Nedo Pinezić: ITB Berlin - deceptive recovery

Despite the excellent forecasts for 2023, the tourism sector must already prepare for 2024 and 2025, which bring new challenges

Author  Nedo Pinezić

9. March 2023.

International Tourist Exchange Berlin – ITB

This year's edition of the world's largest tourist exchange ITB in Berlin takes place after a break of two years.

In those two years, there have been huge changes that are already visible on the trip to Berlin itself: airlines that are late for an hour without explanation or apology, hotels in Berlin that have digitized a large part of their services, so that professional - cordial reception has disappeared, bus lines from the city center to the fair which have been greatly reduced, a smaller number of exhibitors and a less pompous presentation, a congress without the world's biggest names in travel and tourism, without translators... Even the number of "refreshment stations" in the halls has been reduced, everything is somewhat more modest in compared to 2019.

Nevertheless, ITB is still the world's largest tourist exchange, and the ITB congress with 400 speakers in 4 congress halls is also the largest and most important. The number of topics is reduced, but the importance is not.

As before, the congress opens with the introduction of the broader picture presentation by prof. Dr. Clemens Fuesta, president of the IFO Institute - Leibniz Institute for Economic Research at the University of Munich. This institute conducts research every three months through which it receives very significant information from the real sector. By monitoring trends in such short intervals, a very clear overall economic picture is obtained. This situation affects many aspects of professional and private life as well as tourism itself.

What is a kind of paradox of the current situation is that the demand for tourist trips is increasing while at the same time the effects of inflation and rising interest rates negatively affect the available financial resources for travel. This could lead to an increase in demand for shorter trips and longer but cheaper trips in 2024. Digital technology plays an increasingly important role in balancing the needs of travelers and the offer of travel companies.

Dr. Fuest sees the attempt to return to the "old settings", before the pandemic, as a wrong way of development. Innovations, experiments based on experience gained in a continuous crisis environment are needed. The Covid-19 pandemic prepared us for new pandemics, and the crisis caused by the war in Ukraine for new crises, especially in the energy and food sectors.

Digitization, human resources, sustainability are the three basic terms that characterize tourism today

Digitization is rapidly developing and becoming the main tool not only of marketing and sales, but also of process management.

However, tourism is, above all, human, humane interaction, so digital technology and robotics cannot completely replace the human workforce in tourism. It is very deficient throughout Europe.

This is where we come to the second absurdity. Developed countries invite and employ labor force from developing and underdeveloped countries to at the same time support programs for the better life of those communities that are rapidly aging and are left without an active, productive population.

The integration of immigrants is an important process for developed countries, but to what extent can the most important part of the population be "sucked" from regions that are already suffering because of it? In the future, the tourism offer in the global south will increasingly develop, where through such development, the population that would otherwise emigrate will be employed. This will create new problems in the global north, which will continue to experience labor shortages in hospitality and tourism.

A completely new approach to workers with much more flexibility is needed. Those who will continue to immigrate to the Global North should receive all possible assistance for integration.

Unsustainable sustainability

It is similar with sustainability. Everyone is talking about sustainability, but they are also counting on an increase in the number of tourist arrivals, on a greater number of incoming flights, so this contradiction of the desire for the highest degree of sustainability while simultaneously increasing the volume of traffic is increasingly being outlined as a paradox.

In the new sustainable approach, there is also a lot of "greenwashing" where, with the use of abundant financial funds, the business is presented as "greener" than it actually is. Large tourism companies are leading in this. This situation, along with the flourishing of the bureaucratic apparatus responsible for the control and management of sustainability rules, calls into question the sincerity of the bidders and thus the trust of the consumer, the tourist traveler.

Instead of this approach to interpreting the EU taxonomy, Dr. Fuest suggests measuring the "carbon footprint". Reducing CO2 emissions is the final strategic goal of the decarbonization program, but also one of the more important goals of the sustainability of tourist travel.

Tourism is in a state of transformation

The tourism sector still needs to practice elasticity, flexibility in business and build a system that is resistant to crisis situations. The products that should be developed as a priority are those that have proven to be the most resistant in the pandemic. This is certainly mountain tourism, active tourism, small group tourism, individual tourism, baby boomers are the financially strongest, most stable segment of travelers.

The polarization between those who have a good travel budget and those who are more price sensitive will further grow. Care for the environment, clear presentation of all concrete procedures for reducing harmful effects on the environment are extremely important in tourism.

Rail travel will increase, the use of liquid hydrogen as a fuel will increase, air transport will continue to be under strong pressure to use an environmentally friendly fuel.

Everything tells us that the tourist traffic figures that convince us that we are returning to the "old normal" can be deceiving. Physical and financial traffic is returning as a result of too long social isolation during the pandemic. However, the business sector experienced major shocks and changes and did not fully recover operationally or financially. Household budgets of families of tourist travelers will be under increasing strain caused by the effects of inflation. The prices of consumer goods and services, especially energy and food, will rise above the real wage growth.

Therefore, despite the excellent forecasts for 2023, the tourism sector must already prepare for 2024 and 2025, which will bring new challenges.

From Berlin
Nedo Pinezić,

Cover photo: presentation by prof. Dr. Clemens Fuesta/ source: Nedo Pinezić

Author  Nedo Pinezić

9. March 2023.