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| Tourism Economics
Market Allocation PlatformGuiding investment decisions to maximize ROI
| Tourism Economics
Tourism Economics core services
Travel data and
forecasts for 190
countries, 50
states, and 300
cities
Policy analysis
and
recommendations
Market opportunity
and scenario
analysis
Destination visitor
tracking and
economic impact
3
Market Allocation Platform
| Tourism Economics
Intelligent decisions …improved ROI
Selected MAP destinations
ROI ROI
| Tourism Economics
An optimal investment portfolio has the following
characteristics
• Adequate diversification
• Risk mitigation
• Defined time horizon
• Maximizing returns
...the same is true for destination marketing
Market allocation as an investment portfolio
| Tourism Economics
• Marketing strategies are often based on current travel
activity
• However, the goal is to identify new opportunities
• Market costs and risks vary across markets
• And all this changes over time!
The need: a dynamic and flexible system to continuously
evaluate market opportunities and guide investment decisions
Translating market analysis into decisions
| Tourism Economics
Solution: Market Allocation Platform (MAP)
• The underlying model scores and ranks origin markets across
comparable metrics of opportunity, cost, and risk.
• MAP uses these scores to suggest marketing budget allocation
across markets.
• Up to 30 international markets
• The model delivers flexibility in terms of:
• Timeframe for outlook
• Risk tolerance
• Origin markets for comparison
• Components
| Tourism Economics
• Market size and growth
• Destination and activity preferences
• Market presence
• Accessibility / barriers
• Purchasing power
• Value per visitor
Measuring opportunity is complex
| Tourism Economics
Framework
Realizable ReturnOpportunity
Propensity
Value
CostMarketing
Access
RiskConstraintsAccessAllocation
Relative ROI Potential index
| Tourism Economics
Realizable ReturnOpportunity
Propensity
Value
CostMarketing
Access
RiskConstraintsAccessAllocation
Relative ROI Potential index
Step 1: Quantify the raw opportunity
| Tourism Economics
Implementation
• Over 25 indicators of
demand are grouped into
like categories and
weighted based on
historic importance in
determining market
demand
• The MAP scoring system
ensures a comparable
basis for assessing
potential across all
markets
• Scores are all relative
indices for easy
benchmarking
CATEGORY COMPONENT
Opportunity Travel Market Size
Country Size
Market Growth
Headroom
Propensity Sentiment
Alignment
Value Purchasing Power
Visitor Value
Affordability
Market Presence
Constraints Risk
Accessibility
| Tourism Economics
Example: Country size
• The country size score is based on GDP per capita and the
number of households in each income tier.
Component scores Summary data
Rank Market scoreGDP per
capita (US$)
Households
Tier 1
(income over
$150,000)
Households
Tier 2
(income
$70,000 to
$150,000)
Households
Tier 3
(income
$20,000 to
$70,000)
1 Japan 77.2 36,805 2,553 18,464 30,199
2 Germany 48.7 46,364 1,406 8,357 25,771
3 United Kingdom 44.1 42,481 1,678 6,850 15,396
4 France 40.0 42,313 1,084 7,071 18,785
5 China 39.3 7,297 876 5,908 72,940
6 Australia 33.5 63,787 2,252 3,556 2,756
7 Canada 32.5 48,011 1,530 3,773 7,362
8 Italy 30.6 35,526 787 4,663 15,922
9 Spain 22.6 29,573 658 2,672 9,510
10 Brazil 20.8 10,930 417 2,687 20,979
11 Switzerland 18.8 82,183 742 1,634 1,273
12 Mexico 17.8 10,519 349 2,266 14,413
13 United Arab Emirates15.2 43,923 834 704 516
14 Norway 14.1 101,944 369 1,005 874
15 Sweden 12.3 59,496 166 1,147 3,053
16 Netherlands 12.1 48,201 117 1,200 5,190
17 Austria 11.6 50,547 163 1,039 2,297
18 Denmark 10.1 61,117 163 472 1,334
19 Colombia 9.4 7,591 176 584 3,214
20 Finland 9.2 47,779 81 587 1,706
21 Chile 9.1 14,807 90 686 3,382
22 Ireland 8.8 48,607 91 463 1,028
23 Qatar 8.5 97,118 109 165 104
24 Venezuela 8.4 18,267 47 527 4,114
25 India 8.3 1,484 58 469 11,344
26 Argentina 8.0 9,266 40 474 5,255
27 Peru 6.5 7,060 25 192 2,702
28 Costa Rica 5.7 10,069 12 68 491
29 Panama 5.6 11,627 7 49 366
30 Guatemala 5.5 3,567 15 79 663
For example, Japan, the
highest scoring country
on country size, has 2.6
million households
within income over
$150k, plus 18.5 and
30.2 million households
in the next two income
tiers.
| Tourism Economics
Detailed analysis…simple conclusions
For each origin market…
T
1
1
1
2
3
2
4
5
6
3
7
8
9
2
4
10
11
12
5
13
14
6
15
16
3
7
17
18
8
19
20
9
21
22
4
10
23
24
11
25
26
12
27
28
Total potential score
4 categories
12 components
28 indicators
| Tourism Economics
Example metric: Alignment
0 20 40 60 80 100
Australia & NZ
Brazil
Canada
UK & Ireland
France
Scandinavia
Italy
Ger, Aus, Swi
China
Benelux
South America
India
S Korea
Japan
Mexico (air)
Competitor share outbound
Comparable share outbound
Alignment in activities
Alignment in leisure activities
| Tourism Economics
Step 2: estimate costs (the flip side of return)
Cost of doing business in a market AND costs faced by its travelers
Realizable ReturnOpportunity
Propensity
Value
CostMarketing
Access
RiskConstraintsAccessAllocation
Relative ROI Potential index
| Tourism Economics
Market cost estimates
2 types of costs are considered
1. Marketing costs
• The physical cost incurred of operating marketing
activity by market
• The ease of doing business in each market is also
considered
• Current marketing presence as a mitigating factor to
operating costs are also considered
2. Barriers
• Accessibility is included as restrictions on travel from
each market also presents a cost to be overcome
| Tourism Economics
Example metric: Costs
0 20 40 60 80 100
Mexico (air)S Korea
ChinaSouth
JapanGer, Aus,
France
BrazilItaly
ScandinaviBenelux
Australia &India
UK &Canada
Cost of Marketing
Ease of Doing
Business
| Tourism Economics
Step 3: Create ROI index
ROI index is calculated as the ratio of Return and Cost indices
Realizable ReturnOpportunity
Propensity
Value
CostMarketing
Access
RiskConstraintsAccessAllocation
Relative ROI Potential index
| Tourism Economics
Step 4: Factor in risk
Realizable ReturnOpportunity
Propensity
Value
CostMarketing
Access
RiskConstraintsAccessAllocation
Relative ROI Potential index
| Tourism Economics
Risk-return trade-off?
A trade-off is evident between risk and return across similar markets. Markets in the upper-left quadrant should targeted (low-risk, high-return) with limited exposure to those in the lower-right (high-risk, low return).
Canada
United KingdomBrazil
Mexico
Australia
Germany
China
ColombiaFrance
Switzerland
Norway
IrelandChileItaly
United Arab Emirates
50
100
150
200
250
300
50 75 100 125 150
Return relative to Risk
Each score averages to 100 across countries, only the top 15 countries are shown
Risk
Total Return
| Tourism Economics
MAP enables decisions to reflect preferred risk tolerance
2
3
4
5
6
7
8
Risk - Return schedule
Port
folio
retu
rn o
n investm
ent
Very low risk Low risk Average risk High risk Very high risk
| Tourism Economics
Market risk
Risk is the counterparty to return. This is considered according
to 3 categories
1. Country risks
• Based on Oxford Economics risk ratings considering
debt, currency and government stability
2. Volatility / Stability
• Typical volatility in both the economy and travel are
considered
3. Volatility / Stability in recession
• Economic and travel volatility is also considered in
recession years, with a large weight placed on volatility
in 2009.
| Tourism Economics
Market risk is used to “discount” returns
0 20 40 60 80 100
Canada
Scandinavia
UK & Ireland
Australia & NZ
Benelux
Ger, Aus, Swi
France
Italy
Japan
India
China
Mexico (air)
South America
S Korea
Brazil
GDP resilience
Composite intrinsic risk
Market Resilience
GDP resilience in recession
Market resilience in recession
| Tourism Economics
Step 5: Factor in constraints
Suggested allocations are subject to upper bounds according to market constraints
Realizable ReturnOpportunity
Propensity
Value
CostMarketing
Access
RiskConstraints
AccessAllocation
Relative ROI Potential index
| Tourism Economics
Market constraints
Market constraints provide upper limits on allocation based on:
• Distance
• Air service
• Visa requirements
| Tourism Economics
• Interactive analysis
• Time horizon: short-term, long-term
• Risk tolerance: Low, balanced, or high
• Market subsets
• Indicator subsets
Dynamic functions of MAP system
| Tourism Economics
Interactive analytical platform (example)
| Tourism Economics
Viewing an individual market
| Tourism Economics
The user can select any 4 markets and compare their scores. France represents more potential than Japan, Canada, or Australia for this sample destination.
Comparing markets
| Tourism Economics
Strategic applications
• MAP output guides the decision-making process with a
consistent framework to measure opportunity for a particular
destination across its key markets.
• These opportunities are indexed against risk and costs to derive
an optimal allocation and focus marketing investments.
• Flexibility in market inclusion, time horizon, and risk tolerance
provide dynamic analysis.
• Model is completely transparent in its details. Output tables and
charts tell the story of “why” for each market.
OXFORD
Tel: +44 1865 268900
LONDON
Tel: +44 207 803 1400
BELFAST
Tel: +44 2892 63540
FRANKFURT
Tel: +49 69 95 925 280
PARIS
Tel: +33 (0)1 78 91 50 52
MILAN
Tel: +39320 4525 559
DUBAI
Tel: +971 56 396 7998
NEW YORK
Tel: +1 646 503 3050
BOSTON
Tel: +1 617 206 6112
CHICAGO
Tel: +1 773 867 8140
MIAMI
Tel: +1 954 916 5373
LOSANGELES
Tel: +1 424 238 4331
PHILADELPHIA
Tel: +1 (610) 995 9600
TORONTO
Tel: +1 (905) 361 6573
MEXICO CITY
Tel: +52 (55) 52503252
SINGAPORE
Tel: +65 6850 0110
HONG KONG
Tel: +852 3103 1096
SYDNEY
Tel: +61 2 9220 1707
PAARL
Tel: +27(0)21 863 6200