If Small is Beautiful..... Exclusive beats it.

by Alvaro HIDALGO

New destinations mushroomed

If the origin of mass international tourism can be placed in the 60s, one can situate the explosion of new destinations in the 80s, a moment in which major changes in the airline industry enabled access to new international and transcontinental locations at reasonable prices.

New destinations subsequently mushroomed, and the main focus of Destination Manager Organizations (DMO) was to increase the number of visitors as a measure of success.

As a tool to analyze this growth, the well known Tourist Area Life Cycle (TALC) concept was developed by Butler in 1980. Since then, it has survived three decades of constant scrutiny and verification studies, and it is considered now as a cornerstone in the analysis of tourism destination development and a milestone in Tourism academic literature.

Having entered into the second decade of the XXI century, the reactions to the model nowadays are mostly in the line of : .... ok, fine, but what’s news.

Nevertheless, TALC’s chart retains its validity by carrying a good reminder of the existence of – using an aerodynamic term- a “point of separation” beyond which specific measures should be taken to avoid the flow of tourists to become turbulent, resulting in the destination entering in a stall and declining.

Closely linked to the above, the “Carrying Capacity of a Tourist Area" concept started to be shaped. Carrying Capacity is defined by the WTO as "the maximum number of people that may visit a tourist destination at the same time, without causing destruction of the physical, economic, socio-cultural environment and an unacceptable decrease in the quality of visitors' satisfaction".

Maximum carrying capacity overflow

The Carrying Capacity must not be considered as a number resulting from a formula, but as a constantly ongoing process which overviews the destination to ensure that its quality and its capacity to attract tourists is maintained.

Indeed, if the first consequence of success is that it makes obsolete the tools and processes followed to attain it, we then need to constantly re-assess –with a fresh view- the new reality that resulted from the previous plans & actions, and make further plans for this new environment.

The concept evolved into the much broader “Sustainable Tourism” term which is now centering efforts of the industry and governments.

Resulting from this, DMOs are shifting their emphasis from Destination Marketing -focused just in bringing in more tourism-, to a Destination Management perspective centered in enhancing and maintaining the characteristics and attractions that made the destination what it is.

Some destinations are born to be directed to the mass tourism only, but in many others, the geography and/or configuration enables that several poles of activity with very different characteristics cohabit in a broad Tourist Area. Majorca and Costa del Sol are good examples of zones hosting both cheap mass-tourism sites and highly exclusive secluded locations.

The dilemma that any destination faces in the “point of separation”  is therefore the dreaded question: ".....what do we do now?". Being clear nowadays that sustainability must rule and lead, then the farsighted Schumacher’s statement “Small is Beautiful” is the automatic answer.

....But as the title of this entry states, “...Exclusivity beats it”.

Indeed, exclusive destinations are sustainable by their own nature and origin, and cannot overgrow beyond a certain point. Apart from some exceptions –there are always exceptions-, most of the exclusive tourism destinations remain as such after 50 or even 100 years of operation.

The price entry barrier not only keeps out most of the problems brought by excessive growth, but it also generates the revenue that will attract the levels of investment needed (i) to keep facilities, attractions and environment in good shape and (ii) to be updated recurrently. If the destination characteristics, configuration and/or name enable it, a destination facing the point of separation should always consider the "road to exclusivity" as the first alternative to be analyzed.

Luxury Brands are not only natural a path to exclusivity, but most importantly, they will shorten the transition time to attain the objective.

Indeed, Luxury Brands bring (i) the desired level of exclusivity and therefore sustainability (ii) a major worldwide marketing impact and (iii) a defined solution and a defined project. (See our previous entry on how do brands shape a destination http://bit.ly/r4mICb and http://bit.ly/pDkgoU )

The importance of point (iii) is generally overlooked. Indeed, when a new branded luxury project is announced for a Destination, its effects are apparent immediately. It creates a focal point that will drive its future development changing the investment and economic landscape of the overall destination on the spot.

By concentrating the efforts and resources into one clearly defined direction with an established timeline, the branded development begins to shape the destination and its perception from the day of the signature.

And thanks to their versatility, branded projects  provide its benefits to most types of destinations, whether it be a new tropical beach & golf resort, a new Marina or an old ski resort seeking rejuvenation.

Luxury Brands are the most direct vehicle to attain exclusivity and as a result, they assure sustainability.

But if it is true that the incorporation of any established luxury brand may result in the above benefits, only one can bring Power, Beauty and Soul…. the three qualities that most destinations seek to offer their visitors.

For more information please contact FIRSTLOGIC Consulting
http://www.first-logic.com
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Aston Martin 2011/2012 Coolest brand : "This British icon is truly the coolest of the cool".

http://www.coolbrands.uk.com/aston-martin

Gaydon, Warwickshire, 28 September 2011.
Aston Martin has been awarded the prize of the UK’s coolest brand, winning this prestigious accolade for an unprecedented fifth time in six years.

Once again, Aston Martin has topped a poll which comprises an array of leading international contemporary design-driven brands, including Apple and Bang & Olufsen, as well as other leading automotive brands. Aston Martin was also voted the top automotive brand surpassing a host of other luxury and specialist manufacturers to complete a double success.

Stephen Cheliotis, Chief Executive, The Centre for Brand Analysis and Chairman of the CoolBrands Council commented: “Smooth, sexy and sophisticated; British built, high quality and hand finished, let’s be honest, young or old, male or female, opinion former or British public, who wouldn’t aspire to own what is truly the coolest car on the road. Number one in five of the last six years, this British icon is truly the coolest of the cool.”

Since it was established in 2001, the CoolBrands initiative has been canvassing the opinions of experts and consumers to identify the coolest brand in the UK, based on factors including style, innovation, authenticity, originality and desirability.

This year’s council of 36 influencers includes music artist Jessie J, DJ and Bestival founder Rob da Bank and actress and fashion designer, Sadie Frost. After 10,000 brands are initially identified, a shortlist of 1,500 brands is established and the panel and consumers then vote to produce a top 500 of the most highly rated brands.

The past decade has seen Aston Martin transformed from a small-scale manufacturer of specialist sports cars to one of the world’s best-known luxury brands, boasting its strongest ever line-up. From the breathtaking One-77 supercar and the elegant yet brutal V12 Zagato to the Tailor-Fit luxury city car, the Cygnet, from the powerful Vantage range and new Virage to the exquisite DB9, DBS and Rapide, every Aston Martin expresses the core values of Power, Beauty and Soul. The Aston Martin range was expanded further at this year’s Frankfurt Motor Show, where the company unveiled the striking new DBS Carbon Series.

Aston Martin is globally represented with a network of 136 dealers in 42 countries, most recently opening new dealerships in Istanbul, Turkey, Las Vegas, USA and Mumbai, India. The company also has ambitious growth plans for up to four new dealer sites in China over the next 12 months, doubling the existing network.

Aston Martin remains at the forefront of contemporary manufacturing, a cultural force that embodies design and engineering excellence, and a brand with a truly special heritage. Renowned around the world, Aston Martin enters the next decade with the promise of radical innovation and change, without losing the core qualities that make this strong, independent British brand so widely revered.

For further information, pictures and videos please visit www.astonmartin.com/coolbrands

For more information on Aston Martin Branded developments please contact FIRSTLOGIC Consulting
http://www.first-logic.com

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How Luxury and Tourism transform economic unsettlement into steady growth

by Alvaro HIDALGO

In this period of calls for higher taxes, worries about Banks’ solvency;  American and Chinese officials telling off Europeans upon debt, currency and measures to  recover confidence;  BRICS meeting today to decide whether they buy European  debt or not; high unemployment  in industrialized countries; severe austerity programs applied in Portugal, Italy, Greece and  Spain;  talks about overheating Brazilian markets;  bubble in Chinese real estate markets and its implications to its financial sector;  etc, etc, etc, there  is an industry continuing to perform worldwide: Leisure, Travel, Tourism and Lifestyle.

Bulls & Bears may fight pulling up and down stock exchange indexes for reasons difficult to grasp (down 50% twice in a decade and then  returning back to the starting point),  but if there is a sector in which we see the largest gap between reality and  its reflection in the markets, this is the Tourism.

Indeed, most analysts continue to forget that Tourism has provided nonstop stable growth for the last 50 years and is now hovering 10% of GDP in average in OCDE countries, increasing its weight every year. China expects to double the weight of Tourism to 11%  of GDP by 2020.

Most importantly, Tourism is an automatic and effective channel for wealth & investment transfer from cash rich countries to cash seeking countries…,  ...something that sounds good enough in these days.

To start with,  international tourist arrivals are estimated to have grown  to 440 M consumers in the first half of 2011, +19M  more over last year period….several world markets and regions growing by +9% !!!. …and all this in spite of the crisis.  (http://bit.ly/py1zwy , UNWTO)

Tourism has also shown its capacity to bounce back from any type of Political, Health or Natural disasters, whether it is mayor global events (9/11), regional ones (SARS crisis, Iceladic volcanic eruption) or local  (Mexican Swine flu, Far east Tsunami), the recovery period comprised between 3 months for local events, to 12-24 moths for global high importance events (OAG Crisis Analysis Aug.2011).

In the midst of troubled financial markets, the Travel & Tourism infrastructure continues to expand: +3.6% steady growth in air seats per annum since 1979; Airport capacity needs to cope with figures that will double before 2030 (UK demand will go from 240 to 465 mppa. See today's article in FT on the cost of postponing investments http://on.ft.com/ocGbk8); Brazil will double its airport capacity before 2013 requiring US$ 3,76 billion;  Air travel in India passed from  6% to 20% growth p.a  in less than a decade., etc). In turn, Airbus foresees strong ongoing demand for commercial aircraft. By 2030 some 27,800 new aircraft will be required to satisfy future robust market demand, with a combined value of  US$3.5 trillion (source Airbus).

If we leave aside the above number crunching exercise, the two crucial points to consider are:

•    Travel and tourism has become multidirectional, the division between originating and receiving countries is fading with BRICS transforming themselves into originating markets and  USA &  Europe receiving more tourists every year  from the rest of the world.

Funnily enough, the  –once (?) - rich countries are battling in fierce competition to attract this inbound traffic, in the knowledge that  all the economic benefits traditionally provided by Tourism  to developing countries as (i) source of development; (ii)  impulse to investment in infrastructure; (iii) job generating sector;  and (iv) source of hard currency;  are now  providing a good recipe to ease western countries troubles.

•    Regional travel is growing fast in all continents  (a point that deserves an entire blog entry on the subject)

Resulting from these points, hotel chains foresee very solid fundamentals for the medium term. Chris Nassetta, CEO Hilton Wordwide, claimed to be “pretty darned optimistic” about the growth of the hotel sector worldwide, adding that he’s seeing “the best fundamentals in my career to date.”  http://on.ft.com/oCcys5 .

It is true that from a financing point of view, hospitality investments have a bleak short term outlook, due to the accumulation of loan maturities (excellent  article on http://bit.ly/oFvARn ) which will result in a difficult  2012. But again, this is due to short term technical reasons, not fundamentals.

However, there is an additional factor entering the equation:  The new tourism is very focused on Luxury and the common aspects between these -once- different industries are now tying them together and blending them it into one sole industry that could be considered as the Lyfestyle Industry. 

As paradigm of long term view, Mr Arnault , president of the French Luxury  group LVMH,  made his first move 25 years ago by merging the champagne & spirits company  Moët Hennessy with the luxury leather goods and fashion house Louis Vuitton  Malletier -a daring move in those days-.  His vision of reuniting French Luxury brands in one company has proved to be accurate and LVMH is now harvesting the results, having consolidated leadership position worldwide with overall success, let alone minor recent bumps (Hermès) in his strategy.

This brand aggregation -or if you wish, consolidation of the distribution channels- is proving so successful that the subsequent step, The Super Luxury Malls, is becoming a reality http://bit.ly/ppqP93   and http://bit.ly/qop15o,  these two examples showing how the Luxury shopping experience is being implemented.

Las Vegas Crystals at citycenter

This quest for luxury has also entered in full force in the hospitality industry, with relevant brands expanding worldwide (again, note also the penetration of Middle East and Far East hospitality luxury brands in both their regional and the western markets).

The last steps in this trend are the consumer goods luxury brands entering into both (i) traditional hospitality and (ii) residential tourism through the branded residences concept (see excellent article in Forbes magazine http://onforb.es/lMJGey )

The analysis, Q&A on the weight and benefits of the brands in hospitality and branded residences can be seen in previous entries to our blog http://bit.ly/n8XRj2 , http://bit.ly/pO0pIn ;  how a brand can shape a tourism destination. http://bit.ly/r4mICb, and how the presence of the brand reduces risk and shortens maturity of projects http://bit.ly/njITKT . (See also, “the brand advantage” in a real estate market conference marked by wariness http://bit.ly/nxHZyC )

So, while old Bulls & Bears, PIGS or any other category continue to jump like cats in hot BRICS, we should concentrate into proposing this new market what it wants and we can shape.... targeted  Luxury Tourism and Hospitality Services conveyed through brand positioning.

……And once you’re in for the brands in the Luxury Lifestyle industry, then there are “brands” and there is the unparalleled “Coolest brand”

For more information please contact FIRSTLOGIC Consulting
http://www.first-logic.com

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7 words and a logo: Does a brand shape a destination?

by Alvaro HIDALGO

Our two last blog entries were centred on anticipating the consequences derived from the now rapidly escalating financial turmoil. By turning this entry to academic issues, we wish to provide some respite to the now omnipresent “crisis talk”. Hence, it focuses on the subject above and brings some comments on the “Advances in Hospitality and Tourism Marketing and Management” Conference held in Istanbul June 19-24, 2011: Destination Development, Marketing & Management.

Destinations are far more multidimensional than consumer goods and other types of services. To be effective, positioning theory suggests that reaching the minds of busy consumers requires a succinct message focussing on one or a few brand associations. Nowhere is this challenge better highlighted than in the development of a seven word slogan that encapsulates a destination’s diverse and often eclectic range of natural resources, built attractions, culture, activities, amenities and accommodation. (1)

As it is, there is an overwhelming amount of choices available to satisfy any consumer’s need or dream and, in such a competitive marketplace, the viability of destinations depends on the ability to develop effective marketing and management strategies (2), among which differentiation is one crucial element to attract clients to a destination.(3)

Setting and developing marketing strategies and conveying such differentiation becomes an overpowering challenge to Destination Management Organizations.

DMOs’ difficult task is to be in both sides of the table. On the one hand they must set rules for a policy and business strategies by involving institutions and individuals. On the other they must draw support from the different stakeholders so that the brand will be both accepted and communicated through both official and unofficial publicity and products, resulting in a unique and consistent destination brand positioning (4).

So…. How to transmit the qualities of a destination, to attract the types of clients appealed by the different facets of what the destination is, “targeting a multiplicity of geographic markets to attract a wide range of segments”(1) … and all in less than 7 words and a logo?

There are countless studies on destination branding, brand equity assessment models, precise definitions and discussions on the difference between destination image and brand personality. But such analyses are not confined to lecture halls. On the contrary, their assessment will have implications in advertising, promotion and positioning of a city or destination (5).

 
Consistent positioning is of the utmost importance since, unless a place can come to stand for something, it will have little chance of being remembered long enough to compete for any of this precious attention. Indeed, most people spend no more than a few seconds each year thinking about a destination, a city or a country on the other side of the world or about. So, unless that city or destination always seems exactly like itself every time it crops up, there is little chance that those few seconds of attention will ever add up to a preference for its products, a desire to go and visit the place, an interest in its culture. (6) (7)

In this sense, the use of Celebrities has been a traditional way of creating awareness.

Indeed, we already knew that they create destinations -Prince Rainiero & Grace Kelly made what Monaco is now- and their successors -HRH Prince Albert- contribute to create awareness in recently established ones  http://bit.ly/qyUI6N

Now, we have empirical models to analyze Celebrities’ impact (8).

But if attracting customers is already difficult, to grab the attention of the most sought after “creative class” (9) becomes of paramount importance. They, as a group, create trends, build and enhance the characteristics of a city or a destination, and their power of influence lasts much longer than any advertising campaign. Bringing them in and being capable to retain them is a nonstop challenge, even more fierce in these days in which companies and full organisations can and are run remotely.

To retain these customers, destinations need to constantly defeat concurrent alternatives, updating themselves and proving they are in the pinnacle of the pyramid by -among other things- bringing the firms that prove and show their status. Only certain destinations and locations can receive and sustain certain brands and, by fostering their establishment, the destination crosses a threshold that separates it from the rest.

Thus,

Academics say: In this 21st century, cities and destinations compete on their brand and will develop in line with it. They are competing on the value that they provide in terms of physical and service offer, their heritage, their ambitions and their character (6).

In essence, they compete to offer “Power, Beauty and Soul”…

                        …in a way, only 4 words and a brand suffice to shape a destination.

For more information please contact FIRSTLOGIC Consulting
http://www.first-logic.com

References:

(1) TOURISM DESTINATION BRANDING COMPLEXITY
Dr Steven Pike. (2005). Tourism destination branding complexity. Journal of Product &Brand Management. 14(4): 258-9

(2) DESTINATION BRAND PERSONALITY AND BEHAVIORAL INTENTIONS: A COMPARISON OF FIRST-TIME AND REPEAT VISITORS
Ahmet Usakli , Nevsehir University , Turkey
Seyhmus Baloglu, University of Nevada, Las Vegas, USA

(3) LONG-TERM COMMUNICATION EFFECTS OF TOURISM MALAYSIA MARKETING COMMUNICATIONS ON THE AWARENESS AND PERCEIVED DESTINATION IMAGE DIMENSIONS AMONG POTENTIAL TOURISTS FROM THE GULF COUNTRIES (GC)
Ashraf Mohammad Teehi Alfandi and Azilah Kasim
Tourism and Hospitality , College of Arts and Sciences, Universiti Utara Malaysia Kedah, Malaysia

(4) DESTINATION GOVERNANCE AND INTERNAL BRANDING AS ANTECEDENTS OF DESTINATION BRAND DEVELOPMENT: AN EXPLORATORY STUDY ON EDINBURGH
Ilenia Bregoli, Università Cattolica del Sacro Cuore Milan, Italy
Giacomo Del Chiappa Università degli Studi di Sassari Sassari, Italy

(5) EXPLORING THE RELATIONSHIP BETWEEN DESTINATION IMAGE & BRAND PERSONALITY OF A TOURIST DESTINATION – AN APPLICATION OF PROJECTIVE TECHNIQUES
Girish Prayag Faculty of Law & Management, University of Mauritius

(6) CITY MARKETING AND PLACE BRANDING: THE CASE OF CAPPADOCIA
Elem Yalçın and Burçak Çebeci Perker
University Faculty of Economics and Administrative Sciences,Istanbul, Turkey

(7) PLACE BRANDING Some Important Distinctions in Place Branding. , Simon Anholt (2004)

(8) SELECTING THE ‘RIGHT’ CELEBRITY ENDORSER: LATENT MEAN STRUCTURE ANALYSIS
Robert van der Veen and Haiyan Song
The Hong Kong Polytechnic University,School of Hotel and Tourism Management,

(9) THE RISE OF THE CREATIVE CLASS. Richard Florida, 2002.