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The tourist industry cannot be understood without applied technology being a fully integrated tool within the core business strategy
17/10/2011
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The tourist industry cannot be understood without applied technology being a fully integrated tool within the core business strategy
Jordi Bagó Mons, Managing Director of SERHS
Born in Calella in 1963. Tourism graduate at the University School of Catering and Tourism in Sant Pol de Mar, part of the University of Girona. First vice-president of the Board of Directors of SERHS. Boardmember of the Board of Directors of Spanair, Committee Delegate of FemCat, and Board of Directors of Mapfre Catalonia.
SERHS: Founded in 1975 and currently formed of 64 companies structured into six large business divisions (Distribution and Logistics, Tourism and Trips, Hotels, Management and Food Production, Projects and Equipment, and Services and New Technologies). Known as "the first tourism group of Catalonia", it has 2,700 workers on payroll and 1,580 shareholders (44% of which are SERHS staff or their family members). Corporate capital: 93 million euros. Consolidated turnover (2010): 436 million euros. 2011 forecast: 500 million euros.
The Secretary General of Tourism, Joan Mesquida, ensures that the tourist industry will be one of the first to emerge from the crisis, and that the income Spain brought in from tourism in 2011 will hover quite close to that registered prior to the crisis, a year seen as one of consolidation after a 2010 in transition. He further indicated that the number of foreign tourists having visited Spain increased by 7%, with an 8% increase in their expenditure so far in the five first months of the year. How have these forecasts and realities been reflected in the SERHS Group?
In most years, after the busy summer months have passed and autumn arrives, a bit of a balance can be struck or a forecast made for the end of the year. At this point this is hard to do. The current economic and political situation has generated an overall air of apprehensiveness. It’s fair to say, fortunately, the tourist industry is not in the eye of hurricane of this particular crisis, but obviously it has been affected due to the cross-sectoral nature of its activity. Up until the month of August we could say that it has gone quite well in general, underscoring destinations such as Catalonia and especially the city of Barcelona, Mallorca and the Canaries. SERHS has seen increased turnover with regard to the previous year, particularly in the SERHS Tourism division, but this is also due to the proactive work we have done in sizable markets like England and Russia, as well as the increase in the on-line B2B sales with travel agencies and TOs. There is still a complicated quarter left to evaluate, but for the moment we can say that the figures are positive from traditional European markets, new large-potential markets are being consolidated, and regarding the domestic market, the Spanish market remains largely stagnant. However, I think that we should stop obsessing over the numbers and the need to grow year in and year out, and begin to seek out qualitative indicators of our position as a tourist destination, as everything has a limit and the saturation point is probably beginning to emerge, which will force us to focus much more on quality instead of quantity.
The Government forecasts this year there will be an increase between 40% and 50% in the number of Russian tourists, rounding up towards a million visitors. We have already seen the number of Russian visitors grow by 43% the previous year. For the SERHS Group, one of the first to fully back capturing this market, how would you interpret these forecasts?
We were the pioneers who entered this market back in 1992. It was a sizable commitment, but over time it has become a clear reality, especially this year. At SERHS we have made a considerable strategic investment of resources in this market, which has allowed us thus far to handle the holidays of 1,400,000 Russian tourists over these 19 years. It is worth mentioning that this type of tourist comes with a great added value, as their average stay lasts nearly 10 days, leading to a great interest in doing complementary activities and excursions, not to mention their considerable shopping expenditure. Take an anecdote from September 14th, when we welcomed the 25 millionth tourist through SERHS Tourism at the Barcelona Airport, who turned out to be a Russian lady who had come with her husband on a trip to Tossa de Mar. In fact, 65% of all Russian tourists choose Catalonia to spend their holidays. Thanks to the increase seen in this market during the 2011 period, we have managed to consolidate our leadership position.
Along these lines, we have to open up new markets and be much more ambitious that we have the previous decades. Globalisation has also arrived to the tourist industry, and today our market is the world. If 15 years ago SERHS began working in an untapped market as Russia and today we have it entirely consolidated, this means we have an appealing and mature product to offer any market, no matter how far away it is.
Among their main authorities of governments in Spain is their promotion and protection of tourism-related business activities, as much on the national level as the regional, through the Autonomous Communities. However, the tourist industry has tended only to receive support through the promotion of each regional brand, but rarely has ever government played a direct role in the economic strategies of tourist companies and groups. Taking into account the current economic context, how do you consider it should rethink the scope and focus of public initiatives, for example, toward more direct actions in collaboration with the private sector, ones that strengthen our market’s appeal in the face of other competing and emerging markets?
This adaptation of the public-private relationship has long been a constant. Catalonia has all the authority in this ambit, as well as the rest of the autonomous communities. In situations like the current one, what should take precedence is a combination of forces and the operating capacity and efficiency in any measures taken. Each player has their role and there ought to be shared responsibility bound by mutually agreed strategies. It is vital to have a road map to know what markets we compete in, how we have to sell our product that surely should be valued more, and how to position ourselves better, incorporating the added value that undoubtedly we have.
The tourist industry is economically very cross-sectoral by nature, therefore the government, in this sense, has to create infrastructure and facilities that position us as a world-class destination. We have to have of airports, roads, hospitals, etc. that allow us to develop quality and efficient tourism activities.
The tourism industry continues being one of the main pillars of our economy. However, it is not a sector that has traditionally made heavy investments in technology innovation. On more than one occasion, you yourself have manifested you predilection for incorporating new technology projects as a way of sparking new business opportunities within the SERHS Group. What achievement in this field has brought you the most satisfaction as to the application of technology to the business activities of the company you run?
If one sector has evolved structurally over time, it is the tourist industry, although it may not seem so from the outside. The way bookings are made, or travelling itself, has taken a radical turn. Now the tourist industry cannot be understood without applied technology being a fully integrated tool within the core business strategy. Some 20 years ago SERHS had a clear view of the importance of the technology in all our activity areas, not only in the tourist sector, strictly speaking, but also in the world of distribution and even restaurant management. We have an important corporate management structure for new technologies that coordinates the strategy and resources of SERHS, as well as whole divisions, like the one in SERHS Tourism, where is fundamental to have its own department.
To give you some meaningful data regarding this division, I can tell you that in 1995 we had contracts with 2,000 hotel establishments in Spain and handled the reservations of 1,200,000 tourists, employing a staff of 400, 7% of which were university graduates, plus 6 computer technicians. Management costs ran nearly 8% per sale. Now we work with around 22,300 hotel establishments located in 65 countries on all 5 continents, we handle the reservations of 1,500,000 tourists and have a staff of 250, 28% of which are university graduates, as well as 34 IT techs. Management costs are now 3% per sale. This year, 2011, we expect to invoice more than 125 million euros online.
In general, what do you think are the reasons why technology innovation has not been applied to the tourism industry to the same degree as other sectors such as banking, health or education? In what fields do you consider the value chain of the tourist business would benefit most from the introduction of innovation in information technologies?
All processes should be constantly rethought. There surely is still a long road ahead, but presently the application of technology in the tourist industry has made great strides, especially in the access to information or the purchase of airplane tickets, hotel bookings, and more. Perhaps one of the reasons why there hasn’t been such a high level of innovation in the sector is its existing fragmentation. We are an industry largely made up of SMEs that have neither the strategic vision nor the capacity to do this type of investment, although in some aspects we are very advanced. Surely what is lacking is more implementation in management areas, such as invoicing or customer analysis, for example, fields that can contribute a lot towards improving efficiency, a key area to our industry’s competitiveness. As for us, we are constantly investing in improving our technology and response capability. In February 2007 we inaugurated a data processing centre with an investment of 1.10 million euros, blazing a trail in the industry, one that has evolved year after year.
"The growth of B2C on-line reservation platforms is cannibalizing the business margins of tourist agencies and the traditional business of brokers between wholesale agencies and the hotel industry". To what point do you consider this statement to be accurate? Will the future of intermediary companies strictly evolve towards on-line reservation platforms that directly interact with the final customer or tourist, as just another sales channel of the hotel chains? What added value can agencies contribute in order to strike a difference with broker platforms?
As we said the sector has already changed radically on the structural level. The client has plenty of options to choose from and is now the business’s main focus of attention, not the product, as it was years ago. Therefore it is crucial for us to adapt our business to this situation. In fact, in our case we have aimed to convert this threat of "casting doubt over the position and feasibility of the broker" into an opportunity to redesign the business and grow. The key has been the application of technology in all the value aspects of the process. Right at the time of the product sale, we put SERHS within reach of our clients, who remember are the travel agencies - TOs (we always work in the B2B area), a wide range of hotel establishments and related services all over the world, all via online with a high standard of information. This high degree of connectivity provides an extremely fast response to our clients, or to put a number on it, we can handle 5 million online availability requests daily. Such management without technology would be humanly impossible. On the other hand, we also handle over 600,000 bills online with all the administration and logistics tasks this entails. We have managed to turn the issue on its head by offering ourselves as a global service provider for our clients.
SERHS: Founded in 1975 and currently formed of 64 companies structured into six large business divisions (Distribution and Logistics, Tourism and Trips, Hotels, Management and Food Production, Projects and Equipment, and Services and New Technologies). Known as "the first tourism group of Catalonia", it has 2,700 workers on payroll and 1,580 shareholders (44% of which are SERHS staff or their family members). Corporate capital: 93 million euros. Consolidated turnover (2010): 436 million euros. 2011 forecast: 500 million euros.
The Secretary General of Tourism, Joan Mesquida, ensures that the tourist industry will be one of the first to emerge from the crisis, and that the income Spain brought in from tourism in 2011 will hover quite close to that registered prior to the crisis, a year seen as one of consolidation after a 2010 in transition. He further indicated that the number of foreign tourists having visited Spain increased by 7%, with an 8% increase in their expenditure so far in the five first months of the year. How have these forecasts and realities been reflected in the SERHS Group?
In most years, after the busy summer months have passed and autumn arrives, a bit of a balance can be struck or a forecast made for the end of the year. At this point this is hard to do. The current economic and political situation has generated an overall air of apprehensiveness. It’s fair to say, fortunately, the tourist industry is not in the eye of hurricane of this particular crisis, but obviously it has been affected due to the cross-sectoral nature of its activity. Up until the month of August we could say that it has gone quite well in general, underscoring destinations such as Catalonia and especially the city of Barcelona, Mallorca and the Canaries. SERHS has seen increased turnover with regard to the previous year, particularly in the SERHS Tourism division, but this is also due to the proactive work we have done in sizable markets like England and Russia, as well as the increase in the on-line B2B sales with travel agencies and TOs. There is still a complicated quarter left to evaluate, but for the moment we can say that the figures are positive from traditional European markets, new large-potential markets are being consolidated, and regarding the domestic market, the Spanish market remains largely stagnant. However, I think that we should stop obsessing over the numbers and the need to grow year in and year out, and begin to seek out qualitative indicators of our position as a tourist destination, as everything has a limit and the saturation point is probably beginning to emerge, which will force us to focus much more on quality instead of quantity.
The Government forecasts this year there will be an increase between 40% and 50% in the number of Russian tourists, rounding up towards a million visitors. We have already seen the number of Russian visitors grow by 43% the previous year. For the SERHS Group, one of the first to fully back capturing this market, how would you interpret these forecasts?
We were the pioneers who entered this market back in 1992. It was a sizable commitment, but over time it has become a clear reality, especially this year. At SERHS we have made a considerable strategic investment of resources in this market, which has allowed us thus far to handle the holidays of 1,400,000 Russian tourists over these 19 years. It is worth mentioning that this type of tourist comes with a great added value, as their average stay lasts nearly 10 days, leading to a great interest in doing complementary activities and excursions, not to mention their considerable shopping expenditure. Take an anecdote from September 14th, when we welcomed the 25 millionth tourist through SERHS Tourism at the Barcelona Airport, who turned out to be a Russian lady who had come with her husband on a trip to Tossa de Mar. In fact, 65% of all Russian tourists choose Catalonia to spend their holidays. Thanks to the increase seen in this market during the 2011 period, we have managed to consolidate our leadership position.
Along these lines, we have to open up new markets and be much more ambitious that we have the previous decades. Globalisation has also arrived to the tourist industry, and today our market is the world. If 15 years ago SERHS began working in an untapped market as Russia and today we have it entirely consolidated, this means we have an appealing and mature product to offer any market, no matter how far away it is.
Among their main authorities of governments in Spain is their promotion and protection of tourism-related business activities, as much on the national level as the regional, through the Autonomous Communities. However, the tourist industry has tended only to receive support through the promotion of each regional brand, but rarely has ever government played a direct role in the economic strategies of tourist companies and groups. Taking into account the current economic context, how do you consider it should rethink the scope and focus of public initiatives, for example, toward more direct actions in collaboration with the private sector, ones that strengthen our market’s appeal in the face of other competing and emerging markets?
This adaptation of the public-private relationship has long been a constant. Catalonia has all the authority in this ambit, as well as the rest of the autonomous communities. In situations like the current one, what should take precedence is a combination of forces and the operating capacity and efficiency in any measures taken. Each player has their role and there ought to be shared responsibility bound by mutually agreed strategies. It is vital to have a road map to know what markets we compete in, how we have to sell our product that surely should be valued more, and how to position ourselves better, incorporating the added value that undoubtedly we have.
The tourist industry is economically very cross-sectoral by nature, therefore the government, in this sense, has to create infrastructure and facilities that position us as a world-class destination. We have to have of airports, roads, hospitals, etc. that allow us to develop quality and efficient tourism activities.
The tourism industry continues being one of the main pillars of our economy. However, it is not a sector that has traditionally made heavy investments in technology innovation. On more than one occasion, you yourself have manifested you predilection for incorporating new technology projects as a way of sparking new business opportunities within the SERHS Group. What achievement in this field has brought you the most satisfaction as to the application of technology to the business activities of the company you run?
If one sector has evolved structurally over time, it is the tourist industry, although it may not seem so from the outside. The way bookings are made, or travelling itself, has taken a radical turn. Now the tourist industry cannot be understood without applied technology being a fully integrated tool within the core business strategy. Some 20 years ago SERHS had a clear view of the importance of the technology in all our activity areas, not only in the tourist sector, strictly speaking, but also in the world of distribution and even restaurant management. We have an important corporate management structure for new technologies that coordinates the strategy and resources of SERHS, as well as whole divisions, like the one in SERHS Tourism, where is fundamental to have its own department.
To give you some meaningful data regarding this division, I can tell you that in 1995 we had contracts with 2,000 hotel establishments in Spain and handled the reservations of 1,200,000 tourists, employing a staff of 400, 7% of which were university graduates, plus 6 computer technicians. Management costs ran nearly 8% per sale. Now we work with around 22,300 hotel establishments located in 65 countries on all 5 continents, we handle the reservations of 1,500,000 tourists and have a staff of 250, 28% of which are university graduates, as well as 34 IT techs. Management costs are now 3% per sale. This year, 2011, we expect to invoice more than 125 million euros online.
In general, what do you think are the reasons why technology innovation has not been applied to the tourism industry to the same degree as other sectors such as banking, health or education? In what fields do you consider the value chain of the tourist business would benefit most from the introduction of innovation in information technologies?
All processes should be constantly rethought. There surely is still a long road ahead, but presently the application of technology in the tourist industry has made great strides, especially in the access to information or the purchase of airplane tickets, hotel bookings, and more. Perhaps one of the reasons why there hasn’t been such a high level of innovation in the sector is its existing fragmentation. We are an industry largely made up of SMEs that have neither the strategic vision nor the capacity to do this type of investment, although in some aspects we are very advanced. Surely what is lacking is more implementation in management areas, such as invoicing or customer analysis, for example, fields that can contribute a lot towards improving efficiency, a key area to our industry’s competitiveness. As for us, we are constantly investing in improving our technology and response capability. In February 2007 we inaugurated a data processing centre with an investment of 1.10 million euros, blazing a trail in the industry, one that has evolved year after year.
"The growth of B2C on-line reservation platforms is cannibalizing the business margins of tourist agencies and the traditional business of brokers between wholesale agencies and the hotel industry". To what point do you consider this statement to be accurate? Will the future of intermediary companies strictly evolve towards on-line reservation platforms that directly interact with the final customer or tourist, as just another sales channel of the hotel chains? What added value can agencies contribute in order to strike a difference with broker platforms?
As we said the sector has already changed radically on the structural level. The client has plenty of options to choose from and is now the business’s main focus of attention, not the product, as it was years ago. Therefore it is crucial for us to adapt our business to this situation. In fact, in our case we have aimed to convert this threat of "casting doubt over the position and feasibility of the broker" into an opportunity to redesign the business and grow. The key has been the application of technology in all the value aspects of the process. Right at the time of the product sale, we put SERHS within reach of our clients, who remember are the travel agencies - TOs (we always work in the B2B area), a wide range of hotel establishments and related services all over the world, all via online with a high standard of information. This high degree of connectivity provides an extremely fast response to our clients, or to put a number on it, we can handle 5 million online availability requests daily. Such management without technology would be humanly impossible. On the other hand, we also handle over 600,000 bills online with all the administration and logistics tasks this entails. We have managed to turn the issue on its head by offering ourselves as a global service provider for our clients.
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