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Scarcity of place, as travel demand skyrockets

April 03, 2008 |

International travel is no longer the exclusive province of the rich. Over the next several decades, hundreds of millions of new entrants to the middle class will want not only the things, but also the experiences, that money can buy, according to this Harvard Business Review article.

Indian call-center employees, Russian petrochemical engineers, Chinese middle managers, and Brazilian salespeople are already scouring the web for deals on trips. They want to see Paris from the Eiffel Tower, relax in the Maldives, and play blackjack in Las Vegas. According to the United Nations World Tourism Organization, international tourist visits are expected to double soon, from roughly 800 million in 2008 to 1.6 billion by 2020. However, only so many people can visit a particular building or beach in a given year. Where will all the other tourists go? This skyrocketing demand for travel will lead to a "scarcity of place" and to three probable market responses:

First, most tourism-related prices, such as hotel room rates in popular cities, will continue to escalate as demand outstrips supply. A new type of scalper may emerge, offering hotel rooms, air travel, and even museum passes, at whatever price the market will bear.

Second, rationing, and the resulting waiting lists, will become commonplace. Some groups, for example, are already calling for limits on traffic to ecologically sensitive destinations, such as the Incan ruins at Peru's Machu Picchu.

Finally, jaw-dropping prices and decades-long waiting lists will prompt the creation and the expansion of destinations in both developed and developing economies. The Chinese, for example, are developing Hawaii-like Hainan island and Macao, a gaming paradise on China's southern coast.

Get the full story (executive summary) at Hotels Magazine

Purchase the complete article at Harvard Business Review

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