GARY BOWERMAN
Hello and welcome to the High-Yield Tourism Podcast. I’m Gary Bowerman. On today’s show, Dr Jens Traenhart and I will be debating the differences between high-yield tourism and high-value tourism. So let’s get started. This is High-Yield Tourism.

GARY BOWERMAN
Hello, and thanks for listening in. On today’s show, we’ll be examining why high-yield and high-value tourism are starting to be used interchangeably, and why we believe that this is a mistake for tourism strategy planners and destination marketers. Jens is with me. Jens, great to be back with you again. We’ve been discussing this on and off over the last week or so, I guess. What sort of sparked this? Why are we noticing this is starting to happen?

DR JENS THRAENHART
Yes. Hi, Gary. Good to be with you again. I don’t think it’s just maybe a week ago. I think it’s probably around two years ago. You know, when I started my blog, Balanced Tourism, coming out of Barbados Tourism and having worked for other tourism boards, I understood that in the end, while people talk about sustainability and flight shaming and all these things, in the end, it is about growth. Because there are political implications that come with it. You know, you need to bring people in. There’s economic development that’s associated with tourism. But then it’s around the right growth of tourism. And recently, you know, where before when we started talking about high-yield tourism, no one used the word high-yield tourism, essentially. I mean, it was just something. I mean, all the domain names, all the social media accounts were available. When we searched it, there was nothing really out there. But, you know, now I see press releases, I see articles, I see reports, I see a lot of people talking about high-yield and high-value, but they kind of mesh it together. And as you just pointed out, Gary, it is different. And I think that’s why we started High-Yield Tourism as a venture, as an advisory firm to help tourism boards and hotel companies and other travel and tourism organizations to grapple with that in the first place.

GARY BOWERMAN
Yeah, I agree with that. We’ll come back to the differences between high-value and high-yield. The debate has moved on, particularly here in Asia. I remember when all the countries reopened after the pandemic here in Southeast Asia, the kind of term du jour back then was high-quality tourism, which was always very nebulous and was very, very ill-defined. Thankfully, that one has seemed to disappear. And we’ve been kind of left with mostly high-value tourism. But as you say, we’ve been pushing high-yield tourism as a strategy. But the reason that this matters, Jens, you’ve just written a new article, and I think this is quite important, is that you say our industry language actually shapes its direction. That’s quite an important point to make, I think.

DR JENS THRAENHART
Yeah, correct, Gary. I think the first thing, the few things that were out there as it relates to quality versus quantity, high-value, high-yield, the stuff that we saw around two years ago, a year ago, even a few months ago, associated high-value and high-yield with luxury. And I call it the high-value trap. And I kind of point to that in my recent article that I think we’re going to publish in a few days. But what I mean by high-value tourism trap, it’s seductive and it’s simple. And I was there as well. I mean, I used to work for Fairmont Hotels and Resorts and we were looking to bring luxury guests into the hotels. I mean, it’s a luxury hotel company. And we tried to build experiences that they could embrace, you know, and did non-traditional partnerships. On top of that, that was at that time, you know, over 20 years ago, was very innovative, you know, kind of working with Porsche on driving a new Porsche from San Francisco to Sonoma, staying at the Fairmont Hotels there and having a wine experience, a partnership with the Boston Symphony and getting backstage, playing the latest tailor-made golf clubs, all that kind of stuff that is associated with luxury. And there’s nothing wrong with that, especially when you create high-value experiences around it. We’re not against high-value in itself, but it is different than high-yield. The reason I’m pointing out this high-value trap is because people just say like, okay, yeah, I’m just getting rich people into my destination. I’m getting rich people into my hotel. I’m going to get rich people into my attraction and buying my products and services. And now I’m doing high yield tourism. And that’s, I think, essentially what we’re trying to reveal here, that that’s not the case. And that’s why this high-value trap, before we actually going into high-value tourism, because luxury, this connotation of luxury is different actually than high-value tourism. And that’s why I call it a high-value trap.

GARY BOWERMAN
It’s interesting that you mentioned some of the work you’ve done with hotels. I’ve done a lot of work over recent years with hotels in China. And normally when you look at economic strategies or developmental strategies, they tend to go from bottom up. So you tend to look at moving up the value chain. Tourism has definitely tried to do this, has moved up from mass tourism through sort of mid-range tourism up towards luxury tourism. But what we’ve also seen, particularly since the pandemic, is a drip-down effect. So we’ve seen top down from luxury tourism, a lot of those experiences that you talk about from the luxury hotels. Luxury brands and luxury hotels have tried to expand, and they diluted their message. And what that has done is that it has dripped down a lot of their high-value or their high-yield or their high-quality, whatever you talk about, down into the mid-range. And therefore, we just have almost a morass of different terminologies and different concepts moving into the mid-range, the mainstream of tourism from the bottom up and from the top down. And so let’s sort of pull that apart, Jens, really, because the focus of this discussion really is to differentiate what we mean by high-yield and what the travel media and sometimes destinations, sometimes governments, sometimes travel brands term as high-value. Now, one of the terms that I see quite frequently around high-value is they try to sort of make it cute. So they say high-value, low impact, which actually when you think of it, it makes no sense whatsoever. It really, really is a non sequitur. But let’s focus mostly on high-yield. And what is it we actually mean about high-yield tourism? Because I’ll tell you why I think it’s important for us to discuss this at this time. It is a flexible and developmental term. I think we ourselves have developed our concepts over the last 18 months, two years. Where are we at right now?

DR JENS THRAENHART
Well, I think let’s go back exactly as you just articulated. Why did we actually do this? And as you know me a little bit by now, we’ve been working for two years. I always like to start with the why. And I think that’s the problem that many tourism destinations, DMO, even hotel companies miss. They don’t start with the why. And so I get these people, and I see it in Thailand, for example, where they’re spending millions of getting luxury consumers into the destination, into the hotels. They’re staying three nights, but in the end, beyond the credit card transactions, there’s little or no positive benefits to the economy, right? And so they’re saying, well, yes, we’re doing high yield because we’re bringing these people in that’s spending a lot of money. Yes, they’re spending a lot of money, but in the end, it doesn’t create any benefits for the destination. Actually, it could be the opposite. It could be now, you know, as even before COVID, there is pushback. People say like, well, you know what, all these people coming in and not just too many people, this term of over-tourism, but where people say, listen, you know, you’re talking about tourism being that holy grail that makes our lives better. But I see these people driving by in their Porsche, Mercedes, luxury cars, but I’m still poor. I’ve seen it in Barbados. And that’s what happens then is, and you see it in a lot of the Caribbean islands, then crime develops as well. So again, there are these pushbacks. So that’s the first thing. So if we were to create a visual, so we have, let’s say, the high-value trap, which is luxury, attracting luxury consumers that spend money, but the money doesn’t stay. The second pillar, I would say, is high-value. High-value is actually people that are looking to connect to the community. They want to contribute economically. And what they do many times, they might, you know, spend a week learning to weave silk in Laos. Or they go into a pasta, authentic community pasta cooking workshop in Italy, or they’re going into ocean conservation workshop in Australia at the Great Barrier Reef. So they want to connect. They want to be there. That’s what we call high-value tourism, right? And that’s, I think, what many people are looking now as they’re moving away from, oh, yeah, it’s not just about spending money. It’s about connecting to the community. We read it all the time. You know, you go into all, you do a search, you see on LinkedIn, it’s all there. What’s different to high-yield tourism, and that’s where you and I agree, and that’s where we connect, and that’s why we built this venture, is high-yield brings the conversation into a sharper economic focus, but not in the traditional sense of just chasing high spenders. Still, it’s around really making sure that we can see what I call the return on experience. ROE. What’s the return? What’s coming back into the destination? What stays? And that’s, I mean, as you coined this term of the tourism EBITDA, you know, also looking at the expenses. What’s the cost of tourism? You know, almost like, you know, it’s like a balance sheet. And, you know, when we started, you said, you know, you’re listening to a lot of these earning calls from companies and so on. You said, hey, you know, yield, it comes from finance, you know, and it encourages people with public companies to look at the return on investment. We call it the return on experience. So that’s very relevant for destinations and for hosts. And then at the end, we see what’s the net benefit when we consider revenues, jobs, seasonalities, infrastructure, plumbing, garbage removal. All these kind of stuff coming together, and then does it drive community well-being?

GARY BOWERMAN
From my view, the way that high-value now is being used is it’s an easy claim. High-value is a tagline. It’s a slogan. It’s even a meme, really. You can apply high-value without actually having to develop a strategy. In Asia, we’re seeing it very much, but it’s around the world as well. We’re seeing that slowdown of growth of travel after the post-pandemic surge. We’re definitely seeing a slowdown around the world. You look at the earnings calls of airlines or hotels, and there is definitely a slowdown. And so there’s a response, there’s a reaction. How do we reactivate that surge? How do we get value back? How do we bring back tourists? How do we increase spend? And I think that’s where you’re starting to see much more high-value usage because it’s seen as a way to increase spending in tourism. I wrote an article this week for the Asia Media Centre called How Valuable is Tourism for Japan’s Economy, which is a pretty interesting theme at the moment, because Japan is breaking all of its monthly and half-yearly records in terms of inbound travel. It’s increasing its actual visitor spend. But it still actually remains quite a low percentage of the overall economy. So we should be looking at the yield. And the yield, Jens, as you said, it’s a term that was borrowed from agriculture or from finance. It’s a much more holistic term. You can look at the yield of tourism, as you said. You can look at the return on experience. You can look at the yield socially in terms of communities. You can look at environmental yield. It’s not just about the financial, the fiscal returns of tourism. What we’re seeing around the world is that tourism is starting to move away from this pure value spending model in most countries. But still, we use terminology that takes it back down that route. And I think the high yield terminology moves tourism into, as you said, balance sheet driven way of looking at tourism, where we incorporate so many more things. Value is also quite a subject. term. I mean, how do you decide what value is? Whereas yield is more determinative. It’s more holistic. And I think it’s, as you said, much more measurable.

DR JENS THRAENHART
Absolutely. I think you nailed it there. I think high-yield creates a ripple effect. You know, there’s more to it than just, okay, I’m having an experience, a one-time experience, and I learned some silk weaving in Laos. So that’s, yes, it’s better than maybe being in an all-inclusive resort. So there is maybe more value to it, to the destination. But I still don’t know if it actually creates a yield or economic benefits and ripple effects to the destination. So I’m almost like stopping halfway. I’m saying like, OK, well, now I am moving forward, which I applaud destinations for. I’m moving from just attracting luxury tours. And many destinations are not there yet, as we can agree. But the ones that are moving on, just attracting luxury consumers into high-value tourists. These are the ones that, you know, connecting with the community. But as you just said, you know, we still don’t know if it actually drives economic benefits. You’re coming into this partnership from an economic standpoint. And I think that’s why we connect. I come from, let’s say, I’m very into this whole concept of passion tourism. I’m working on a book right now on that. And when you talk about passion tourism and these micro niches, you’re actually creating relationships. You’re coming back. You’re becoming an advocate for the destination. And that’s actually where you have the return coming in. Because then, I mean, we see it on the consumer side, right? I mean, on the retail side where people are investing money in customer lifetime value, right? This is what we’re talking about here now. I’m not just going to Laos once to learn silk weaving. I’m not just going one time to Australia to learn about ocean conservation. No, I’m going there. I want to learn. I want to contribute. I want to come back. I want to become an ambassador, an advocate. And I think these ripple effects, that’s where we’re driving the yield.

GARY BOWERMAN
Yeah, that’s a good point. I was on a webinar the other day and somebody asked me about our podcast that we’ve done recently. And they asked why it is that we chose digital nomads, remote work, work from anywhere, tourism, and dark sky tourism. Why we chose those two themes for podcasts recently. It’s because they tap into where we are at the moment in this global discussion about tourism, and particularly the move towards yield, the move towards strategization. If you look at most tourism economies around the world, digital nomads or dark sky tourists don’t really contribute very much, not yet. But the debate around them is about how they become more immersive, how they become more experiential, and how they actually tap into the way. that consumers around the world are now thinking about travel and tourism, which is different to the pre-pandemic. I don’t think we can deny that. People do have a different way of looking at their lifestyle, about what they want from their lives, what they want from their leisure time, what they want from their travel experiences, what they want from tourism. And they are starting to, in general, be a little bit more experimental and a bit more adventurous. So we have to start asking these questions because we can’t just simply say, well, luxury tourism is changing or high-yield tourism is changing or mass tourism is changing we actually have to delve much much deeper which is what we try to do into where those changes are actually happening now that will matter in five years time ten years time where those trends will go in future you know we’ve talked a lot in the past about things like self-drive tourism which is really developing fast in Asia but if you talk about that on a conference stage in Europe or North America, for example, they say, yeah, but we had self-drive tourism 20 years ago, which is true. But the way that it’s developing and evolving in this part of the world is very, very different. The technology is different. The experiential demands are different. The service provision is different. The digitization of self-drive travel is very, very different. So what we’re seeing is some of the trends that maybe existed in… The more mature parts of the tourism world are developing very, very differently here. And this is where I think high-yield tourism brings together. We don’t call ourselves futurists because we’re not. But what we are trying to see is where current trends will take the industry in future. And I think this is a really interesting time because we are now in the middle of the decade, five years since COVID. We actually have to start thinking as an industry about the future, not looking back at what the numbers were pre-COVID.

DR JENS THRAENHART
You’re absolutely right. And I agree with you. We’re not futurists, but I think we’re pretty good in connecting the dots. And when you’re connecting it, actually, while you were talking, something popped in my head. Maybe this whole thing is a journey, right? You are first starting to attract luxury consumers, high spenders. Then the second stage is you’re looking to create high-value experiences. Right. You know, for these micro niches, silk weaving, bird watching, whatever it might be. And then out of that, you build the right infrastructure now to make them become advocates to come back. And essentially what we’re doing with that is by curating these high-value experiences for travellers that are paired with engineering. The high-yield outcomes for communities, that’s where you drive the high-yield and these ripple effects. But I think what I see right now is people just kind of throwing the words out. And this is what prompted me to write this article and say, OK, we’ll do high-value, high-yield. It’s all the same thing. And in the end, it’s always just attracting high spenders. But I think it’s actually very complex to build a high-yield tourism strategy. It requires a lot of experience on the ground that I have. It requires a lot of economic experience that you have. And it is something that is, in one hand, you need to develop the models and having the data-driven expertise. On the other hand, you need to know how these destinations operate, what are the value drivers, what are the politics around it, and then building a high-yield tourism strategy where you can go into a destination and assess what are the strengths of the destination, number one. And then also, what are the opportunities, right? With opportunities, sometimes you have AI technology as new opportunities, maybe new market segments, maybe new air connectivity, right? And then the next thing is aspirations. What do you actually want to stand for as a destination? You don’t want to be just another beach destination, be cookie-cutter, because what happens then, you’re competing on price, right? And then the last thing is the results, right? What are we actually measuring beyond just visitor arrivals and spent? What are we, as you said, creating this whole holistic measurement system? And I’m working on another article right now where I adapted a 15-year-old model called the SOAR model. Strengths, opportunities, aspirations, and results. It’s a 15-year-old model. And I adapted this model for high-yield tourism. And I built a whole framework around it. And this might be our next podcast where I’m introducing that. And I just finished writing this article because it’s a whole new framework. You know, when we’re looking at the why, we’re looking to create a balanced tourism growth, where we don’t get pushbacks from the residents, where we actually drive economic benefits. So really the why around balanced tourism. The what, how we’re looking to make people become advocates, focusing on passion tourism, on micro niches. And the how is the sales model. which is a strength-based strategy, not by starting with the weaknesses and the threats, and we see that all the time with destinations, but starting with the, sorry, not starting with the weaknesses and the threats, as we see many times at many destinations and tourism boards. When I see a marketing plan, and I just saw one, the new one from a Mekong Tourism Coordinating Office, which has a big SWOT analysis in there. What I’m proposing is stop the SWOT analysis and start with the SOAR analysis, which is strengths, opportunities, aspirations, and then holistic results.

GARY BOWERMAN
The biggest mindset challenge for travel and tourism going forward is to get away from the type of strategizing that’s been done before, because we have entered a new realm. We’ve come out of that high-growth period before the pandemic, then the slump during the pandemic, and then this Renaissance period, which is now over. And we’re moving into an era where we have to accept that travel and tourism is very much enmeshed into global geopolitics, geoeconomics. And barring some kind of miracle, the world is heading towards a global economic slowdown, perhaps even a global recession. I think we have to accept that. So putting together five-year tourism plans right now is just simply unrealistic. We actually have to look at how we are looking to develop tourism and travel planning both in the short term the medium term and the long term now you could say well yes some destinations hedge that by having three different scenarios best case worst case and mid case scenario but sometimes the uppercase scenario is the one that always gets published the one that always gets promoted in the media and that’s the one everybody aims for then if you miss it there’s the disappointment. I think really where we have to look at now is breaking down travel and tourism lifestyle and the whole economy that comes with tourism into much more detailed mini segments, like you said, Jens. And we have to have a much better assimilation of international and inbound tourism with domestic tourism, because in future they need to interact and interlock in a much more effective way than they’ve done before. If you go back to the pandemic, particularly in this region, Asia Pacific, you know, had two, three year long lockdowns. All the travel industry’s resources were internalized. They were returned towards the domestic market because it was the savior. It was the only thing that kept the industry from complete collapse. And then as soon as the borders reopened, the focus went straight back to international tourism. Domestic tourism got sidelined. And domestic tourism now, if you look in countries like Thailand, for example, the way they’re trying to reactivate domestic tourism, which is suffering because the economy isn’t doing very well, the Thai baht is quite weak and prices have gone up, is they’re trying to do it through subsidies. They’re trying to subsidize domestic tourism. And that’s just a short-term elastopass. That isn’t really going to fix the long-term issues. So I think the high-yield strategy going forward has to be, if we want to focus, as you say, Jens, which we do, on looking at how communities, how the environment, how the economy, how society responds to the future of tourism, then we have to make sure that domestic tourists are well -catered for and that they are actually a real part of the future plan.

DR JENS THRAENHART
I agree, Gary, and I just want to go back for a second what you just said from a practical standpoint for tourism boards and hotel companies as it relates to the one or the five-year marketing strategy or tourism strategy and I agree with you I mean you know you can’t just you know do a five-year strategy anymore you know you have to have strategies where you can adapt very quickly however And this is what I would add to it. You need to have a foundational framework that you drive consistently because in the end, a long-term strategy may take you 10, 15, 20 years to develop, right? So what I see right now, people do a strategy and then… The last strategy they throw in the bucket. Maybe it’s because there’s new leadership, a new minister and so on. They’re like, oh, what the previous one did, you know, I need to kind of redefine myself. I need to position myself. So whatever was in the old strategy, I’m going to throw it in the bin. And that can be done from a tactical standpoint, right? A new logo, a new tagline, a new color from blue to pink, whatever it is, and doing campaigns and all that kind of stuff. But the foundation, and this is why I was talking about the high-yield strategy, that is a long-term strategy that is very complex because it develops a whole mindset shift. And that’s the key here. And it also requires bringing in investors to make this all happen. But these investors, they could see a very big return because these people that are coming to the destination and spending money, they’re going to be there for the long term. They’re going to become advocates. So we’re really looking to rethinking tourism in a whole different way. And so creating a long-term strategic foundation is key. And then all the tactical stuff on top, that can change based on the flavor of the day or on different opportunities that come along, technology, air connectivity, or other political or economic situations from crisis to wars and all of that, where you need to adapt very quickly.

GARY BOWERMAN
Yeah, I would agree with that. I think coming back full circle to where we started this conversation, Jens, we’ve said right from the outset that what sets high-yield tourism strategy planning apart is that it’s not dogmatic, that it is adaptable, that it is flexible, and that it is customized very specifically to a country’s own unique circumstances. We know that travel and tourism is in different places around the world. We know that developmental models are in different places. We know that emerging economies place a much greater emphasis on the revenue side of tourism simply because their economies are not strong enough to use tourism in a more, perhaps, mature and sophisticated way, they need to bring in the revenue, they need to bring in the foreign exchange. We understand that that’s realistic, but I think what we’re saying is there are models where you can actually do that while you can also, you can bring much more foundational, as you said, societal and economic strategies that overlay that rather than simply, as you said, if you get to a crisis point in three years, if there’s another pandemic. You haven’t actually moved on since the last pandemic because all you’ve been doing is collecting revenue in the meantime. You haven’t built the resilience that you said you would do five or six years ago. And you haven’t actually put in place a strategy that actually enables you to weather a major economic shock because they may be coming. And tourism can do that. The one thing is tourism isn’t just a tool. It’s not something that you just use as an ATM when it’s working well and as a method to get you out of a crisis. It’s something that can develop over time. And I think what you’re seeing in Europe now, I don’t know, there’s kind of reckoning that tourism has reached such a point, such a scale, particularly in the summer seasons. Yes, the revenues are huge. The leakages are huge. But also the challenges are enormous. And somehow you’ve got to try and balance that out. And emerging economies have a chance to do that. Whether they will is to be seen, I guess.

DR JENS THRAENHART
No, and you just mentioned a word here, resilience. I think high-yield tourism drives resilience. It drives a balanced tourism economy that in the end makes the destination resilient to whatever may come because you have that foundation there and you have these ambassadors and advocates and passionate travelers that will stand up for you and they will protect you because they don’t want these assets to go away. Because this is fulfilling their passions, what they want to outlive. So I think in the end, resilience here is really the holy grail. And that’s what I wrote my doctorate thesis on five years ago. And the high-yield tourism strategy is really the way to get there. And it’s long-term, it’s complex, but it’s about asking the right questions. And it requires travel and tourism leaders who look past their comfort zones and look at problem-solving and imagine what their destination really could become. And that’s the visionary behind it. And when I look at some of my friends that run tourism boards, for example, Ras Al Khaimah with Raki. I’ve never heard of about Ras Al Khaimah before, you know, and he put it on the map. He was looking at the UAE from a whole different standpoint, adventure tourism and really attracting people that normally would go to Dubai and say like, wow, you know what? There’s something else in the UAE. And these people are coming back. They’re now buying real estate. And soon there will be obviously a lot more in Ras Al Khaimah from casinos to flying taxis to film studios. But I think in the end, it’s really having a long-term strategy, building that out, to create a resilient destination and being visionary enough to see what that destination could become.

GARY BOWERMAN
Ras Al Khaimah is doing a terrific job in raising its profile and branding itself as a destination. I think another one that’s doing that, but in a very different way, is Armenia in Europe, which is really looking more at the co-living, the work environment, the digital nomad sector to try and build interest in a destination where obviously there’s a lot of competition in that part of Europe. Yeah, I think we’ll see more of these case studies for the future coming through. But then the destinations that have been doing well over recent years, they’re going to have to reposition. They’re going to have to rethink because competition is going to come in very different ways over the coming years.

DR JENS THRAENHART
Yeah, another one I just want to point out since we’re naming destinations, not to leave some good ones out there, is Slovenia. Right. I think we talked about this before and they were looking about how can we compete with Switzerland and Austria on skiing? And they created a whole new narrative around it. And now it’s one of the most visited destinations in Eastern Europe.

GARY BOWERMAN
So thanks very much for listening into our conversation today. You can continue the conversation on our LinkedIn page at High-Yield Tourism. That has a hyphen in it at high hyphen yield tourism. And you can visit our website, highyieldtourism.com. We’ll be back soon to talk more high-yield tourism. See you next time.