Challenges and Opportunities in Global Tourism

1. Challenges and Opportunities in Global Tourism Aichi Shukutoku University Nagoya 25 May 2006 Herman Ehrlich

2. ‘‘If you want to achieve big, you need to dream big’’ Conrad Hilton Challenges & Opportunities in Global Tourism

3. STRENGTH CREATIVITY SKILL COMPASSION FOCUS INSPIRATION STAMINA Exceed Expectations • INTELIGENCE • COURAGE • INNOVATION • DETERMINATION • PIONEERING SPIRIT • INITIATIVE Challenges & Opportunities in Global Tourism

4. CHALLENGE THE STATUS QUO TO GO BEYOND!!!! Challenges & Opportunities in Global Tourism

5. Presentation Outline • Tourism Explained • Facts & Figures in Global Tourism • Challenges & Opportunities • Hilton Hotels Challenges & Opportunities in Global Tourism

6. Tourism Explained Challenges & Opportunities in Global Tourism

7. Tourism • 12% of World GDP (Gross Domestic Product) • 200 Million jobs (8% of world total) • 763m Intl tourism arrivals (2004) • $623b in global tourism revenues (623’000’000’000) Challenges & Opportunities in Global Tourism

8. Outbound tourism evolution Organized Groups (Japan 1975, Taiwan 1985, China 2000) Travel, Accommodation and Tours organized. Organized Individual(Japan 1995, Taiwan 2005, China 2020) Travel, Accommodation and Tours organized. Independent (Japan 2000, Taiwan 2010, China 2035) Travel & Accommodation organized Independent (Japan 2005, Taiwan 2015, China 2040) Purchased direct by traveler (web?) Challenges & Opportunities in Global Tourism

9. Tourism motivation • Leisure • Business • Meetings, Incentives, Conventions & Exhibitions (MICE) • Independent • Government • Interest groups Challenges & Opportunities in Global Tourism

10. Impact drivers on Future Tourism • Demographics • Politics • Economics • Industrialized nations • Developing nations • Emerging economies Challenges & Opportunities in Global Tourism

11. Ski ? • Spend • Kids • Inheritance Challenges & Opportunities in Global Tourism

12. Travel • Domestic • Inter-regional • Long-haul Challenges & Opportunities in Global Tourism

13. Tourism Products are perishable • Short “shelf life” • Ketchup bottle principle……… Challenges & Opportunities in Global Tourism

14. If 20 btls. ketchup not sold today…. Bottles remain on shelf tomorrow. Owner loses interest on value of ketchup 20 btls.(i.e. 20x Yen 300 @ 4% / 365 =0.66 Yen loss) 20 airplane seats NGO-HKG empty (20 x Y17’000 = Y340’000 loss) Tourism Products are perishable Tomato Ketchup Bottle Principle Challenges & Opportunities in Global Tourism

15. Tourism Products are perishable • Product pricing based on offer and demand (Yield Management, see: Airlines, Hotels, Car rental, Tour products, etc.) Challenges & Opportunities in Global Tourism

16. The Tourism product • Service delivery (human interaction) • Consumer expectations • Product standards • Consistency Challenges & Opportunities in Global Tourism

17. Facts and Figuresin Global TourismSource: United Nations - World Tourism Organization & IMF Challenges & Opportunities in Global Tourism

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21. China (excluding Hong Kong & Taiwan) Source International Herald Tribune Challenges & Opportunities in Global Tourism

22. Outbound Tourism by generating region Challenges & Opportunities in Global Tourism

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24. Challenges & Opportunities in Global Tourism

25. Market Share (2004) (Expenditure) Challenges & Opportunities in Global Tourism

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27. International tourist arrivals 1950-2020 Challenges & Opportunities in Global Tourism

28. Challenges & Opportunities

29. Challenges • Safety (Terrorism) • Travelers assume risk easier • Impact short lived • Economic • Energy prices • Inflation • Interest rates • Health • Avian influenza with human mutation of H5N1 • Visa procedures and restrictions Challenges & Opportunities in Global Tourism

30. Opportunities • Improved prospects from Euro-zone economies (Germany in particular) • Increased disposable income in emerging economies from intra-regional middle class market growth (China, India etc.) • Investments by (local) government in infrastructure. • Favorable legislation for tourism Challenges & Opportunities in Global Tourism

31. Opportunities… • Hospitality consolidation (Hilton, Marriott, Starwood, etc.) • Resorts • Time-share • Health care resorts and hotels • Cruise line industry • Air travel and High speed rail Challenges & Opportunities in Global Tourism

32. Tourism Forecast • Continued Growth forecasts (WTO) 4.5% p.a. • Tourism growth in Asia-Pacific (9%) Middle-East (8%) • Demographic impact (ageing) industrialized nations favorable for tourism Challenges & Opportunities in Global Tourism

33. Hilton HotelsSince 1919 Challenges & Opportunities in Global Tourism

34. 1973 Hilton goes Online as the most sophisticated reservation system in the industry 1919 Conrad Hilton purchases his first hotel in Texas, USA 1955 The Hilton Istanbul opens as the first Turkish hotel to meet international standards & is our longest running European hotel 1949 The Caribe Hilton opens, the first Hilton outside the USA marking foundation of Hilton International 1964– Hilton becomes independent company with right to use Hilton name outside USA 1969– John Lennon & Yoko Ono stage famous “Bed-in-for Peace” at Hilton Amsterdam 1946– Hilton Hotels Corp. is listed on New York Stock Exchange 1959– Hilton pioneers airport hotels concept with opening of San Francisco Airport Hilton Challenges & Opportunities in Global Tourism

35. 1999– Hilton acquires Stakis Plc with 54 hotels, 22 casinos and 68 Livingwell Health Clubs 2002– Launch of Hilton Worldwide Resorts and coral by Hilton, setting new standards in the global resort market 1997 Ladbroke Group plc and Hilton Hotels Corp. sign a strategic Marketing alliance reuniting The brand after 32 years 1994 Hilton HHonors Rewards Exchange is introduced 2001– Hilton acquires Scandic Hotels AB with 154 properties in the Nordic region 2000– Hilton in the Community Foundation is launched 1995– Hilton Launches www.hilton.com 1998– New global brand is launched Challenges & Opportunities in Global Tourism

36. 2006 Hilton Hotels Corp. acquires Hilton Group plc reuniting the brand after 40 years Challenges & Opportunities in Global Tourism

37. Hilton Nagoyafacts • 1989 • 500+ employees • 2000 people per day visit hotel • 50% of resident guests; foreigners • King’s, Queen’s, President’s, political- civic leaders and You! Challenges & Opportunities in Global Tourism

38. Hilton Hotels • 2800 Hotels • 80 Countries Challenges & Opportunities in Global Tourism

39. ….like any other business • Finance • Human Resources • Production • Distribution Challenges & Opportunities in Global Tourism

40. Business Cycle • People -Team members • Hilton Brand Standards (the expectation) • The minimum level of service we deliver to guests at each key service point. • Service Standards (deliver the expectation) • Cost control through productivity, methodology, processes, etc. • Profitability • Return on investment to shareholders • Investors confidence = Capital for growth Challenges & Opportunities in Global Tourism

41. 4 Core values • People (employees) • Quality • Customers • Profit • What gets measured, gets done….. • ‘’Balanced scorecard’’ measures across the 4 core values. Challenges & Opportunities in Global Tourism

42. 2 Philosophies • Equilibrium (for guests) • “Put back a little of what life takes out” (an environment in which guests can relax, refresh and rejuvenate, whether on business or leisure) • Esprit (for employees) • ‘’Only those that feel valued can add value’’(How we behave with each other) Challenges & Opportunities in Global Tourism

43. How Hilton delivers Equilibrium • Consistency • Personalized • Hassle-free • Inspirational -Hilton Moments

44. How Hilton delivers Esprit Service (internal & external) Recognition Communication (dialogue not monologue) Product & Process (training & education)

45. Hilton Esprit ……………… • Good Induction • On the job training • Direct Learning • Knowledge room • Hilton University • Hilton Team Member Committee • Encourage Self Expression • Social Activities • Celebrate success Challenges & Opportunities in Global Tourism

46. Culminating in….. Balanced Scorecard “What gets measured, gets done” Challenges & Opportunities in Global Tourism

47. Education is not optional http://www.hilton-university.com/ Challenges & Opportunities in Global Tourism

48. Corporate Social Responsibility Environmental impact • Sustainability • Construction & Interior Decoration • Services (electric power, water, gas, sewage) • Alternative fuels and methods • Waste Management • Environmental conscious vs. cultural traditions Challenges & Opportunities in Global Tourism

49. Corporate Social Responsibility “Charity starts at home” • Supporting our community at large • Children, Aged care, Impaired (Physically and Mentally challenged) • Service organizations; • Roteract, Rotary, Lions, Soroptimist, Kiwanis, Red Cross, Salvation Army, Hope Intl. Challenges & Opportunities in Global Tourism

50. Technology not optional….. Hilton Enables Guests to Print Airline boarding Passes from Hotel Check-in Kiosks • Hilton Hotels announced that it enables guests to print boarding passes for most major airlines at check-in/check-out kiosks within the lobbies of 37 participating Hilton hotels in the USA. (March 2006) Challenges & Opportunities in Global Tourism