Megatrends in Tourism and Hospitality in Australia

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Table of Contents

Executive Summary
Introduction
Megatrends and Tourism Future
Megatrends Opportunities and Challenges
Political, Socio-Cultural, and Economic Factors
Key Drivers for Megatrends
Conclusion
Recommendations
References

Executive Summary

Tourism is among the most dynamic and largest sectors in the modern hospitality industry. This paper will examine the sector in-depth and predict its future by addressing the megatrends identified in the Commonwealth Scientific and Industrial Research Organisation (CSIRO) report. Tourism megatrends are widely referred to as social, environmental, and economic shifts that may affect human decision-making and traveling preferences. There are six CSIRO megatrends: “more from less,” “going, going, … gone?”, “the silk highway,” “forever young,” “virtually here,” and “great expectations.” Each trend has specific characteristics and leads to certain opportunities and challenges in tourism businesses. Australian stakeholders need to know that political, economic, and socio-cultural factors can influence tourism markets to predict conflicts, control population growth, and maintain cultural intelligence. Key drivers in the hospitality industry are related to sustainable development, competitiveness, technological advancement, and innovation. Addressing the main aspects of Australian tourism megatrends, several recommendations will be developed to help the country enhance a successful future in the chosen industry. Today, many organizations and countries introduce unique approaches to attract tourists to their regions. Australia should be ready to compete in the spheres of management and marketing, focusing on digitalization (virtual environments), maintaining sustainable development, and learning the aging population’s needs.

Introduction

Today, tourism is one of the constantly developing industries in Australia and across the globe. It contributes to each country’s economic stability, international relationships, and personal benefits in education and employment. The future of tourism depends on various social, economic, technological, environmental, and political factors, also known as tourism megatrends (Hajkowicz et al., 2012). The Commonwealth Scientific and Industrial Research Organisation (CSIRO) is a well-known strategic advisory in the Australian government that manages national and international scientific research. In one of the CSIRO Futures reports, the authors identified six major interlinked megatrends that affected contemporary decision-making and problem-solving in the hospitality industry (Hajkowicz et al., 2012). This report discusses the megatrends and analyses opportunities and challenges related to these shifts through the prism of socio-cultural, economic, and political perspectives to ensure Australia is a successful competitor in the future tourism sector.

Each megatrend is also closely related to a particular sphere of human life, including demographics, culture, technology, economics, and the environment. According to the CSIRO Futures, megatrends are defined as substantial changes in the environmental, economic, and social circumstances that affect multiple business processes and the existing social systems (Hajkowicz et al., 2012). “More from less” is the first megatrend to examine how corporations, authorities, and societies discover new ways to guarantee the quality of life for upcoming generations within the restrictions of the world’s limited natural resources (Hajkowicz et al., 2012). It is important to remember that human activities dramatically challenge the earth, and its resources need time to be restored and improved. However, population growth is an evident social shift, affecting economic, cultural, and environmental choices. Water scarcity, energy investment, climate change, increased food demand, and resource conflicts can no longer be ignored.

The “going, going, … gone?” megatrend focuses on the impact of human interferences on global biodiversity. Hajkowicz et al. (2012) underline that people’s intention to create favorable living conditions affects the planet’s ecosystem because related greenhouse gas emissions and climate change lead to the decline of habitats and plant/animal species. The loss of biodiversity seriously threatens regional and national security (World Tourism Organization and United Nations Development Programme, 2017). Tourism industry representatives should protect their interests and respect the needs of the world around them.

“The silk highway” is the third megatrend that predicts that the world economy will shift from northwest to southern in the subsequent years. Due to strong economic growth in Asian and African regions, many people will be lifted out of poverty and into the middle class (Hajkowicz et al., 2012). Australia may rely on its structural prosperity to create new international markets, trade relationships, marketing strategies, and cultural ties. At the same time, attention should be paid to the achievements in the Asian region, where many technologically advanced ideas and opportunities emerge.

People cannot ignore the fact that their age plays an important role in many activities. Thus, the next megatrend, “forever young,” proves that the older population is a beneficial issue for analysis as these people become a tremendous source of expertise, knowledge, and mentorship (Hajkowicz et al., 2012). To maintain the elderly participation in tourism activities, retirement savings and healthcare challenges should be recognized and solved.

“Virtually here” is another tourism megatrend based on the increased online connection between individuals and communities. The virtual world grows fast and unpredictably and distantly promotes the exchange of services and ideas (Hajkowicz et al., 2012). This trend is critical for Australian tourism because digital media helps people learn about the region and make their traveling choices. The creation of new connections and knowledge strengthens tourism and hospitality globally.

Finally, the “great expectation” megatrend includes the importance of developing social relationships at different levels. Hajkowicz et al. (2012) describe it as a socio-cultural, demographic, and consumer issue to investigate the rising preference for experiences over material possessions and the growing value of social bonds. To create a successful tourism future, it is necessary to enhance cooperation between the retail sector, the government, human service facilities, and private organizations because people’s expectations are unpredictable.

Megatrends and Tourism Future

Each megatrend identified in the CSIRO Futures Report should be properly analyzed and investigated to understand what theories to apply to the tourism and hospitality industry and what improvements to offer at the broad level. The future of the tourism sector is predetermined by multiple decisions people make about natural resources and human needs. Hajkowicz et al. (2012) mention that humanity’s ability to innovate and adapt is impressive, and several new ways to improve the quality of life at the expense of limited natural resources emerge. Khan et al. (2020) introduce simultaneous equation modeling to examine the energy-growth-environment-tourism relationship and prove the necessity of improving the environmental quality through green tourism. Water and food resources become insufficient, and global water demand will increase by 55% by 2050, raising new concerns about human needs and resource scarcity (Hajkowicz et al., 2012). These problems can hardly be solved at the individual level, and more organisations and communities have to be involved, relying on the collaborative theory that encourages the government empowerment of the locals (Musavengane & Koppers, 2020). Similar conservation initiatives are necessary to protect the natural world and biodiversity.

Following the “silk highway” megatrend, Australia has to pay attention to the impact of other countries on its development and tourist demands. For example, Asia remains the major region from which tourists come to visit Australia, and the number of visitors continues to grow from 4.2 million in 2017 to 4.9 million in 2019 (Tourism Research Australia, 2017). CSIRO Futures is right that it will be the Asian Century because of the strong social and economic ties with the region (Hajkowicz et al., 2012). At the same time, the age of a tourist remains a serious element in understanding the tourism future. Demographic issues affect local economies and destination decisions, and aging is a critical workforce because older people prefer to exchange their experiences, choose convenient options, and focus on comfort (Yeoman, 2011). Chen et al. (2021) develop a theoretical basis for consumption wealth and explain why people’s consumption decisions depend on their incomes and past or present profits. Thus, it is important to learn what older adults prefer and offers services that meet their basic needs and consumption hopes.

Finally, the evaluation of technological (virtually here) and socio-cultural (great expectations) megatrends define recent shifts and obligations of tourist stakeholders. The era of digitalization has already shaped human relationships and opportunities in the tourism sector. Information and Communication Technologies are constantly developing, increasing affordances and allowing manipulations with consumer choices (Gössling, 2021). Still, not many improvements in social relationships are observed because of digitalization because individuals prefer to find different Internet sources instead of relying on their own knowledge, resources, and opportunities. Maslow’s theories of human motivation and the hierarchy of needs can be implemented to understand what expectations are critical and which needs are not critical for tourism success (Hajkowicz et al., 2012). Thus, each global megatrend determines the other’s progress and overall impact on the tourism and hospitality industry.

Megatrends Opportunities and Challenges

The identification and development of the offered megatrends might have specific opportunities and challenges in the tourism and hospitality industry in Australia. In general, attention should be paid to six main aspects: natural resources’ scarcity, biodiversity conservation, international (Asian) impact, increased aging populations, the virtual world, and social relationships’ importance. Evident opportunities are related to Asian-Australian cooperation, elderly citizens, and virtual advancement, while challenges in climate change, water/food resource shortage, and high social expectations question a safe future in the tourism sector.

As soon as more people want to visit Australia, a range of different effects on stakeholders is observed in the industry. Hotels and lodges are the enterprises that provide tourists with food and shelter, contributing to much-needed employment (World Tourism Organization, 2017). Comfortable rooms, 24/7 services, and interpersonal cooperation affect tourists’ willingness to visit a region. For example, Tutek et al. (2015) discuss the demands of silver hair tourists in terms of security, desired products, and customization, which is similar to the CSIRO Futures’ “forever young” megatrend. The aging population is a critical segment in the tourism industry, which might grow by 21% by 2050 (Tutek et al., 2015). This fact creates new opportunities for hotels and other stakeholders to investigate their needs and ensure their comfort and desire to travel, focusing on health and wellness products, personalized services, and specialized playgrounds.

Asian and generation Y and Z tourists introduce a number of opportunities for hospitality because digitalization and international relationships allow for finding enough credible and accurate information. People want to visit places where their cultural preferences, traditions, and interests are recognized and respected. Digitalization and the implementation of social media resources in the industry is a unique chance to exchange information quickly (Gössling, 2021). Cultural intelligence, a multilingual staff, and employees from different parts of the world will become new areas of improvement and industrial growth.

However, such megatrends as “more from less,” “great expectations,” and “going, going, … gone?” might challenge tourism-related industries in several ways. Private and public organizations have to re-evaluate their resources and understand the impact of their decision on nature and the earth in general. The balance between economic, environmental, and social issues is hard to achieve, and sustainable tourism has become a recent trend (Tutek et al., 2015). The more people want to improve their comfort; the more natural resources should be found and used, leading to climate change and energy investment.

Political, Socio-Cultural, and Economic Factors

The tourism industry is exceedingly vulnerable because it is susceptible to altering political, socio-cultural, and economic pressures, and as a result, it is pretty unstable. The growth of traveling decisions coincides with periods of relative political calm worldwide. Tourism often suffers in regions where armed conflicts, political tensions, civil riots, and terrorist attacks might happen (Tutek et al., 2015). Political factors like the government’s participation and the legalization of tourism activities influence tourists’ views. The awareness of visa regulations, taxation conditions, and currency export are integral for aging populations and Asian tourists, becoming a serious trend in global tourism markets.

During the last several years, tourism has remained one of the fastest-developing economic sectors. It contributes to wealth creation, employment, and economic growth in Australia (World Tourism Organization and United Nations Development Programme, 2017). The improvement of international conditions is closely related to the economic forecast, with the national Gross Domestic Product increasing by 3% during the last several years (Tourism Research Australia, 2017). As a result, increased household consumption, business investments, and a more competitive exchange rate are observed, proving the relationship between tourism and the country’s economy. With time, it is possible to notice that unemployment rates are reducing to 5%, creating a positive world economy picture (Tourism Research Australia, 2017). Cooperation with Asian regions helps Australia build new export markets and strengthen trade relations (Hajkowicz et al., 2012). These environmental factors prove that global megatrends positively affect the tourism market.

Finally, socio-cultural factors like age distribution, family incomes, lifestyles, and education levels predetermine people’s decision to visit Australia as the main destination point. According to the World Tourism Organization and United Nations Development Programme (2017), the promotion of peaceful societies based on justice and equality attracts tourists’ attention. When multicultural tolerance becomes a core issue in the hospitality industry, people feel safe and confident that their human rights are met. Local communities should also support tourists and participate in their routine activities to learn about the country, its traditions, and integration attempts.

Key Drivers for Megatrends

The megatrends under discussion may be affected by several meaningful drivers, including sustainability achievement, competitiveness, population growth, and innovation (digital transformation). The main idea of sustainable development is to meet the current population’s needs without neglecting the potential needs of future generations and the environment (World Tourism Organization and United Nations Development Programme, 2017). The World Tourism Organization and United Nations Development Programme (2017) introduced its public policy to end poverty and hunger, promote food security and well-being, support equal and high-quality education, and ensure water and resource management. This driver cannot be ignored in tourism because it reveals controversies in several economic and environmental factors. For example, the increased number of tourists contributes to positive employment shifts and economic benefits but also to overusing natural resources, deforestation, and overall wildlife damage. Thus, sustainable tourism must be promoted to generate threats and opportunities. Similar examples and outcomes are associated with the population growth driver because when more people want to travel, they need additional human and natural resources to be spent. Meeting human needs and great expectations may be a challenge and another reason for development and improvement.

Despite the already-made achievements, the tourism industry is highly competitive. Traveling agencies, hotels, and other hospitality stakeholders should prove their readiness to develop and compete with each other (Vu & Hartley, 2022). Competitiveness has become a serious business driver of sustainability and tourism success (World Tourism Organization and United Nations Development Programme, 2017). It is expected to use any available resources if they do not contradict the sustainable development goals and expectations. Vu and Hartley (2022) suggest focusing on the digital revolution, making this issue another critical driver in tourism. To be in demand, Australia must compete with other places of attraction in Europe, Africa, and America. Digital transformations include internal and external changes to attract employees and tourists. Virtual tours, online communication, and vivid examples help individuals decide if they want to visit a country or not. The “Virtually here” megatrend proves that many people and businesses are ready to move into the virtual world but need to improve their technical skills and awareness (Hajkowicz et al., 2012). The aging population, in particular, seeks professional assistance to recognize their options and succeed in decision-making.

Conclusion

Because of the high degree of sensitivity of the tourism industry to political, economic, social, and environmental factors, its future is notoriously difficult to forecast. On the other hand, there is a clear indication that hospitality stakeholders do everything possible to understand tourists’ interests and cooperate with local governments and communities to create favorable settings. On the other hand, as soon as another megatrend emerges, it may be associated with certain opportunities and challenges. The CSIRO report indicates six tourist megatrends to explain major management and marketing steps for success, sustainability, and competitiveness. Information exchange, online cooperation, and natural and human resource management should be constantly improved.

Recommendations

Australia’s tourist sector is thriving and is a substantial contributor to the country’s development. However, it is not enough to pay attention to economic or social factors but combines political and environmental issues that determine the industry’s growth. Thus, to ensure Australia has a successful and competitive tourism future, it is recommended to address the aging population’s needs, strengthen its virtual environment, and recognize the impact of human activities on nature. People should know what Australia is ready to offer to its tourists, and social media sources and virtual tours are applicable in this case. The tourism sector differs globally, and each country can underline its history, places of interest, and comfortable services. Australia should compete, relying on its environmental friendliness, sustainability, and innovations. It is easy to introduce a technically advanced service and a variety of alternatives, but Australia needs to use its uniqueness and naturalness.

References

Chen, T. S., Hwang, M. S., & Chang, Y. J. (2021). The effect of the wealth effect and population aging on tourism expenditure.Current Issues in Tourism, 25(11), 18852-1865.

Gössling, S. (2021). Tourism, technology and ICT: A critical review of affordances and concessions.Journal of Sustainable Tourism, 29(5), 733-750.

Hajkowicz, S. A., Cook, H., & Littleboy, A. (2012). Our future world: Global megatrends that will change the way we live (The 2012 Revision). CSIRO.

Khan, A., Chenggang, Y., Hussain, J., Bano, S., & Nawaz, A. (2020). Natural resources, tourism development, and energy-growth-CO2 emission nexus: A simultaneity modeling analysis of BRI countries.Resources Policy, 68.

Musavengane, R., & Kloppers, R. (2020). Social capital: An investment towards community resilience in the collaborative natural resources management of community-based tourism schemes.Tourism Management Perspectives, 34.

Tourism Research Australia. (2017). Tourism forecasts 2017. Tourism Research Australia.

Tutek, E., Gebbie, M., Chan, K. Y. G., & Durand, S. (2015). Tourism megatrends: 10 things you need to know about the future of tourism. Horwarth.

Vu, K., & Hartley, K. (2022). Drivers of growth and catch-up in the tourism sector of industrialized economies.Journal of Travel Research, 61(5), 1156-1172.

World Tourism Organization and United Nations Development Programme. (2017). Tourism and the Sustainable Development Goals – Journey to 2030. UNWTO.

World Tourism Organization. (2017). Tourism highlights: 2017 Edition. World Tourism Organization.

Yeoman, I. (2011). Tomorrow’s tourist: Scenarios & Trends. Routledge.

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