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Sustainable tourism industry needs better data

Ten years ago, in the spring of 2002, flat-screen televisions were one of the signs you'd "made it" in the post-911 world.
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Ten years ago, in the spring of 2002, flat-screen televisions were one of the signs you'd "made it" in the post-911 world. The economy might still be shaky following the dot-com bust and people's nerves were shaky following the attacks on New York and Washington but if you had one of those big flat-screen TVs you were obviously doing better than most.

Now, flat-screen TVs are standard in most North American homes. They're expected in the rooms of any reputable hotel. They are the centrepiece in any home that has a "media room." The quality of the images and sound that flat-screen televisions produce is still impressive, and given the technology that goes into them and their ubiquity one would expect that the manufacturers of these devices are reaping huge profits.

But according to The Economist, http://www.economist.com/blogs/schumpeter/2012/01/flat-panel-displays-0, manufacturers, including Sony, Samsung, LG and Panasonic, are losing money on the flat-panel LCD screens they make for televisions and other devices, including smart phones and tablets. In fact, according to one brokerage, the industry lost a combined $13 billion between 2004 and 2010. And they continue to lose money, despite the fact consumers spent $115 billion on 220 million flat screen TVs last year.

This phenomenon of losing money in a business that sees high consumer demand is one of the puzzles in the rapidly changing business world of today.

Executives in traditional media companies are acutely aware of it, as they seek ways to stop declining revenues at the same time consumers are demanding more service and content at a faster pace than ever before. Print media — newspapers and magazines — are usually cited as the traditional media that are struggling most today, but social media and the erosion of the traditional model of selling advertising to support content (and providing content that draws advertising) are having an impact on radio and television too. Advertisers and newsmakers know they can bypass the traditional media and reach consumers directly with their own Tweets, websites and Facebook posts.

There isn't a lot of sympathy for the media empires that once dominated regions and even countries as they struggle to figure out a new sustainable business model. Like the manufacturers of flat-panel screens, they can't continue to lose money forever, but what consumers will be left with when the markets decide the winners and losers is unclear.

This period of rapid change and instability is by no means restricted to the manufacturers of television screens and media companies. For many industries the business model has changed drastically in the last five-10 years. The airline business is nothing like what it was before 9/11. The North American auto industry, once the domain of some of the largest companies in the world, had to be bailed out because many of the people leading it couldn't see the changes that were coming, or had already arrived. The telecommunications industry has generally grown more lucrative as technology has advanced and more services have become available to consumers. But increased competition has also pushed consumer prices down at the same time consumer demands — fuelled by technological advances — have increased. How long that can continue is unclear.

And the same can be said of the tourism business, both on a global and a local scale. It's not that tourism is going to die, but how will some of the businesses that are central to tourism today survive?

Like many other industries tourism has been profoundly changed in recent years through the Internet and other technological advances. Consumers can now compare their options in real time, weighing price, availability, weather conditions and other factors, including transportation to various destinations. This has, among other things, led consumers to book vacations with less lead time. With fewer advance bookings, tourism operators are less certain about how to act — cut prices, maintain them, offer incentives to book earlier...

While the world changes around tourism — the economy bumbles along, consumers have more choices and more tools to help them make choices, transportation costs ebb and flow — the tourism industry itself remains stagnant in some respects.

Our measurements of tourism, locally, provincially and nationally, are general rather than specific. And in some instances the information is not timely.

In Whistler, the relevant measurements are skier visits, room nights booked and sold and snow depth. Based on that, and a lot of anecdotal information, people make decisions. There is some valuable feedback from customers — the visitor surveys Tourism Whistler undertakes — but the information is usually seasonal, indicating guest satisfaction and trends well after the fact. While consumers are now making vacation decisions at the last minute, people in the tourism business are still getting information quarterly, semi-annually or even annually.

That leaves Whistler at a disadvantage to states like Colorado, where a completely different tax system allows local governments to impose a sales tax. The tax is an up to date public record of how much money was spent on liquor, retail, accommodation and other things within the local government's jurisdiction, and as such provides an accurate, current measurement of commerce and tourism.

The impression locally is that this has been a banner winter. Bolstered by abundant snow (particularly early in the winter, when most other ski areas in North America had little) skier visits have been strong. Apparently there have been over 26,000 skiers on the mountains on some weekend days. Room night forecasts have been healthy all winter, although the average room rate won't be known until the end of the season.

Strong skier visits and room nights booked is the foundation for a successful winter of business, but it doesn't mean every business in town is doing well. Discounted hotel rooms are still common. And this spring may reveal more empty retail spaces in the village.

That would suggest — as flat panel television manufacturers and media companies have learned — that some business models are unsustainable and need to change. Having more accurate, current data would help businesses prepare for that change.