Special interest industries

Transcription

1 Industrial Organisation of Tourism Fall Semester 2012 Chapter 5 Special interest industries Prof. Hon. Dr. Peter F. Keller Business and Economic Faculty, University of Lausanne Switzerland

2 Structure of the course The booming cruise ship industry Special interest industries The stagnating skiing industry The railway system as tourism resource

3 Cruise ship industry Definitions and concepts Unique selling proposition Standardisation of the demand and the supply Oligopoly with one strong market leader Some niche markets

4 Introduction Cruising on the sea has a long tradition in Europe and the United States where it was essentially a pleasure for wealthy people spending many days on the ships and visiting attractions situated near the shore. This allowed them to visit interesting regions without having to change the accommodation. The construction of huge cruise ships popularised cruising by opening it to the mass markets with shorter cruising to lower prices. The cruise ships became a destination in itself offering a big variety of leisure activities on board. This market is still growing fast. The important investments into ships led to a sharp structural change and a consolidation process in the cruise ship industry which is known for its high degree of standardisation and management efficiency. The cruise ship industry used all instruments of price discrimination.

5 Cruise ship industry Supply Products sold as packages: - Fly cruise - Nights in hotels - Food and Beverage - Lodging in cabins - activities on board - Excursions - Journey allowing to visit different far away destinations Demand - Strong growth in the last 20 years - Big growth potential - Enlargement of market segments - Reduction of the length of cruises Structure of the market Tough management on all levels of the firm: - equipment of the ships - management of the and maintenance - management of waste - management of human resources - Revenues on board - Information and reservation system - Problems of financing the heavy investments Politics International industry: - foreign ports with flexible regulations - new US and EU rules Strategies Performance - High occupancy rates - High satisfaction of the customers - Strong growth - Important economic impacts -Repositioning the product - Segmentation of the market - New marketing strategies - Utilisation of yield management systems

6 Few bigger firms with a high market share Oligopolistic situation with four big companies offer 72% of the world cruise market s supply. These companies are umbrella brands for all segments of the market. Their fleets are very young (only 9.90 years old). Small cruise ship companies are very much specialised in niche markets and attract essentially North American clients. They prouve by their performances that specialisation matters also in the field of cruising.

7 The cruise ship industry is a rather small but lucrative segment of the world tourism market The capacity supplied at the world level amounts to about 30 million beds which is only 0,6% of the beds of the global hotel sector. But: Actually boat by the industry for 14 billion US dollars are ordered => big trust into the future High growth rates of the supply in the last years (about 8%) Big sums earned by visited destinations Possibility to open new markets to the destination oriented tourism for visiting places site; High value added of cruise shipping

8 The cruise ship industry creates more than average value added in the field of tourism Comparison with the tourism sector as a whole: Tourism Cruises Receipts in US $ % of total billion 17,3 billion 0,47 % Employees 220 million Labour productivity in US $ Comparison with Switzerland s hotel industry: Swiss hotel industry Cruises Number of hotels/ships Occupancy rate 38,5 % 77,9 %

9 Industrial structure of cruise ship industry: structural change and concentration 5 largest cruise lines Number of ships Market shares Marketing budgets Carnival Group 41 25,13 % 22,5 Royal Crribean International (RCI) 17 16,34 % 12,5 Star Cruises / Norvegian Cruise Line 18 11,20 % 14,0 P & O Group 14 10,24 % 9,0 Royal Olympic Cruise (ROC) 16 4,67 % 6,0

10 The four big cruise ship operators

11 Importance of the «Big Four» in the main regional markets Share of supply in the major cruising regions in 2005 Group Caribbean Alaska Europe Asia-Pacific Carnival RCC P&O Princess Star Cruises Total

12 Globalisation of the US cruise experience Cruise shipping is a product which is not yet mature and demand grows therefore in a fast way. New supply creates automatically new demand. The first modern cruises were offered at the beginning of the 1970th in the Caribbeans to American customers. In the 19090th, cruises started to be popular in the UK and Europe, later on in the Asian-Pacific region. The new demand is characterised by a high number of first comers who do their first cruise. Today, all segments of the population of developed countries choose cruise ship trips. It is no more a form of holiday for rich and older people of the upper class. The average age of the cruise ship passenger fell to 46 years nowadays. Cruise ship attract also families with average income. The itineraries proposed today are shorter and cheaper.

13 Segmentation of the market: Standard - Premium - Luxury Segments Criterias Standard Premium Luxury Size of the cabin (m 2 ) 17 (9) 20 (14) 20 Ratio passager / staff (1) 3,2 à 2,2 2,2 à 1,8 1,8 à 1,3 Expenditure for food (e/d) 7,5 à 15 $ 18 à 25 $ 30 à 45 $ Prices of the cruises 80 à 470 $ 300 à 500 $ 500 à $ Journey (j) 3, 4, 7 Caribbean Idem Tour of the world Compagnies Carnival RCI Carnival Club Med Renaissance Cruise Mega-Yacht > 300 p

14 The European demand is growing faster than the American demand => The cruise ship market is expanding. The European markets of origin have the biggest potential in the short and medium term. Important consequences: Decrease of the average age of the cruise ship passengers Increase of the supply of short cruises (less than 7 days) Mediterranian sea profits from these developments France and Germany are the fastest growing spending markets

15 Trend to bigger boats More and more big cruise ships for passengers and more are put on the water. Important consequences: Necessity to have just in time big enough ocking places in the harbours Strong demand for tourism services at the stop overs and the moment of departure Investment in port facilities are not profitable in a short time perspective Concept of ship-destination combination has not the priority in Asia and Europe Problems of congestions because of the big number of passengers visiting a place at the same time New constellations of trips appear (traditionally people travel in the summer in the Mediterranean and in the winter in the Caribbean's).

16 Horizontal concentration of the cruise ship industry There are and four star cruises led to the creation of few big groups, first in the USA then in Europe and Asia. Important consequences: Independent companies of medium size in the segment of 3 and 4* will disappear Modernisation of the fleets with ship of medium size in Europe Difficulties for new operators to enter into the cruise ship market Transfer of equity from the US companies to European companies Increase of the negotiation power of the big cruise ship companies Only specialised companies can escape from acquisition

17 Questions to be asked What caused the ongoing boom of the cruising industry? What is the difference between the American and the European cruise formula? How can the competitive situation be described?

18 Cable car industry Definitions and concepts The link between ecosystem and tourism product Product innovations Key factors of success

19 Introduction (1) The cable car companies are the leading industry in the field of winter sports in mountain areas. They depend largely on the suitability of a given territory for glides sports on snow such as skiing or snowboarding. Snow is an essential component of the snow sport system. Down hill gliding asks for heavy investments in transport and slopes facilities and needs high physical skills from the practitioners. The cable car industry which operates on built, prepared and technically snowed slopes is together with hiking the main leisure activity during mountain stays. It is a young industry which was only developed in the 1960ties by exploiting with cable car and ski lifts downhill areas, either from traditional summer resorts or from newly built totally functional ski resorts such as the French Super Station or the consolidated North American resorts.

20 Introduction (2) The leading winter sports industry has come to maturity and is stagnating in the mountain areas of the Alps and the Rocky Mountains and declining in Japan. But new resorts are built in China, South Korea and Eastern Europe largely depending on the home and nearby markets. There are only few business models which follow largely the framework conditions traditional or functional resorts follow. The saturation of the major markets, the rejuvenation of the equipment and the climate change are the future challenges of the industry. There is no more lucrative alternative for the cable car industry in mountain areas.

21 Overview limited space, snow problems important investments built, prepared and artificially snowed slopes difficult learning low growth demanding clients competition of substitutes Market structure low number of winter sport countries little internationalisation difficult access to market concentration process Strategies offensive marketing Politics Régulation Promotion restructurate offer cooperation and integration Performance highest yielding sector in mountain economy high productivity of installations impressive social benefits

22 The snow sport system

23 Mountain tourism depends as an economic activity depends largely upon the natural environment Space Climate Suitability of terrain Snow Safety ecological fragility Breathtaking scenery Installations and equipement equipment Individual abilities Sports training and practise Accessibility Distance Services

24 Winter sports depend on a series of major innovations from 1870 to today Phases from 1870 from 1930 from 1964 from 1970 from 1980 from 1985 from 1990 Innovations Discovery of the winter season, adaptation of nordic skiing to downhill Invention of the skilift, and development of small ski resorts Construction and technical preparation of skiing slopes (Winter Olympics in Innsbruck) Creation of whole new ski resorts («superstations» in France) High technology and installations with high capacity (chairlifts with 4 places, giant cablecars) Snow canons and artificial snow «Renovation» and «lifting» of the downhill sport by «snowboards»

25 The winter sports system reacted to changes in customers preferences lifestyle winter sport services offered 1890 leisure Sports on ice and sledding Transformation from summer to winter resort for the elite 1960 Sport Skiing on marked and prepared slopes Fully functional «superstations» for skiing for the popular 1990 Experience Snowboard, carving, winter hiking Stage-managing resort activities emotionnal and exciting events

26 Suitability of terrain for skiing: limiting factors, example of Swiss glaciers Suitability of the terrain for skiing on glaciers General Suitability Aptitude to make winter season longer Suitability for summer skiing A B C D E F G Result: of glaciers, 5 offer the possibility to lenghten the winter season and allow summer skiing

27 Planning a ski resort - example of the Blackcomb Ski Area (Whistler Mountain, Canada) 1. Determine spatial needs by category of skier 2. Limit the amount of skiers for a given ski resort 3. Equilibrate the number of slopes of the tourists and their performance as a function of the transport capacity of skilifts Sd = VTM x h C x P Sd skiers per day VTM vertical meters per hour of skilifts h number of working hours of skilifts C category of skiers P performance of skiers in height meters 4. Adapt the number of beds in the resort, capacity of acces roads and parking lots to the capacity of the skilifts

28 Switzerland s government planned ski resort between but France and then the United States innovated with integrated mountain resorts

29 The French superstation was created for giving total satisfaction to the skiers: the example of Courchevel 1850 meters above sea level

30 The world ski market

31 The only worldwide figures on skiing market are provided by: Laurent Vanat: Swiss consultant in Geneva Page «Publications»

32 Laurent Vanat 19, Margelle CH Genève Tel / fax / messagerie : Courriel : vanat@vanat.ch Internet : Laurent Vanat

33 Market geographics 80 countries 6000 places of practice 2000 resorts 6 million beds

34 Skier visits of major players (in million) 400 United States Switzerland Sweden Slovenia Czech Republic New Zealand Norway Japan Italy France Finland 50 0 Spain Korea, South Canada Skier visits Skier visits Skier visits Skier visits Skier visits Skier visits Skier visits Skier visits Austria Australia Andorra Germany

35 The ski market is not yet saturated in all Alpine countries Evolution of total lifts tickets turnover (EUR million) 1'400 1'200 1' Austria France Switzerland

36 Stagnating Japanese ski tourism Decline of the industry after the 1990 s Consolidation phase in present times Number of ski areas Skier visits (million) / / / / / / / / /09

37 Strong growing South Korean market Continuous growth since 1975 Industry focused on young people, offering a lot of fun Number of ski areas Skier visits (million) / / / / / / / / /09

38 Growing Chinese market Years Skiers Expected in Market potential

39 Skier visits in the European Alps (in million) /01 Skier visits (million) 2001/ / / / / / / /09

40 Other European regions /01 Skier visits (million) 2001/ / / / / / / % 2008/09

41 North America /01 Skier visits (million) 2001/ / / / / / / / %

42 The world s major mountain with more than one million visitors per year La Plagne SkiWelt Wilder Kaiser Les Arcs Courchevel-Méribel-Mottaret Kitzbuehl Ischgl/Samnaun Silvretta Saalbach Hinterglemm Leogang L'Alpe d'huez Whistler Blackcomb Val Thorens Soelden Val Gardena Sestriere Via Lattea Zillertal Mayrhofen Les Ménuires Grand Valira Tignes Flachau-Wagrein-Alpendorf Davos-Klosters Zermatt Breckenridge Serre-Chevallier Mammoth Vail Chamonix St. Moritz Adelboden-Lenk Planai-Hochwurzen-Hauser- Val d'isère Les Deux-Alpes Flaine-Morillon-Samoens-Sixt Serfaus-Fiss-Ladis Zillertalarena St. Anton/St. Christoph/Stuben Jungfrauregion Alta Badia Keystone Verbier Avoriaz Gstaad-Region Åre Cortina d'ampezzo Méribel Steamboat Killington Hochzillertal-Hochfuegen- Copper Mountain Sierra Nevada In million skier visits

43 Skiers international flows Mostly concentrated on intra-european flows

44 Inbound & outbound skiers Share of the various destinations in inbound international skiers Share of the various home countries of outbound international skiers Asia America 3% 6% East 2% Europe 7% Various 1% Alps 1% America 0% Asia 5% East 6% Alps 81% Europe 88%

45 Andorra Austria Switzerland New Zealand France Bulgaria Italy Slovenia Canada Czech Germany Hungary Korea, South Slovakia Spain Finland Norway Sweden United States China Poland Romania Ukraine Japan Australia Domestic ski demand Strength of national customer base of most of the big players. Foreign visitors concentrate on a few top international resorts. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Share of foreign visitors Domestic Foreigners

46 Strategies and business models

47 Positioning: a unique product with high emotional value Fascination S n o w Orientation S p o r t Unique selling proposition USP Scenery M o u n t a i n Welcome P r o x i m i t y

48 Reason for slow or stagnating growth Promotion et marketing Weak image & Distribution problems Product lifecycle Maturity & Saturation Number of practitioners of skiing Limited recrutement basis & high desolation rate Substitution Winter holidays in the sun of the southern hemisphere

49 The big challenges for winter tourism at the turn of the century:phenomena of saturation, competition by substitutes and ecological problems Society Economy Substitution Competition by tropical beaches Fitness and wellness centers Decline Aging of infra- and superstructure Missing attraction of equipment Global warming Rise of the lower limit for snow Snow remains for shorter period Environment

50 Future strategy: enlarge the potential for winter sport practitioners Encouragement for practising winter sports Fascinate children lower desolation rate Introduce sports in NIC s -Reduce costs of practising winter sports -Create events and a unique atmosphere -Promotion of winter sports

51 Key factors for the prosperity of a touristic transport installation Suitability of the terrain for skiing Accessibility of and from the ski resort Multifunctional use of the installation Size of the skiing area Infrastructure and capacity (beds) in the closest tourist destination

52 The destination management approach: create a unique winter sport experience What are the kex factors of success of the swiss holding «Alpenarena» Flims-Laax-Falera? Vision Client orientation («Communities», «CRM», «SmartCard») Put on stage a multi-optional offer Computerised management system Business model Management integrated in the destination Services Skilifts Hotels & Restaurants Locations Promotion Adventures IT Solutions

53 Cable car suppliers: merger for a good position on world market What are the reasons for the austro-swiss merger Doppelmayr-Garaventa? Vision Reinforce position as market leader (2/3 of sales abroad) Business model Common activities Research and development Oversea markets Labor division and internal competition Degree of merger depends on performance Competence center Doppelmayr Cablecars 1100 employees TO 277 millions Competence center Garaventa Funiculars, rack railways 520 employees TO 115 millions

54 The specialist of alpine technologies: the complete supplier What is the answer of the Leitner Group to market consolidation? Vision Producing the complete product range for ski Resort technologies (transportation and slopes) Business model Constitution of «Leitner Snow» «Prinoth» vehicles for slope preparation «Snowstar» artificial snow machines «Gespi» security technologies, sport equipment Acquisition of Pomagalski Biggest producer of skilifts in France (TO 140 mio.)

55 Questions to be asked What is a winter sports system? Can all mountain regions develop winter sports? Is the winter sport market more than a niche market? Is skiing a more domestic or international market? Why are winter sports unique? Which are the challenges for winter sports? Which are the innovative business models of the cable car industry?

56 The railway system as resource for international tourism Definition and concepts Railway system as resource for tourism Special interest tourism All-in-one ticket Scenic routes

57 Swiss Travel System: How can the Public Trans-portation be enhanced for tourism needs? Hugo Furrer, Management Swiss Travel System c/o SBB Passenger Traffic Division, Bern

58 Programme 1. The idea of Swiss Travel System and how it works Key success factors of Swiss Travel System

59 1. The idea of Swiss Travel System and how it works What is Swiss Travel System? Pooling of the Public Transportation Network The concept of all-in-one Ticket Method of revenue sharing Some sales figures

60 What is Swiss Travel System?? 1. Brand name used abroad for Swiss Public Transport Network 2. Dedicated range of travel passes/tickets for visitors from abroad Swiss Pass, Swiss Flexi Pass, Swiss Youth Pass Swiss Card Swiss Transfer Ticket Swiss Half Fare Card Free Swiss Travel System Family Card!

61 Pooling of a very varied and dense network of public transportation Network consists of: km of railway lines km of mountain railway and cable cars km of bus routes stations of public transportation Network operated by: approx. 150 railway and bus companies 15 boat companies 38 urban transportation companies

62 Concept of all-in-one Ticket One ticket, the Swiss Pass, gives access to the entire network. Travellers benefit from unlimited use of trains, buses, boats, city transportation during the period of validity of the pass... regardless of the carrier

63 Method of revenue sharing Co-operation instead of competition between the various operators Through ticketing: one integrated tariff system for all public transportation companies Revenue sharing among transportation companies is based on regular surveys of use of the passes by the travellers 150 transportation companies get a share of revenue of each pass sold. Example: SBB as major partner receives only 43.5% of the turnover of a Swiss Pass

64 Organisation of Swiss Travel System (STS) Pooling of public transportation companies for joint marketing purposes Swiss Travel System is NOT a registered company SBB has a management mandate from the public transportation companies Marketing Board STS with members of the 8 most important public transportation partners Final decision about pricing is taken by Commission Voyageurs where all public transportation companies are represented

65 History of Swiss Travel System Exists since 1990 under this name and replaced previous offers with a different name 1990: Turnover 16 Mio. CHF Turnover increased steadily thanks to extension of product range and intensified marketing 2000: 41.9 Mio. CHF 2002: 37.8 Mio. CHF 2004: 41.1 Mio. CHF 2005: 43.7 Mio. CHF 2006: > 50 Mio. CHF (ca. 32 Mio. EUR)

66 Swiss Travel System sales 2005 without Swiss Half Fare Card Passes and Tickets sold: 53% Swiss Pass 28% Swiss Card 19% Swiss Transfer Ticket Turnover of 43.7 Mio. CHF Major markets: United Kingdom: 11.7 Mio. CHF North America: 6.7 Mio. CHF Germany: 4.6 Mio. CHF Japan: 3.4 Mio. CHF India: 2.7 Mio. CHF 2006: January to September: +20% we already matched turnover of entire Year 2005

67 2. Key Success Factors of Swiss Travel System in the categories Product Distribution Communication

68 1. Attractive and flexible product range Swiss Pass: all-in-one Ticket ONE ticket is valid for travel by train, bus, boat and urban transport systems.. and also for more than 400 museums in Switzerland -> world-wide unique The product range matches the needs of individual travellers to Switzerland, from Transfer Ticket to Swiss Pass for 1 month Special discounts for groups of 2 adults travelling together and for young people under 26. Children under 16 years travel free with their parents Tailor-made tickets for Tour Operators for their individual tour programs. Many tour operators include transfers by train in their package tours to Switzerland

69 2. A unique network of public transportation Very dense and efficient network of public transportation Seamless transportation chain from airport to cities, holiday resorts, remote villages and mountain peaks Half-hourly service on most intercity trains No seat reservation required Competent and multilingual staff on board the trains and in stations Diversity of routes and services Marketing efforts of individual companies with strong brands contribute to strengthen the Swiss Travel System brand (and create a healthy competition)

70 comfortable trains with various seat assignments Special carriages like Family Cars Dining cars, Bistro cars,...

71 3. Scenic routes Connect the various tourist destinations in Switzerland Marketed as the highlight of any trip to Switzerland Include some of the most attractive train rides worldwide: Glacier Express, Bernina Express, GoldenPass Line, Wilhelm Tell Express, etc. comfortable cars with panorama windows guarantee a great viewing experience The journey itself is the reason for travelling Variety of trips by train, bus and boat 28 scenic routes and excursion ideas published in the brochure and in the internet encourage customers to make an extensive use of their passes

72 Stuttgart (Cisalpino, ICE) Frankfurt, Berlin, Hamburg (ICE), Amsterdam Munich (EC, ICE) Scenic routes Basel Paris (TGV) Zurich Innsbruck Salzburg Vienna (EC) Geneva Lyon-Avignon Nice Montpellier (TGV) Lausanne Chocolate Train Chamonix (F) Broc Bern GoldenPass Line Montreux Mont Blanc Express Interlaken Zermatt Lucerne Railways of the Jungfrau Region William Tell Express Glacier Express Locarno Lötschberg Line and Centovalli Train Milan (Cisalpino) Lugano Chur Davos Bernina Express St.Moritz Palm Express Tirano

73 Glacier Express

74 Bernina Express

75 Bernina Express

76 GoldenPass Line

77 Wilhelm Tell Express

78 Wilhelm Tell Express

79 Palm Express

80 Mont Blanc Express

81 Centovalli Railways

82 Le Train du Chocolat (Swiss Chocolate Train)

83 each scenic route is unique healthy competition leads to product improvements all scenic routes included in the Swiss Pass, even the sectors in Italy and France! often compulsory seat reservations incl. supplement required often additional services included in the supplement group business is also important

84 4. Unique solutions for baggage We also provide solutions for baggage transportation Fly Rail Baggage: From any airport world-wide to 50 train stations in Switzerland Check-in at the Train Station: Check-in for the flight via ZRH or GVA at 50 train stations and collect your boarding pass Fast Baggage: Same day baggage transportation between 45 stations in Switzerland, for individual travellers and groups

85 5. World wide distribution In Switzerland at major train stations, tourist offices and through tour operators SBB Contact Center (Internet and call-center) In Europe through national railroads (SNCF, DB,...), through appointed travel agents and tour operators and through Switzerland Travel Centre (Internet and callcenter) Overseas through 2 joint-ventures with SNCF (Rail Europe Group and Rail Europe 4A) and their dense network of sales agents Distribution is 100% electronic with possibility of instant seat reservations

86 6. Own corporate design Logo refers to the brand of Switzerland Touris Board Used consequently for all communication since year 2000 Pictures show travellers enjoing their trip by train, bus and boat

87

88 7. Active multi-channel communication own brochure in 13 languages and 4 formats (more own home page (since May 2006) targets: Travel Trade, Media, End consumers Presence in on-line and print communication of Switzerland Tourism Presence in on-line and print communication of our distributors world-wide Active and passive presence at travel fairs world-wide (trade and public)

89 8. Attractive range of sales tools Swiss Travel System Brochure STS CD ROM Images from Switzerland STS DVD Mail from Switzerland Public Transportation Map Join the Ride Varied range of Give-Aways

90 9. Successful marketing co-operation with Switzerland Tourism Contract regarding world-wide marketing Integration in main campaigns of Switzerland Tourism as Premium Partner Integrated marketing plans for world wide markets, funded by Swiss Travel System, Switzerland Tourism and additional partners (e.g. Cisalpino, TGV Lyria, etc) Joint marketing plans represent a total investment of ca. 3 Mio. CHF (1.9 Mio. ) per year Active Key Acccount and Key Media Management Active support of Study trips with free Swiss Travel System tickets (approx per year)

91 Some examples... Media supplement in Germany from 2005

92 Some examples... London taxis in summer 2006

93 10. Continuous innovation (since 2000) New corporate design extension of brochure formats and language versions (in order to be ready for new markets) movie on DVD / picture CD ROM / new maps Introduction of Swiss Youth Pass own homepage Inclusion of Swiss Museum Pass 50% discounts on mountain excursions

94 New with the Swiss Pass 50% Discount on Mountain- Top Excursions The Swiss Pass entitles to 50% discount on mountain railways and cable cars (previously only 25%) Swiss Museum Pass Free admission to more than 400 museums, castles and exhibitions -> significant sales increase