GARY BOWERMAN
We’re back. Welcome to the High Yield Tourism Podcast. So let’s talk about tourism segmentation optimization. Let’s get started. This is the High Yield Tourism Podcast.

GARY BOWERMAN
Hello. and welcome to season two of the High Yield Tourism Podcast. I’m Gary Bowerman. As always, I’ve got with me Dr. Jens Traenhart, and we’re going to be talking today about high-yield tourism in terms of segmentation in markets. This is a key issue at the moment, Jens. You and I, over the past six months, the first half of the year, we’ve both been visiting a lot and speaking at a lot of travel conferences. We’ve been involved in a lot of travel projects. And the issue of segmentation seems to be becoming more and more important. but also, I would say, a little bit more elusive, particularly for some of the destinations in Southeast Asia and the Middle East. So, Jens, let’s start. Let’s go back to basics. Segmentation optimization. It’s a grand phrase. What does it mean?

DR JENS THRAENHART
It’s interesting, Gary, because when we look at high-yield tourism overall, I mean, many people kind of think when we talk about high-yield tourism, we talk about luxury tourism, high-end tourism, but in the end, it’s really around optimization of source markets, optimization of the segments within a source market, and even then kind of drilling down and making sure that we attract the right people at the right time for the right product. It’s a little bit like yield management with airlines and hotels, right? Making sure that the right person is being attracted to optimize the yield of a hotel or an airline.

GARY BOWERMAN
Right. So 2025, we’re almost halfway through the year, Jens. Why is this more important than ever? Or is it? Is that just what we’re perceiving? Why is it now such a hot topic across the travel industries?

DR JENS THRAENHART
Well, obviously, I mean, we live in very changing times. I don’t want to say the word volatile, but after the pandemic and we have the various situations in the world that affect travel and tourism, where people are going. conflicts in various regions, if it is consumer preferences that are changing, if it is AI and a digital revolution that’s impacting how people make decisions in terms of where they go, how they spend their money, and really drive purpose in terms of how they want to find meaning when they go out there and connect with a destination, even if it’s just laying on the beach or if it’s exploring cultural sites. So I think it is important because it always is changing. And when you do a marketing strategy or a marketing plan, you always have to optimize that. Because also, I mean, it’s driven by, let’s say, air connectivity, currencies that are changing and so on. So it never stays the same. But then also making sure that you understand what your destination can really stand for. So there is meaning behind it.

GARY BOWERMAN
So those are good points, Jens. And also, I would say at the moment, we’ve really seen since the pandemic, I mean, some regions were hit harder than others by the pandemic and longer closures. And we’ve got to a point now where a lot of countries in the global south, especially Africa, Middle East, Asia, have identified travel and tourism as an economic pillar for the future, longer term. You know, you see a lot of these economic plans being put together now for… 2035, 2040, even 2050. So there’s a long-term focus on how travel and tourism can bring benefits to the national economy, to regional economies, to local communities. That’s very, very important. But to deliver on those, you have to have a much more stratified and strategized tourism plan. As you said, the marketing plan has to be much more driven by how you segment how you attract different source markets, but also, as you said, what you stand for and what it is that the destination or the cruise line or the hotel or the airline is going to deliver across a period of time. That’s all changing with AI. We are in an era of flux. We are in an era of volatility. That’s absolutely true. To bring that back, if you look at the way volume tourism, for example, has worked over recent years, a lot of that is about building capacity. That’s about increasing the numbers. Is that compatible with improving the segmentation of your market?

DR JENS THRAENHART
Yes, I actually, I believe so. I mean, obviously, you know, when you look at capacity building, you work with your stakeholders to make sure that they can deliver on the promise, that they can host the visitors that come into a destination. You know, if it is service, if it is cultural sensitivity, you know, all these kind of things. to make sure that visitors that come, if it’s domestic or international, based on various source markets, a Chinese traveler is different than a German traveler and so on, that they have the experience that they expect. And also from that standpoint, that they can drive yield, meaning that they spend more money, especially spend more money in the right places, but also maybe spend more time in the destination, visiting local communities and spending money at local businesses. So I think the capacity building side is an important piece of that, but it is different from the source market optimization in a sense that with source market optimization, we’re looking to make sure that we bring the right people into that destination that can actually spend that money. So there is a connection with capacity building and source market or segmentation optimization.

GARY BOWERMAN
Right. Okay. Two ways of looking at this. One, of course, is from, well, three, I would say. One is from the governmental side, one is from the supply side, and one, of course, is from the demand side. Take Asia Pacific for an example, Jens. We were both at the Skift Asia Forum in May. One of the best and most succinct phrases I’ve heard to describe Asian travel markets at the moment was from Laura Holdsworth from Booking.com. And she described, in four words, a dichotomy of trends, which I think is absolutely fabulous. I think that really explains the sense of evolution, diversification, fragmentation, whatever phrase you want to use about how travelers are thinking about travel today and the challenges that presents for the industry, a dichotomy of trends. People want customized and personalized travel experiences, but that’s quite hard to define when you have such fragmenting trends across the region. That doesn’t just apply to Asia Pacific, of course. I think just the context of this region and its economic growth and just the explosion of travel since the pandemic kind of elevate those. But that really shows, I think, the challenges for the industry. When you’re looking at segmentation, when you’re looking at your sources, when you’re looking at how you engage with consumers, wherever they come from, you are now dealing with more variables than you’ve ever done before.

DR JENS THRAENHART
Yeah. And I think it’s a great subject to talk about trends, right? I mean, we all read these trends reports that come out mostly at the end of the year or the beginning of a new year. And they talk about solo travelers and adventure travelers and digital transformation, all these kind of things. The question I have for you, especially for someone who has done reports for various publications. As an economist, how relevant are these trends today? Because I think in the end, if I read, well, you know, the biggest thing is now solo travelers. Well, you know, how relevant is that for me when I build a marketing strategy? Wouldn’t it be more relevant to really making sure that I understand the assets in my market, right? So let’s say we’re looking at stargazing. I mean, stargazing could be amazing in Finland, in Mongolia and the Gobi Desert and in Saudi Arabia. But it probably is not that relevant in New York or London, you know, where you can’t see the sky with all the lights and potentially pollution. But still, if now stargazing is the biggest trend, you know, is that relevant for me? And how do I now leverage these trends? Or is it better for me to ignore the trends and just focus on what are my assets and how can I now target the right customers that can appreciate these assets and then spend the money in the destination that then also drives investment?

GARY BOWERMAN
Yeah, it’s a good point because it comes back to the word of what is trend and what does trend mean at the moment? And I think there are various different definitions of what a trend is. The consumer market version of a trend the travel market version of a trend and the investment market version of a trend. Different investors don’t invest on trends they invest on long-term solidities they’re looking for securities they’re going to help them invest and one of the most important parts of travel and tourism now from a governmental perspective is to help attract investment whether that’s investment for infrastructure whether it’s investment for tourism services or whether that’s just investment that’s going to help the national growth plan over the next 10, 15, or 20 years. So coming back to the issue of trends in Asia, I still like the phrase dichotomy of trends because I think it shows that it’s an overused term, but it’s like a galaxy. There are such a galaxy of trends. And if you look, for example, at consumer trends in a market like China or India, these massive markets where everything is changing, consumers are incredibly indulged by brands, destinations by travel marketers very very indulged it means that trends come and go like lightning speed and you reference stargazing as a trend and we can say it’s a trend but when you delve deeper into the micro trends of stargazing they become even more interesting because where is it that somebody wants to go stargazing they may have done it in their home country they may now be looking for something that They go stargazing in Mongolia or they go stargazing in the Gobi Desert, but they want to combine that with a trip to a city, to another destination, to the beach. You know, it’s not just a singular trend in itself. So if you’re trying to attract stargazers, you don’t just appeal to them as stargazers. You have to look at the rounded part, the holistic part of their travel. And that’s where it comes back to the source market.

DR JENS THRAENHART
Exactly. I mean, another interesting example, you know, kind of looking at our friends at Crescent Trading, halal travel. Right. I mean, yes, it’s a huge opportunity for many destinations. And you and I have done work on that as well. But when you then go deeper into it and you look at, let’s say, the female halal traveler, you know, which in itself is highly influential and spend a lot of money in destinations as well. It is a whole different segment than just the halal traveler overall. And I think that’s sometimes overlooked. The other thing maybe to look at is, let’s say, culinary traveler, right? So I mean, when we look at, let’s say, culinary travel from China versus Germany, I would assume that culinary travelers in different countries have different needs. They’re not just, you know, culinary or food travelers. And then obviously, when you look at China overall, you know, from Beijing to Chengdu to Guangzhou. There are different needs, again, when it comes to culinary travelers. I mean, you’ve done a lot of work in China, as have I. But what are your thoughts around that?

GARY BOWERMAN
Well, I think that’s when you look at the mega markets, you look at India, you look at China, you look at Russia. You know, you’re almost talking about continents. You can’t really talk about Chinese travelers or Indian travelers or Russian travelers in any context, and particularly when it comes to food, because, you know, there’s such diversity within markets. not just between markets. You mentioned Beijing, Chengdu, Guangdong, very, very different temperatures, climates in terms of the ingredients that are produced, how they’re turned into food, the dining preferences of people in those regions. The same in India. I mean, if you look at the south and you look at the north, you look at the east, very, very different culinary preferences. Russia, too, is a huge country with different culinary traditions. Spain is another good example. Great culinary traditions, but very, very different across the region. So that’s where you have to segment. And I think that the halal market you referenced as well, you know, I think you mentioned Crescent Rating. One of the interesting things they’re doing now is they’re creating the halal gastronomy awards. They want halal food to be judged in the same way as Michelin. You know, they want to create this elevated status for good quality halal dining, however that is interpreted. In different markets around the world and it will be interpreted very very differently I think that’s really fascinating and to me that really shows you how whether you look at the term trends or whether you just look at how elements of travel will continually evolve and diversify and dining is particularly one of those we’re all foodie travelers now everyone in the world is a foodie traveler but we all have changing preferences we understand more from social media we know more about food before we travel And that really impacts our expectations.

DR JENS THRAENHART
I think it’s a great point. And with High-Yield Tourism, the service that we have developed over the last 18 months, yield management for destinations and also for attractions and hotel companies, but in a different way. It’s really attracting the right people looking to understand the segments within a source market and drilling down to it. And that normally, and we’ve both been working with various destinations on marketing strategies, is normally not done. And I think that’s the exciting opportunity right now, helping destinations, helping travel and tourism organizations and companies to make sure that that is optimized. Not just looking at the normal source markets, but making sure that the money is spent in the right way on one hand, but then also it’s optimized in a way that the right people come into a destination that spend more money, that the money goes into the right pockets within a destination. So the money stays in the destination and doesn’t leak out. The leakage factor is reduced. So that’s, I think, the exciting opportunity right now. as we’re helping destinations to really make sure that tourism is almost like a means to an end. It’s not about, you know, getting more visitors in. This is not even almost like getting more spend in, but making sure that it drives economic benefits. And as you said before, it also drives investment because investment, especially for developing countries, is so critical to drive and build economies.

GARY BOWERMAN
Yeah, I agree. And it’s also a 180 degree, perhaps even a 360 degree mindset that’s needed within the destination marketing sphere, I think. Because traditionally, if you look at the way destinations are marketed, it starts with a campaign theme, it starts with a slogan or a tagline, and then it drips down to, well, how do we use that to attract tourists? But I keep saying, and I’ve said this on conference stages around the world, I’ve said this in various reports, I’ve said this in investment boardrooms. Travel consumers today are in control, not the destinations. So you have to start from the consumer demand perspective, not from the campaign theme perspective. That’s how fast -moving consumer goods or luxury brands, that’s how they market. They start from the consumer perspective. They know what they have. They know what they stand for. They know what they want to get across. But the campaign is driven by consumer expectations at that point in time. And I think that is very, very different to the way destinations are marketed.

DR JENS THRAENHART
Exactly. And I think right now when I look at and I have a whole library of marketing plans, marketing strategies from all over the world, destinations from cities to countries to region, it’s a bit of a passion of mine to collect these marketing strategies going back probably over 10 years. And even the most recent ones that are being published. you know, kind of miss that opportunity. And I think that’s the chance now for destinations to kind of work with people like us that, you know, kind of understand how do you look at developing a marketing strategy differently to make sure that we’re not just looking at the Chinese traveler or the German traveler, but making sure that we’re looking at the optimization of these source markets by understanding the segments within. And I think that’s the huge opportunity, especially for smaller destinations that have assets that they can really position themselves around and leverage storytelling to inspire people that are relevant for that passion, for that community.

GARY BOWERMAN
So in that sense, Jens, does it mean that destinations have to think less in terms of national source markets and more in terms of trend or niche segmentation source markets, or is it a combination of both?

DR JENS THRAENHART
I think it’s a combination of both. I think it’s a great question because on one hand, you still have levers like air connectivity, currency, right? So I mean, do I get good value for my money if I go to Japan today? Or do I get good value for my money if I go to Europe today with the euro? So that is a decision-making factor when people choose a destination. Also, is it easy to go there? Are the flights affordable? Do I have to change planes two, three, four, five times? Do I have to get a visa? And how long does it take to get a visa? We’re lucky as Europeans, but a lot of people, let’s say friends from Thailand, sometimes it takes 15 to 30 days to get a Schengen visa for a European country. So all these are drivers to look at the national side. So when you look at the different levers from a marketing strategy standpoint, but then to really target the people, to inspire the people, to make sure that there is passion behind it, as we call it, say, passion tourism, that is then looking at the segments within my destination, then understanding what are the right segments within the German market that are really poor segment or micro niche for my destination or for my hotel or attraction.

GARY BOWERMAN
Before we finish, because we’re running out of time, Jens, just before we finish, when you listen at travel conferences in particular or when you talk to the industry, we tend to think of tourism and promotions in more of a macro format, in terms of looking at the source markets as the bigger picture, the national markets, the air connectivity. Do you think that will change? Do you think that as tourism becomes more competitive, which it clearly is, it’s becoming much more competitive amongst destinations, and you’re also seeing more destinations competing for, a good example is Southeast Asia, if you go back 10 years. Most Chinese tourists who were traveling out of China went to Northeast Asia, Japan, South Korea, and Southeast Asia. Increasingly, they’re traveling to the Middle East, into Turkey, into Egypt, into Central Asia. You know, there’s just a diversification. So there’s more competition to attract these travelers. Do you think that means that campaign planning is changing? Or is it at the moment just a kind of, well, they’re coming. So let’s enjoy that. And when it gets difficult, we start planning again. I mean, is it simply that there isn’t a longer term plan in place? I think that when I look at many of the marketing plans and marketing strategies,

DR JENS THRAENHART
think that when I look at many of the marketing plans and marketing strategies, I see that most destinations or consultants who create and develop these marketing strategies start with a how. They start with the channels. Okay, we’re going to go on social media. We’re going to go on TikTok and Instagram, do a fam trip with media. We’re going to go to trade shows. We’re going to do a campaign and all these kinds of stuff. But that’s the how. I think people haven’t started with the why. Why should someone come to my destination? What do we stand for? What can we really do to enhance someone’s life? What’s the purpose behind someone can have when they come to our destination? And then it’s the what. Who are these people within that? What do we need to do to attract them now? And then the how comes at the end. So I think we need to flip the model a little bit. And I think when we do that, things will fall into place when we start with the why and really making sure that we leverage what a destination stands for, what are the assets within the destination, and then making sure. that within the key source markets, we understand who are the people that are right for our destination.

GARY BOWERMAN
We’ve covered a lot of ground, Jens. There’s plenty that we can then segment into future podcasts. We’ve started season two now. How do you think we take this forward in terms of your point, which I like, about the why, how, and what? Whichever order you put those themes into place, what would you like to take from today’s podcast into the next parts of the series?

DR JENS THRAENHART
What’s interesting in terms of as we have developed this whole concept of high-yield tourism, and I would almost say we coined the word high -yield tourism. You know, it wasn’t really used before. And when it was used, it was more used in the context of luxury tourism and high-end tourism. But I think what I would like to focus on is really how we can help destinations. How can we help DMCs, hotel companies, cruise lines, attractions, and so on, to really make sure that they optimize their marketing strategies. Similar to this whole concept of yield management, but making sure that we start with the why and that we understand the destination and so on, and then drilling down. And I think what’s interesting in terms of our small team and then our kind of partners around that we have strong relationships with is you come into this as an economist. And really have looked at the trends, build reports for companies like Phocuswright and other ones and so on. And then I’ve been working for tourism boards at senior levels, you know, from Asia to North America, to the Caribbean, to Europe, the Middle East. And bringing those pieces together, I think, is unique. And very well needed in today’s world. You said it’s a very competitive landscape, but it’s a changing landscape. And if you don’t optimize today, I think you’re just not competitive. I think it’s as simple as that. And I think I’d love to take this podcast further to provide insights to our listeners, our tourism boards, and also organizations and professionals from the private sector. How can they leverage our thinking in becoming smarter destinations, becoming smarter travel and tourism organizations and companies to make sure that they can deliver economic benefits for their stakeholders and their shareholders?

GARY BOWERMAN
Yeah, I agree with that. I think you mentioned there about the term high-yield tourism. One of the questions I get asked quite often is, what’s the difference between high-spending tourists, value tourists and high-yield tourists. And my simple answer to that is that high-yield tourism is a strategy. It’s about future planning. This is about making travel and tourism overall, whether it’s in a destination, whether it’s an airline, whether it’s a cruise line, whether it’s a hotel, more resilient in future. When you talk about high-spending or high-value tourists, you’re really only talking about the short-term financial rewards. You’re not really thinking about a longer-term plan. And you use the term yield management. That’s really where we’re going. That’s where we’re trying to talk about segmentation and optimization, because this is really about the business of tourism. This isn’t just about the financial returns in the short term, in the longer term. Yes, of course. We know that tourism is a very, very important economic pillar of all destinations, increasingly so. But it’s about the yield management plan for the longer term. Whereas high value and high spending tourism, that’s just getting money in today and it could leak out tomorrow. There’s no actual corresponding strategy behind it.

DR JENS THRAENHART
I couldn’t have said it any better, Gary.

GARY BOWERMAN
So again, that completes issue one of season two of the High Yield Tourism podcast. I look forward to catching up with you again next week for episode two. If you’d like to join our discussion, please drop us a note on our LinkedIn page at High-Yield Tourism, or you can find out more about what we do and the services we offer at highyieldtourism.com. So until next time, Jens, see you next week.

DR JENS THRAENHART
Thank you, Gary. See you soon.