least for a time.
Assessment: This trend
is well established in the industrialized world, but only beginning in the
developing world. It can be expected to grow more powerful as the no-nonsense,
bottom-line-oriented Generation Xers and Millennials gain influence.
Implications: Once the
current, business-friendly administration leaves Washington, government
intervention will supplant deregulation in the airline industry (in the
interest of safety and services), financial services (to control instability
and costs), electric utilities (nuclear problems), and the chemical industry
(toxic wastes).
In the United States, frequent incidents of political
corruption may spread the demand for greater responsibility into the field of
government and public service, although that is not yet clear. As the Internet
spreads Western attitudes throughout the world, consumers and environmental
activists in other regions will find more ways to use local court systems to
promote their goals. Litigation is likely to become a global risk for companies
that do not make the environment a priority.
Implications for
hospitality and travel: This will bring still more pressure to
minimize fuel consumption and cut air and noise pollution. The impact of jet
exhaust on the ozone layer will continue to draw unwelcome publicity to air
travel, but with little impact on seat-miles or the bottom line. Cruise lines
whose itineraries permit may wish to add day trips to rain forests and other
environmentally sensitive locations. Carefully managed excursions to poor areas
are another possible option, if they can be structured to benefit the
community. “Green” furnishings and supplies are the trend at hotels and
resorts. Look for bamboo flooring in the rooms, eggs from free-range chickens
in the kitchen, and a growing demand from guests for better worker benefits and
pay. In all but extreme-luxury locations, hotels will save energy and water by
providing fresh towels and linens only every other day, or when guests request
them.
Even simple measures, like saving water by providing it
only at the customer’s request, can help to burnish a restaurant’s
eco-reputation. However, many necessary—or at least unavoidable— measures will
be harder to accept. Demands for nutritional information on the menu eventually
will become impossible to resist. They will be accompanied by calls for
eco-conscious sourcing of foods and other supplies, better pay and at least
minimal benefits for restaurant workers, and American-style work rules in
offshore subsidiaries. Look at the pressure put on Nike to improve working
conditions at the plants of overseas suppliers, and you see the future of the
restaurant industry.
Trends such as eco-tourism and “pro-poor” tourism are
just getting started. While tourists from China and India will still be eager
to see Paris and Orlando, their more experienced peers from Europe and America
will be looking for the last few elephants, coral reefs (before they are gone),
and impoverished natives still living by the ways of their ancestors. However,
they will want the people and sites they visit to benefit from their spending,
not just the companies arranging their vacations.
52. On
average, institutions are growing more transparent in their operations, and
more accountable for their misdeeds.
Many different
forces are promoting this change in various parts of the world. In the United
States, the wave of business scandals in 2004, the exposure of child abuse
within the Catholic Church, and other perceived offenses by large organizations
have inspired demands for greater transparency and accountability. China, rated
by Kurtzman Group as the most opaque of the major nations, was forced to open
many of its records as a precondition for joining the World Trade Organization.
In India, a country often regarded as one of the world’s most corrupt, the
Central Vigilance Commission has opened the country’s banking system to more
effective oversight. Lesser “vigilance commissions” now oversee many parts of
the Indian economy and government. More generally, wars against terrorism, drug
trafficking, and money laundering are opening the world’s money conduits to
greater scrutiny. They also are opening the operations of nongovernmental
organizations that function primarily as charitable and social-service agencies
but are linked to terrorism as well.
Assessment: There are
roughly as many reactions against this trend as there are governments,
agencies, and individuals with something to hide. Yet, the benefits of
transparency are so clear that the general decline of barriers to oversight is
likely to continue until societies develop a consensus about how much—or
little—secrecy is really necessary. We give this trend at least 20 years of
continued vigor.
Implications: Countries
with high levels of transparency tend to be much more stable than more opaque
lands. They also tend to be much more prosperous, in part because they find it
easier to attract foreign investment.
Greater transparency reduces the operational
effectiveness of the world’s miscreants. It impedes drug traffickers and
terrorist organizations, as well as dishonest governments and corrupt
bureaucrats.
Implications for
hospitality and travel: Like other companies, large
hospitality firms are likely to face demands for more rigorous accounting
practices and other transparency-oriented changes in their operations.
Companies based in lands such as China and India may
find it more costly to borrow capital for expansion than those in the West.
Western firms expanding into some of the developing countries also may find
themselves paying unaccustomedly high rates for capital, particularly if they
are forced to take on local partners.
53.
Institutions are undergoing a bimodal distribution: the big get bigger, the
small survive, and the mid-sized are squeezed out.
Economies of scale enable the
largest companies to win out over mid-sized competitors, while “boutique”
operations can take advantage of niches too small to be efficiently tapped by
larger firms. We see the result in a wide range of industries throughout the
developed world. In agriculture, banking, auto manufacturing,
telecommunications, and many other sectors, the largest firms have been buying
up their mid-sized competitors or driving them out of business. At the same
time, hundreds or thousands of tiny operators have arisen in each industry to
get rich by serving markets beneath the notice of the giants.
Assessment: Thanks in
part to technology, this trend is likely to be a permanent feature of the
business scene from now on.
Implications: No company
is too large to be a takeover target if it dominates a profitable market or has
other features attractive to profit-hungry investors. No niche is too small to
attract and support at least one or two boutique operations. Thus far,
industries dominated by small, regional, often family-owned companies have been
relatively exempt from the consolidation now transforming many other
businesses. Takeovers are likely even in these industries in the next decade.
This consolidation will extend increasingly to
Internet-based businesses, where well-financed companies are trying to absorb
or out-compete tiny online start-ups, much as they have done in the
brick-and-mortar world.
However, niche markets will continue to encourage the
creation of new businesses. In Europe as of 2006, no fewer than forty-eight
small, no-frills airlines in twenty-two countries had sprung up to capture
about 28 percent of the Continental market share. Only fifteen offered more
than fifty flights per day.
Implications for
hospitality and travel: FI expects airlines to continue
merging for as long as there are airlines available to do so. At the same time,
small startup airlines are appearing almost constantly, taking advantage of
routes other niche opportunities that their predecessors either have not
recognized or did not consider sufficiently attractive. In the United States,
Delta and Northwest should be the next major union, as soon as their respective
pilots can work out seniority concerns. United and Continental are likely to
follow soon after. In Europe, Easy Jet has just completed its acquisition of GB
Airways and TUI Travel’s TUIFly is merging with Lufthansa’s Germanwings
airline. Air France wants a piece of the merged Delta/Northwest giant, if U.S.
regulators will allow the deal.
We have long seen the same trend in the cruise industry.
Royal Caribbean and P&O Princess joined forces in 2001. Four years later,
diminutive Clipper Cruise Line announced its pending merger with Australia’s
Peregrine Adventures. And last year, Royal Caribbean/Celebrity spun off the
new, upscale Azamara Cruises to compete with Oceania Cruises. There will be
more such examples in the future.
Hotel chains have been merging constantly at least since
Bowman-Biltmore bought United Hotels back in 1924. There is no sign the
deal-making will stop in the near future. Given the weakness of the dollar, and
of the American real estate market, we expect to see a wave of offers by
European hospitality firms for their peers in the U.S.
In this aspect, the restaurant industry parallels hotels
almost exactly. Mergers and acquisitions, startup and failures, change the
industry almost too fast to follow.
This is truly a universal trend. The implication for
travel is the same as for all these sectors: Large companies will continue to
snap up mid-sized competitors or, by outcompeting them, drive them out of
business. At the same time, new companies will prosper in niche markets. Some
will remain small and highly profitable for their owners. Others will grow
until they attract the attention of the giants. A very few may become giants
themselves. Look for the fastest turnover in the online travel search and
marketing operations, where niche startups abound.
All segments of hospitality and travel have been in
ferment for as long as we can remember. They will remain in ferment long into
the future.
TERRORISM TRENDS
54.
Militant Islam continues to spread and gain power.
It has been clear
for years that the Muslim lands face severe problems with religious extremists
dedicated to advancing their political, social, and doctrinal views by any
means necessary. Most of the Muslim lands are overcrowded and short of
resources. Many are poor, save for the oil-rich states of the Middle East. Virtually
all have large populations of young men, often unemployed, who are frequently
attracted to violent extremist movements. During its proxy war with the Soviet
Union in Afghanistan, the United States massively fortified the Muslim
extremist infrastructure by supplying it with money, arms, and, above all,
training. It is making a similar mistake today. The overthrow of Saddam Hussein
and the American occupation of Iraq has inspired a new generation of jihadis,
who have been trained and battle-hardened in the growing insurgency. In a
now-declassified National Security Estimate, the American intelligence
community concluded that Al Qaeda was more powerful in 2007 than it had been
before the so-called “war on terror” began—more dangerous even than it had been
when it planned the attacks of September 11, 2001.
Assessment: This trend
may wax and wane, but it seems unlikely to disappear this side of a Muslim
reformation comparable to those that transformed Christianity and Judaism.
Implications: Virtually
all of the Muslim lands face an uncertain, and possibly bleak, future of
political instability and growing violence. The exceptions are the oil states,
where money can still buy relative peace, at least for now. These problems
often have spilled over into the rest of the world. They will do so again.
In a 1994 terrorism study for the Department of Defense
and other government clients, Forecasting International predicted that by 2020
a strong majority of the world’s 25 or so most important Muslim lands could be
in the hands of extremist religious governments. At the time, only Iran was
ruled by such a regime. That forecast still appears sound.
Iraq is likely to become the next fundamentalist Muslim
regime. Once American forces leave, Iran will support the establishment of a
Shiite regime much like its own in Baghdad. There is a one-in-ten chance that
this will set off a general war in the Middle East, as Sunni-dominated states
intercede to protect Iraqi Sunnis against Shi’a domination. However, Iraq and
Saudi Arabia already are negotiating to keep this situation under control.
Any attempt to reduce the commitment of Western forces
to the task of stabilizing Afghanistan will result in the restoration of the
Taliban to power.
Implications for
hospitality and travel:
In Bangkok and Pattani, Thailand, hotel bombs kill four people. Another bomb
shakes the Al Dera Tourist hotel, west of Gaza city. In Kabul, Pakistan, one
journalist dies in a hotel bombing. In Islamabad, Pakistan, a restaurant
bombing kills 20 people. In Baqouba, Iraq, a car bomb outside a restaurant
kills at least 70. In Mumbai, three hotels and a restaurant are among 10
targets struck by terrorists. All these incidents happened in 2008—and outside
Iraq it was a relatively slow year for terrorism.
In 1994, Forecasting International predicted that as
government installations were “hardened” against attack, terrorists would turn
to softer targets, and particularly those of the hospitality and travel
industries. That forecast has been amply proved correct. Hotels, restaurants,
and transportation facilities have become the preferred targets of both local
and international terrorists.
The next generation of terrorists is now being trained
in Iraq and Pakistan. As the American wars in those regions prove unsustainable,
the most zealous among them will continue their war against their chosen
enemies. Most will return to their home countries to attack local rulers.
Others will focus on the United States and its allies in the Iraq war. All of
them will continue to find hotels and restaurants easy targets with high
publicity value. Some may attempt to attack passenger aircraft, while others
will aim their bombs at public transportation. A few may even choose cruise
ships, conference centers, or casinos as their victims of choice.
Terrorism will become more common in the future, not
less so, and the hospitality and travel industries will remain appealingly
vulnerable to attack.
55.
International exposure includes a growing risk of terrorist attack.
Terrorism has continued to grow around the world as the
Iraq war proceeds, even as the rate of violence in Iraq itself has, at least
temporarily, declined. State-sponsored terrorism has nearly vanished, as
tougher sanctions have made it more trouble than it was worth. However, nothing
will prevent small, local political organizations and special-interest groups
from using terror to promote their causes. These organizations have found
inspiration in the successes of Al Qaeda, and many have found common cause. The
most dangerous terrorist groups are no longer motivated primarily by specific
political goals, but by generalized, virulent hatred based on religion and
culture.
On balance, the amount of terrorist activity in the
world will continue to rise, not decline, in the next 10 years. This was seen
in corrections to the State Department’s April 2004 report on terrorism, which
originally seemed to show a sharp drop in terrorist incidents. In fact,
terrorist attacks had risen sharply since the invasion of Iraq, both in number
and in severity.
Assessment: This trend
is unlikely to change in the next decade and relatively unlikely to change in
the next 20 years. A permanent end to the international terrorist threat would
require a broad philosophical and cultural change in Islam that makes
terrorists pariahs in their own communities. No such change is on the horizon.
Implications: Terrorism
against the West is likely to grow, not decline, when fighters trained and
blooded in the Iraq war are able to turn their attention elsewhere.
Western corporations may have to devote more of their
resources to self-defense, while accepting smaller than-expected profits from
operations in the developing countries.
Like the attacks on the World Trade Center and Pentagon,
the American embassies in Kenya and Tanzania before them, and the bombings of
the Madrid rail system and London subways since then, any attacks on major
corporate facilities will be designed for maximum destruction and casualties.
Bloodshed for its own sake has become a characteristic of modern terrorism.
Where terrorism is most common, countries will find it
difficult to attract foreign investment, no matter how attractive their
resources.
Though Islamic terrorists form only a tiny part of the
Muslim community, they have a large potential for disruption throughout the
region from Turkey to the Philippines.
The economies of the industrialized nations could be
thrown into recession at any time by another terrorist event on the scale of
September 11. This is particularly true of the United States. The impact would
be greatest if the incident discouraged travel, as the September 11 attacks
did.
The U.S. economy is being affected already by American
anti-terrorism measures. Since Washington began to photograph incoming
travelers and to require more extensive identification from them, tourism to
the United States is off by some 30 percent. The number of foreign students
coming to American universities has declined by a similar amount.
Implications for
hospitality and travel:
Until the terrorist problem is brought under control—probably not for at least
a generation—tourism to the more volatile parts of the Middle East will be a
relatively hard sell for Western vacationers, despite the appeal of historic
places.
This stigma is likely to spread almost instantaneously
to any destination that suffers a major terrorist incident. That threat is
likely to be one of the great unpredictable risks of the international tourist
industry for at least the next 20 years.
Terrorist hazards are not limited to Muslim lands. The
communist insurgency in Nepal, which now seems to be winding down, has
significantly inhibited vacation travel from China and India.
American-owned facilities, and those where Americans
congregate, will be favorite targets for many terrorists now being trained in
Iraq and Pakistan and will have to devote more of their budgets to security.
Disgruntled employees and former employees are the
single greatest threat, because they are familiar with security procedures and
weaknesses. Therefore, some of the most important security measures will be
invisible to customers, but highly intrusive for staff. These may include
comprehensive background checks for new hires, much as airports need to screen
such behind-the-scenes personnel as baggage handlers and fuel-truck drivers.
Those recently fired are a frequent source of problems.s
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