Transcript of Episode 2

Applying High-Yield Tourism to Dynamic Asian Markets

With:

Gary
Bowerman

Dr Jens
Thraenhart

Transcript

Hello, I’m Gary Bowerman, and welcome to the second episode of the High-Yield Tourism podcast. On today’s show, Jens Thraenhart and I will discuss the potential of high-yield tourism within Asia-Pacific’s dynamic growth context.

Hello, and thanks for listening in, and many thanks for all the feedback we’ve received from our first podcast, which we posted last week for our second edition. Jens and I are going to set the scene for the future of high-yield tourism across the Asia Pacific. It’s a very big topic. Firstly, to give a little bit of context, both Jens and I have lived and worked in Asia for over two decades and have diverse travel industry experience across China, Southeast Asia, and beyond. During that time, we’ve both seen and been involved with immense changes in travel and tourism throughout this diverse region. So, as we discussed in our first show, in the rush to recover from the pandemic, many destinations and tourism segments, including hospitality, aviation, and transportation, have pursued the matching of pre-COVID numbers and revenues. This has been especially evident in the Asia-Pacific region, which was closed for longer than other regions of the world, such as Europe and the US, and a region of such huge diversity in terms of geographies, histories, cultures, cuisines, and of course, tourism appeal. So after that long intro, Jens, given how Asia-Pacific economies and tourism landscapes continue to change, is high-yield tourism a discussion topic across this region, which really spans from Australia to India, China to Singapore, and everything in between? Where does that discussion go?

Well, thank you, Gary. And it’s great to be back with our second episode of the High-Yield Tourism Podcast. As we are focusing a bit more on Asia this time, I think, you know, we should look at Thailand. I mean, the reason is not just because I am currently living in Bangkok but also because the prime minister recently announced this whole new strategy around “Ignite Tourism Thailand in 2025”. So, it’s a multifaceted approach to establishing the country as a tourism hub. But how Thailand wants to do that is through leveraging the whole concept of soft power. I think it’s interesting because Thailand obviously has a huge tourism brand and is recovering extremely quickly. And we see already that, you know, the numbers, the tourism arrival numbers with Thailand actually already, I think you know better, Gary, but already match pre-pandemic levels. But I think what’s interesting here is that Thailand is looking to build a strategy to attract what we call high-yield tourists, people that spend more, people that stay longer, and people that appreciate the culture, the culinary, the heritage of the country. And with that, also look to be conscious travelers, protect the biodiversity, and connect with local communities. And they have created this five-pillar approach of must-do activities when you come to Thailand. Must beat, which is around Muay Thai boxing, really a real Thai, obviously, activity. Not sure if everyone wants to do it because it might also leave some bruises. But the other one is must-seek, which is around the Thai culture. Also kind of connects to faith-based tourism, which is interesting and cultural superstitions and folklore and culture. Then you have must-buy, which is Thai fabric, Thai silk, obviously, really a nice way to also connect fashion into that conversation. And then the fifth one being must-see, which is Thai shows, which could be traditional and contemporary performances. And when I think about looking at these five pillars, I really see that we’re moving kind of like from interest into passion, that people can live out their passions when they travel and create a whole new purpose when they’re trying to experience a destination. I think it’s really interesting, but also exemplary, what Thailand is trying to do. But then the question always arises, when I look at this, when I’m trying to kind of experience these must-five-do pillars, are they actually authentic? Do I have that trust that when I buy Thai silk, it is actually from Thailand? When I eat Thai dishes, are they actually prepared with local ingredients?

Yeah, that’s an important point, I think. The interesting thing about this soft power concept that Thailand has put forward is that it’s identified 11 soft powers, one of which is tourism. But this is really a way to sell the country, to market the country and to promote different aspects in different parts of the country. So try and really avoid everybody going to Bangkok or everybody going to Koh Samui or going to Phuket. It brings in, as you said, everything from music and fashion and cuisine to festivals, sports events, those kind of things, trying to promote Thai culture and living, mostly to younger people who want to experience Thailand in a different way. It’s a good time to do that, I think, right now in this context of Asia’s changing international travel scene. Some of it is probably lent a little bit from South Korea. I mean, South Korea has been very, very successful in promoting K-pop, K-culture, K-cuisine, K-cosmetics, you know, that K-lifestyle, health and well-being and that kind of thing, to promote South Korea, not just as a destination, but as a country, as you said, to improve its brand internationally. There is some elements of that, but obviously Thailand has different things to promote in different ways. So you can see that that sort of kind of melding of Northeast Asian and Southeast Asian ways of promoting their destinations, similarities, but also differences.

Yeah, no, I absolutely I think Korea is a great example that you’re bringing up, Gary. And I think coming back to this whole concept of passion and converging passion with authenticity and converging authenticity with trust, I think is a real interesting topic and I think we’ll discuss at a future podcast, I’m sure, because it really ties into having high-yield travelers having these experiences that they really find purpose when they travel and connect with the local culture. But I just had an interesting discussion with someone a few days ago from the United Nations that looked at the whole concept of GI, geographic indications. As you probably know, geographic indications is almost like a certification of local foods and their geographic authenticity, where it’s originated from. And it started in Europe, but now actually has really gotten some good traction in Asia as well. In fact, he told me that Asia is actually now ahead of Europe because they just added, in addition to food and agriculture, they added now handicrafts. And that obviously, you know, really is fundamental when it comes to shopping and souvenirs. When you come, when you go shopping in a destination, you don’t want to buy something that has not been made in the country and that maybe you turn it around, you see a Made in China sticker on it. So I think the whole geographic indication or GI concept becomes very important. And when we look at Korea, you know, that really established this whole K-pop and K-lifestyle foundation and building everything around it, now starting, you know, K-pop schools or academies and bringing foreigners, you know, into the country, I think is very interesting, but it all comes down to really authenticity and that trust, which needs to be connected with it.

Yeah, that’s really interesting. Trademarking and tourism are topics we’re going to follow in future issues of the podcast. I really think that that GI issue is something that really is going to take hold in our region, because it really enables destinations and countries and regions to really play on their own strengths and to kind of trademark those strengths. But let’s move on next to Mongolia, Jens. And you picked this up. This is a really interesting new campaign coming out of Mongolia. And there is a link here. It doesn’t come out of nowhere. It’s working with South Korea. Can you tell us a little bit more about how this program is being proposed?

Yes. I think Mongolia is a fascinating country. I’ve done quite a bit of work there when we created the Mongolia.Travel and the Feel Mongolia campaigns. But now, just about three to four months ago, Mongolia established a new campaign, Go Mongolia. And it’s really interesting because it’s linking tourism to lifestyle, to film and production. The tagline is “Go Mongolia, always moving”. And it’s really attracting foreign tourism, filming industries, creative industries, highlighting Mongolia’s nomadic societies, the vast landscapes, the culture, and the uniqueness of its geography. I love Mongolia. It’s a fascinating country. But what Mongolia has done, as you pointed out, they have now partnered with South Korea. They just had a whole press conference with the prime minister of Mongolia, with the South Korean prime minister. This just happened April 1, so just a few weeks ago, where they now look to partner in Mongolia as learning from South Korea, you know, how they can actually adapt some of these concepts for the Mongolian tourism strategy. And what’s also interesting is to point actually, out, that there’s over 40,000 Mongolians that are living in South Korea that also brings this whole concept of diaspora into it, which is another component that we haven’t even touched on yet and we’ll talk about in future episodes. But I think all of that coming together where there’s a partnership where Mongolia is now learning from a neighboring country, which is part of the whole Greater Tumen Initiative in Northeast Asia, I think is fascinating.

Yeah, and you referenced a point that I think sometimes when I’m speaking or working with clients around the world, that one of the things that Thailand is a great reference point, you also mentioned there Mongolia and South Korea, is this is tourism strategy for the future coming right from the top from the political leaders, you know, Thailand, it’s being driven by the Prime Minister, you mentioned there that the meeting of the leaders from Mongolia and South Korea. So tourism isn’t just being integrated into lifestyle it’s being integrated into government policy and that often doesn’t happen in the West you know often traveling tourism is left to the the private sector to get on with, but what you’re seeing here is that it’s really driving societal change and traveling tourism as we’ve said and we referenced at the beginning is still going through this real growth dynamic growth or regrowth after covid. We saw this huge growth during the 2010s. But it’s going back through a new dynamic phase. It’s going to bring challenges. It’s going to bring risks and issues that are going to have to be solved longer term. But we are seeing in this region enlarging middle classes who want to travel, who want to experience destinations in new ways. And that means that governments are going to have to try and meet that demand. It’s going to be a big challenge, right?

Yeah. And it’s interesting that you pointed out that both of these examples are driven at the very top. And why are now presidents and prime ministers really looking to leverage tourism for economic diversification? You know, in Mongolia, the main industry is mining. But I think, you know, the country has realized, the government has realized that it needs to diversify for mining alone. And tourism is a way of doing it and also a way to attracting investment. And when you have tourism also, that also drives airlift. And airlift together from trade and tourism, that drives economic growth. Let’s just look at Saudi Arabia, right? Saudi Arabia has all, you know, his main industry from oil. Arabia has you his main industry from oil. all, know, But now we hear about bigger projects, you know, from Alula to Neom to Red Sea Global and so on. That now where the crown prince himself is now driving this vision, this Saudi Arabia Vision 2030, which is all about innovation, sustainability. which is all 2030, about innovation, sustainability. But most and foremost, it’s around diversification from a single industry sector, in this case oil.

Yeah, you’re absolutely right. Wherever travel and tourism goes in future in the Eastern Hemisphere, it is going to be driven by governments, it is going to be driven by leaders, and it is going to be driven by investment. That’s a really key point, whether that investment comes from within or that investment comes from outside or under joint ventures. That brings us neatly, actually, to Singapore, Jens. Singapore, a very small country, it’s only less than 6 million people, very small landmass, doesn’t really have a domestic travel sector, as was highlighted during the pandemic. But over the last 15,-0 years, Singapore has been a leader in terms of its forward thinking of how to make the most of what it has. It doesn’t have much natural resource, but it does have a very, very passionate and driven travel culture, inbound and outbound. And I would say that it’s been leading the region in terms of forward thinking, in terms of experiences, forward leading in terms of investment. But as you’ve referenced earlier, Jens, that term passion and trust, it is a trusted destination. Now, it’s an expensive destination. The cost of living there is high. The cost of travel there is high. But it’s kind of trying to rethink travel and tourism there within those parameters, isn’t it? And passion is its key word.

Well, it’s interesting that we’re coming back to passion. It almost seems like a threat and a storyline through our entire episode here, which we didn’t even really plan for, which is very interesting. I’m obviously very passionate about this concept of passion travel. But Singapore actually has a tourism brand that actually uses passion as its foundation, “Passion made possible”, right? So I think there we have it again. I think it’s a destination that builds an entire narrative around how to attract tourists around passion. How can people live out their passion? I think that’s fascinating. And obviously, they have a fantastic tourism brand. But also, as you just mentioned, it’s a smaller market, but it’s also a very sophisticated market. And for Singapore to realize that passion can be a driver of purpose to travel, I think is very important here, especially when we’re looking at high-yield travelers. And as we have been working through this concept of high-yield tourism over the last almost six months now, being on the phone nearly every day, I think Singapore is one of these markets that we will be focusing on in educating people how to tap into high-yield travelers that come to destinations, that spend more, stay longer, connect with the local community and appreciate the culture. But Singapore, probably a market that most of the time is overlooked because it is so small. And maybe it’s also more complex, as we pointed out in the previous episode, to market to high-yield travelers. And finding these high-yield travelers in Singapore is obviously a lot easier doing that, because it’s a smaller country, than maybe compared to China, which is a huge country, but also has a lot of passionate travelers. You and I both have quite a bit of experience when it comes to China. What do you think about that? Yeah, I think one of the interesting

I think one of the interesting things about China, Jens, and I talk about this quite a lot in interviews and presentations, is just how quickly consumer trends change in China and how the overlay of social media and the overlay of a very, very fast and dynamic consumer culture really impacts not just travel and tourism, but lifestyle. Younger Chinese people don’t really think of travel and tourism as a separate ecosystem. They don’t really think of travel and tourism as a getaway from life. It is integrated into their lifestyle. And that involves all the dynamic consumer cultures, all the apps that they use, everything is brought together in one element of lifestyle. And I think around the world, travel and tourism tends to be marketed as its own separate industry, but it really isn’t like that in China. And if you look at the way consumer trends, and particularly how brands are now using travel to promote brands rather than the other way around, it’s not travel using brands to promote travel. You’re seeing so much more bringing together of diverse brand partnerships into the travel sphere. And this is creating such a dynamic culture. And for anybody marketing into China at the moment, it’s really, really difficult because if you’re planning ahead a campaign two or three months in advance, you’ve no idea really how quickly young people’s perceptions of brands, of travel experiences are going to change during that time. And so we’re going to see a different timeline for travel marketing. You really see that domestically in China, It’s very quick. It’s very instant. It’s very spontaneous. Whereas the old travel promotion model, if you build a campaign months in advance, you might even use it for the same year. In China, that goes out of date very, very quickly. I think the interesting thing for the rest of Asia, particularly here in Southeast Asia, Jens, is a lot of that thought about lifestyle and consumer branding and travel is filtering into our region. It really is driven by e-commerce and digital payments and that kind of thing. Younger people in Southeast Asia are thinking a lot more along the same lines as Chinese travelers now. And so anybody around the world is kind of thinking about how you market into this region. It’s got to be quick. It’s got to be dynamic. It’s got to be upbeat. It’s got to be uplifting. But it doesn’t have a long duration, not in the way that we used to market travel in the past.

Gary, I think you’re making an excellent point by referencing, you know, consumer perceptions and branding. When I lived in China and co-founded Dragon Trail back in 2008 and also edited China Travel Trends, when I did presentations all over the world, one thing that I always referenced is that when Chinese people, and this was 2008, 2009, 2010. So we’re talking around 15 years ago. But I think it still prevails today. And you can comment on that. But when people in China select a brand, it is less about functionality. Obviously, quality plays a bigger and bigger role today than maybe 10, 15 years ago, but it’s around choosing a brand that connects to their lifestyle. They almost want to join a tribe. When I did my presentations back then, I always had this slide of a campaign from BMW, which really did an amazing job in connecting Chinese culture with the essence of what BMW stands for. And so people wanted to join that tribe. They were not looking to have a car that is the fastest car or a car that is the best quality car. Obviously, BMW is a very high quality car, but they were looking to join a tribe. And I think that goes for fashion brands and for other consumer goods as well. But as you referenced now, that obviously is a lot harder when we’re marketing travel, because with consumer goods, you’re always connecting and interacting with the consumer. If it’s a coffee brand or if it’s a fashion brand or if it’s a food brand, whatever it is, you’re always there day to day. But with travel, it’s slightly different. But when it comes to China, what’s interesting is many, many travel brands and tourism destinations, they think China is mass tourism. It’s numbers. It’s volume. And it is. 1.4 billion people, obviously. You’ve got a big bucket there to do a pond to fish from. But I think what’s interesting about China, and I think that’s what we’re looking to also dive deeper, not just in a future podcast with some interesting guests, but also we built our products and services to help travel brands and tourism destinations to really leverage the uniqueness of China is how do you actually find, attract, and engage with these high-yield travelers in China that are so valuable, but also so difficult to find and to please?

Yeah, I would agree. And as we wrap up the discussion, Jens, I think there are two points that you referenced there that are really interesting. One, of course, is the size of China and the huge numbers that always come out related to consumer, to travel, to tourism, all of those things. But that does mean that you have so many different segments. This is a massive, massive market. Absolutely everything I think I’ve referred to on interviews before, the Chinese travel market, for example, counts everything from backpackers and budget travelers right up to those that have the wealth and the capacity to travel into space and absolutely everything in between, which most international markets have. But you also have the overlay that this is just so huge. The numbers are massive. So if you look at each individual segment and subsegment, they are themselves very, very large. And the second element, I think also, is that it’s often overlooked just how young the travel industry is in China. I mean, international travel was only officially recognized by the government back in 1997. That’s not very long ago. And it was only in the early 2000s when we were living there, Jens, that travel and tourism actually became part of people’s lifestyles. And for younger people, it wasn’t until the social media era, which is from about 2011, 2012 onwards, that they really started to engage with travel. So their whole engagement with travel has been through social media. Now, you and I, Jens, we’re a little bit older. We’ve seen travel and tourism change through the different marketing phases. But a lot of young people in China, they only know travel through social media. And that is a very, very different lens. And particularly because Chinese social media operates in very different ways to international and global social media formats. So there’s a lot of learnings that you have to know from behind the screens of Chinese social media that you can’t apply unless you actually have on the ground information and market learning. unless you actually have on the ground information and market learning.

I completely agree. No, And in order to really understand China. China is so complex. Just a visit quickly into China is not going to do much in really understanding the country to market to what I believe is the most multi-segmented consumer market in the world. You know, you need to, I mean, you and I lived there for five years plus. I mean, I think we got emerged in this market, but as you referenced, it’s changing so quickly. But I wanted to ask you an interesting question. You mentioned the word backpacker just a second ago. And in our first episode, we talked about this bridge between mass tourism and luxury tourism, you know, being that high yield traveler. Now, would you put a backpacker into that niche or that segment of high yield travelers?

It’s a really good question. I mean, Jens, when I first came to Asia many, many, many years ago, it was as a backpacker in Southeast Asia, as, you know, a lot of young people did back in those days. It was as a backpacker in Southeast as a lot Asia, of young people did back in those days. And back in those backpackers were embraced by tourism industries across the days, region because it brought in a lot of travelers. It brought in a lot of funding. But as the travel industry has changed, and particularly as domestic markets have grown and middle classes have enlarged, backpacking has been pushed to the side, really. You look on most international marketing sites for different countries in the region, they don’t really even mention backpacker anymore. I think what we’re starting to see now is that governments are looking at different types of visas, longer stay visas. Thailand is even talking about a six-nation visa around Southeast Asia. I think that is actually aimed at having longer-stay tourists. Now, those won’t just be high-end travelers because they don’t tend to travel for that long. Backpackers do. Backpackers are an extraordinary element, really, of the tourism industry. It’s changed quite a lot over the years, particularly with technology and that kind of thing. But they do stay longer; they do travel more widely, and they do move out into areas of the country that perhaps other tourists don’t. They do connect with local communities. A lot of the tours and operations that they get involved with are community-based or go off track. So I think backpackers in many ways are high-y yield travelers of a different nature. But it is quite hard to actually square that with conventional thinking about travel and tourism, which is moving more upscale.

Yeah, because I mean, if we look at, you know, the criteria, you know, what you and I define as high-yield travelers, I mean, they stay longer, they do spend in local communities, they go to local restaurants, they stay longer. They do spend in local communities. They go to local restaurants. They stay in local accommodations for the most part. They might not spend as much money as a luxury tourist. But again, I mean, if you’re a luxury tourist, you might drink red wine from France and eat caviar from Russia and steak from Australia or Texas. And all of that needs to be imported, which also affects climate change as well. But that money doesn’t stay in the country. It kind of leaks out. So I mean, it increases the leakage factor. So if there is a luxury tourist that spends a lot of money, but that money is mostly on imported goods. And then you have a backpacker that stays longer and spends less money, but on local goods. And then we kind of add all this up and put a put a line underneath and see what the number is. We might be surprised.

I think you’ve just given us a topic for another podcast, Jens. There’s so much more we could enlarge on that discussion. I think it’s a very, very interesting element. I know that a lot of people in the region have been talking for quite a long time that, you know, backpacker tourism gets overlooked, not just because it’s not maybe as sexy or as dynamic as other forms of tourism, but simply because there are perceptions about what backpacking is, but there is certainly value towards local economies of having a backpacker economy for sure.

Gary, I think as we wrap up this podcast, I think one country we need to mention on this podcast is Japan. You know, Japan’s numbers are going through the roof and they are, you know, already tackling over tourism. You know, they’re now, I just read an article where they’re building a whole wall at a major site to have a view on Mount Fuji because it is just too much for the residents there. So that’s a very extreme situation. But Japan is interesting because we talked about passion before, we talked about niches before. You know, Japan is all about, you know, culinary, about outdoors, about, you know, all these kinds of things that we talked about. And yet it is now tackling mass tourism just shortly after the borders open again. And as we’re looking at recovery post-pandemic.

Yeah, you’re absolutely right. A lot of the themes that we’ve been talking about in other destinations really coalesce in Japan. And we’ve seen since Japan opened at the end of 2022, this passion for travel for Japan, particularly from within Asia Pacific. I think about 75% of its visitors in the first quarter of this year were from Asia Pacific. So you can see there is a huge surge of interest of travel in Japan. And often that travel is concentrated in public holiday periods, because we know that from Asia Pacific, a lot of travelers go during the public holidays. There’s going to be a lot of challenges going forward, Jens. I think that’s also going to be another topic that we’ll discuss in more detail in future podcasts. But I guess we’ll have to wrap up this second edition of our show, Jens. Thanks so much. We’ve covered a lot of ground here. Thanks so much. And we look forward to episode three.

Thank you, Gary. And there was pleasure talking to you again and looking forward to the next episode. So we would like this to be an international conversation. So please join our LinkedIn page at highyieldtourism. And we’ll be back next week to talk more high-yield tourism. See you then. Thank you.

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