Nelson Alcantara: Intra-European tourism is all the hype these days. What does the World Travel & Tourism Council make of this?
Jean-Claude Baumgarten: WTTC’s way to look at travel and tourism, and the way we measure travel and tourism relies on three pillars – inbound, outbound, and domestic. And more and more, we consider intra-European tourism like European domestic tourism, and, of course, it is a very important part of our interest. And, of course, it shows a couple of things. First, that travel and tourism is still resilient, is still solid, and the need to travel is there, and it shows also that in difficult times when people have a hard time to figure out what is really their disposable income, they tend to be a little bit more cautious.
Alcantara: In that respect, what does WTTC make of the economic crisis and its global impact on travel and tourism?
Baumgarten: We are like everybody. We didn’t see the global impact when the bank crisis started. Then we saw little by little that spread all over the economy and all over the country, actually. What we see is, again, the fundamentals are changing, and what I just said before, is that really the consumer has to face a couple of challenges, quite major challenges – the rise in food prices, the rise in oil prices, the lack of easy credit, which means that there is a certain uncertainty. And we see that this will, next year, come into a slow down in the growth if not maybe just zero growth or maybe a slight negative growth, but if you ask me, like we always do, what percentage, I cannot tell you. It’s just terrible. We can give you trends, but we are all lost, actually, as far as IMF [International Monetary Fund], everybody.
Alcantara: Being that you’re based here in Europe, some argue that the UK and Europe will actually thrive during this economic crisis. That the region will you actually prosper.
Baumgarten: As far as travel and tourism is concerned?
Alcantara: As far as travel and tourism is concerned.
Baumgarten: I personally think that will not be the case. I think that we all are going to have to tighten our belts. We all have to be ready to sell more advantage in terms of prices and products in order to keep the demand alive.
Alcantara: Let’s talk about WTTC. What exactly is its role in global travel and tourism?
Baumgarten: Well, it’s simple. Maybe you don’t even know the origin of WTTC. It happened twenty years ago…
Alcantara: I know a little bit, enough to be talking to you today.
Baumgarten: Okay, good. Well, it’s very simple. It’s a group of business leaders representing each sector of the travel and tourism [industry]. We have now members in all continents in the world except Australia and New Zealand. We have limited our number to 100, because we feel when you are 100, you can know each other and you can be more efficient; you can make decisions more faster. And what do we do, actually? Our basic mission is to raise awareness among governments of the importance of travel and tourism. That’s our basic mission.
Alcantara: Perfect that you said governments. There is a movement among governments now to raise the taxes on air travel. The UK is very notorious on that. What is WTTC doing to address this?
Baumgarten: Well, our policy has always been to say to governments, since we represent more or less 10 percent of the world GDP, we are ready to pay taxes, of course, but we are ready to pay our fair share of taxes, and we are ready to pay intelligent taxation. Now don’t take advantage of the fact that you will need money to tax an industry, which is important, which is very fragile as far prices are concerned. And also, and that is something government starts to understand, which will help you to restart your economy, because travel and tourism is notoriously one of the most resilient industries in the world.
Alcantara: It’s been proven time and time, through catastrophes…
Baumgarten: It’s amazing.
Alcantara: Price fixing – for the regular tour operator or travel agent, Article 81 and 82, are you familiar with those? Can you translate, because most people don’t understand.
Baumgarten: And I’ll tell you why – because we are more macro-economic. We don’t go into pricing and things like that. We really… with the government, it’s important; you have to take the right measures to keep that important.
Alcantara: Very specific question – I was just in Zimbabwe, where the tourism infrastructure is really the envy of a lot of African destinations. What do you make of what’s going on there as far as travel and tourism is concerned?
Baumgarten: Well, it’s sad; it’s very sad. The only thing I can say is that I hope that it will ease down, and I’m sure that if that would be case, due to the fact that you said the infrastructure is quite good over there, it will bounce back.
Alcantara: Kathy Sudeikis – are you familiar with who she is – the former president of ASTA. She said, under no circumstance should tourism end. With Zimbabwe in mind, do you think that applies to…
Baumgarten: I think it’s a very good statement; it’s a very voluntary statement, and I think whenever something like that happens, we have to have that attitude.
Alcantara: The United Nations Millennium Development Goals – are you familiar with them?
Baumgarten: Yes, yes.
Alcantara: Do you think… It’s obviously a framework for developing countries, but Zimbabwe already has that infrastructure. Do you think international travel and tourism, as an industry, can come up with a checks and balances system that would protect investments in countries like Zimbabwe.
Baumgarten: It’s difficult to say. What we promote… Due to a fact that tourist investments are heavy, you know. When you talk about a hotel, its US$160 to 200 million dollars; it takes 35 years to amortize the whole thing. So you need a complete set of things. First, you need political stability.
Alcantara: Since there isn’t, how do we provide checks and balances?
Baumgarten: To be very blunt, I don’t think that any investor would put money in a country which is not politically stable. You have, one of our members is investing heavily in Africa, and there’s a will, and there’s a potential, but their political situation has to be stable.
Alcantara: I agree. The United Nations World Tourism Organization (UNWTO) – now there is a big buzz going on over who is going to be the next leader. Is it election or selection for the next secretary general? What is your take on this issue?
Baumgarten: Well, everybody has his way to choose the leader of their organization. We are private-sector driven. I have a board; a board that gives me a contract, and if the board is not happy with me, can remove me, you know. They have their own decision-making process – that’s the only thing I can say, you know.
Alcantara: That’s fair enough. I just came from a conference, actually, where one of the issues discussed was dilemmas in tourism. What do you think about nonprofit organizations profiting from holding summits or membership fees?
Baumgarten: Well, we are that case. How do we function? We function with our membership, and we have summits where we sometimes have an excess of revenue compared to the expenses. And our aim is not to make money. Our aim is to promote the importance of travel and tourism. So I think it’s fair that organizations, first have membership fees, otherwise you cannot live, and we don’t want to have any subsidies from government because we want to be independent. And second, if you do something and you have excess, as long as you put it and you spend it again for your mission, I don’t see anything wrong with that.
Alcantara: Excellent; that’s clarified. Also, there is some talk – that I want to just get it out and clear them up right now – with you and me. Taxation investigation of WTTC. Is there truth to this?
Baumgarten: No, no, no, we don’t have…
Alcantara: There’s no investigation?
Baumgarten: No, and anyway our books are open; our books are open; how do you say… the house of…
Baumgarten: Of course. Our balance sheet is open – everybody can look at it; you can look at it if you want to. We have an auditor, an outside auditor. According to the British law, we are not supposed to have an outside auditor, but since the last nine years I’m here, I have that auditor because I want that… You know, the profile of a member is so important, that we have to be hyper-transparent.
Alcantara: Okay, that’s good. WTTC’s relationship with various organizations and individuals – I want to get that clarified. Some would argue that WTTC and UNWTO are in competition with each other. What is your take on that?
Baumgarten: No, we are different types of animals, if I may say so. UNWTO is an international government organization, which functions like any international government organization, and it has a way of functioning and has way too many decisions. We are a private-sector organization, and we function in our philosophy and our way to do things is private-sector director – fast decision, immediate action, and openness. Now, I am sitting on the strategic committee of the UNWTO, so if I would be an enemy, I might not sit there, and on top of that, that I want to make it very clear, is that we are for private and public sector partnership, and whenever there is a common cause, we do it together with UNWTO, of course.
Alcantara: Akbar Al Baker, CEO Qatar Airways and chairman Qatar Tourism Authority, is not a fan of yours. Can you explain that dissonance?
Baumgarten: Not really, I wouldn’t say that. We did a very successful summit in Doha, very successful, and I think we have a common respect to each other. I think he’s a great (developer?); I’m an old airline man. So he introduced me to all what he does in the airline business, in the airports. So I don’t think we have a… how can I say… I think we have a common respect, actually.
Alcantara: He won’t say it, but, you know, he said, “you just ask him,” so I’m asking you.
Baumgarten: If you meet him, he knows that, and I always said…
Alcantara: He wouldn’t dive into it. He said, okay, just ask him.
Baumgarten: That’s it. We have a very great respect to each another.
Alcantara: What do you make of Peter do Jong’s resignation from the Pacific Asia Travel Association (PATA)?
Baumgarten: I don’t know. Honestly, I have no opinion for it.
Alcantara: There is word now that Peter is going to work for WTTC.
Baumgarten: No, no, no, no. Okay, I think he did a good job in PATA. That’s how far I can see it from my side of view. He’s not going to work for WTTC at all. No, there’s no discussion, nothing.
Alcantara: What do you make of the talk of restructuring PATA now?
Baumgarten: I don’t know too well that organization, I’m sorry, I don’t understand. You know it’s very funny…
Alcantara: Well, it has to relate with transparency.
Baumgarten: No, no, absolutely; I don’t know how that works. I read some of your articles, but honestly, I don’t know how PATA works. That’s why, by the way, that’s why we have a very simple organization – 100 members, an executive committee…
Alcantara: Transparency is key.
Alcantara: Exiting CEOs – you’ve got Francesco Frangialli, Peter de Jong, you’ve got Tom Wright – what do you make of this trend?
Baumgarten: I don’t know; honestly, I don’t know. Maybe it’s a coincidence, but what I can say is that if I look at… most of them have done quite a few years, you know. And I think this time comes where you have to go. I looked at my executive committee two weeks ago, and I could see that the average age is doing down. So I think, yeah, maybe they felt their time is to go, and if one day, I feel my time is to go, I will go.
Alcantara: Okay, that’s fair enough. What trends from WTTC’s perspective should the tourist industry be looking for?
Baumgarten: I think we have to… we haven’t fulfilled our mission at WTTC. There is still a lot of governments who don’t understand the value of WTTC in terms of economy, in terms of social, in terms of environment. So, we have a message to get across – Mr. Government, it’s important; we want to help you to make it even more important; Mr. Government, we have to work, both of us, on infrastructures, because you know there is a big, big need of infrastructures, even in this country where we live nowadays. We have immense challenge in front of us, which is human resources. First, to make the young people understand that travel and tourism will not only bring them jobs and cheap jobs, but will bring them careers, and that is something which we have to strive, all of us.
Alcantara: Do you have any members from Zimbabwe?
Baumgarten: No, no, no. The only member we have in Africa is the Tsogo Group in South Africa. Our members have certain size; we have JTB, we have BTG, you know that type of… And by the way, because they are big, they feel obliged to help the small- and medium-sized enterprises.
Alcantara: My take on this issue now is that, because I’ve just come from Zimbabwe…
Baumgarten: Oh, that’s why you are so… must be terrible?
Alcantara: I look at it differently now. Tourism is the only way to bring aid to the country… because Robert Mugabe has cut off and frozen the assets of the aid community, so the only way to really keep them going to work is indirectly through tourism – keep those people working in tourism…
Baumgarten: I think you are right.
Alcantara: Guaranteed a paycheck; that’s why I asked you if you have… you talk about pressuring government…
Baumgarten: Not pressuring, lobbying governments.
Alcantara: Well, in a way…
Baumgarten: It’s an amicable pressure.
Alcantara: In a way it is a way to…
Baumgarten: You can consider that.
Alcantara: Two big things that are being addressed by this forum – climate change and food crisis. What’s WTTC’s positions on these issues?
Baumgarten: First, climate change. We consider that travel and tourism has a major role to play .I would say, not because we are the major polluters – after all, we only represent 11 percent, the airlines 2 percent – but that’s not the case. The case is we are the ultimate servicing industry; we are people service people. And if our people are not convinced about the mission each individual has and each company has, we do something wrong. And our members – and we have a global initiative as far as environment is concerned – which is we consider that awareness, speaking of awareness, is there. You have very few people in the world who now are not thinking – thanks to Al Gore, thanks to a lot people – now it’s put it into practice. And the very interesting twist is that with the increase in energy prices, with the increase in food prices, you become more and more conscious about how you use those resources which are becoming more expensive and more rare. You don’t have any, among our members, and I’m sure other travel and tourism companies in the world, which are not first, trying to save energy, trying to build other ways to get energy to their hotels and resorts, whatever, and to find the best way to get food and to answer the two questions, which is healthy food and clothes food. In other words, by doing that, you help the local communities to create new types of resources, and that’s how we feel that has to be done. And you will hear in the next future, we will come out with some very interesting environment initiatives, actually.
Alcantara: Excellent; I’m looking forward to hearing about them.
Baumgarten; And, again, it’s not any more in the gurus; it’s now our daily life – you switch off your TV, you switch off your computer when you leave the office, and, you know, we all have to, you know… we don’t take a plastic bag.
Alcantara: The microscopic approach…
Baumgarten: Exactly, exactly; that’s the word.
Alcantara: And food crisis.
Baumgarten: Food crisis – the world is changing. It’s very easy to say, you know… When we had the first food crisis, I’m old enough… The first food crisis came in the 50s, 60s, and then the world developed an international organization. That’s why an international organization has a value when they have a very fixed and a very focused objective. We created a new agriculture, which was based on fertilizers, which was based on pesticides, and which was based on water. And that created an abundance of food. Two things have happened – the increase in population and the fact that we have realized that by doing that, first, we produce food which might not be too healthy when you put too much pesticides on it, and second, which is consuming water, which is becoming due to the other factors, a scarcity, something which is rare or which is becoming rare. So our point of view is first, we have to rebuild completely the way we grow our agriculture, and that is possible.
Alcantara: How to you plan to spearhead this?
Baumgarten: We plan to spearhead it by the fact that we promote more and more local products; where you don’t need to transport internationally. Why do you eat strawberries coming from I don’t know where if you can grow them in your garden? And on top of that, your consumer is much more comfortable with that. And maybe last but not least, travel and tourism can only grow if you have a buy-in from the local communities, and how can you convince the local communities if you don’t make them participate economically, culturally, and socially? And the time has gone where those big monstrous resorts, they are really only isolated, and the consumer wants that, by the way. Consumer wants to have, when he goes somewhere, [to] bring something back gastronomic adventure, a sport adventure – something more than just a trip.
Alcantara: Your next summit is in Brazil. Why Brazil and why Santa Catarina?
Baumgarten: Life is done by vision and opportunities. The vision – and that’s what we discussed two weeks ago – is that in a world which is going to have a hard time next year, we have to choose a place where there is a fantastic build-up, and I would say even a symbolic place where things are moving ahead, and Brazil is one of them. Over the last, I would say, ten years, that country which was in trouble is building little by little an economy and is becoming one of the potential for the future of travel and tourism, where the new travel and tourism can be built. The new travel and tourism is built of a market which is going to grow, there is no doubt in our mind, but which will be a niche market. And the countries which have a variety of products to offer, which corresponds to those niches, are the ones which will be successful. And that’s why we consider that Brazil is one of them, and that’s why we chose Brazil. On top of that, President Lula and the governor of Santa Catarina, and I come to that now, have always expressed their full confidence of travel and tourism, which, as you know, is at the heart of the mission of WTTC, actually. How very comfortable when the head of a state makes a statement about travel and tourism. Opportunities – that is a typical Brazilian story. Were you at the conference before? No? Okay. I was invited by a TV group, a group … to make a TV show live, 2 hours and grilled by 4 journalists, which I loved by the way.
Alcantara: Did you?
Baumgarten: Of course, because when you go on the big networks, you have three minutes – what can you say in three minutes? In four hours you can build, you can develop your vision. In the spectators, all of a sudden a man jumped out, and went – live – on the podium and said, I’m the governor of Santa Catarina. I want to have your summit next year, because I was told you handle the summit. So at first, I was surprised – who is that guy? I did not know him. And second, one of the journalists said, it’s the governor. And so we developed a relationship, and I think that’s how it works, of course. We have our conditions, we have our technical requirements and everything, but when you have an energy like that…
Alcantara: It’s hard to resist.
Nelson Alcantara: Let’s talk about Obama. WTTC, what do you think of that?
Baumgarten: Oh, listen. Personally, I’m a believer like 99.9 percent of the people in the world; he’s a fantastic man. He has created by his election… he has made for the US the best PR budget ever. All of a sudden people start to believe again in the US, people start to believe that there’s a future, and I think Obama will, by the very fact, that he has created a new enthusiasm, a new hope, will bring and help everybody including travel and tourism. People will go back to the states and feel happy to go back to the states.
Alcantara: I’m glad you feel that way. Hopefully we can put that message out, and people will start going back to the US.
Baumgarten: Hey, come on. It’s such a great country. I lived 8 years there.
Alcantara: It is a great country.
Baumgarten: It’s a great country.