How Will Destination Leaders Overcome the Industry Disruption? | Orioly

How Will Destination Leaders Overcome the Industry Disruption?

The COVID-19 pandemic has caused an unprecedented disruption in the tourism industry. As a result, the weaknesses of many businesses in this segment were exposed.

The challenges brought by this adversity are not limited to small companies. Destination leaders are also facing pressure to respond to industry disruption.

For that reason, they should understand the most dangerous changes in the market in order to adapt to them.

New research from travel and tourism advertising agency BVK addresses this topic. The company surveyed 240 DMO leaders from around the world and found out that 95% of them recognize the need to transform in response to disruptive industry trends.

What should be transformed according to DMO leaders

The need to change or evolve existing funding models is the top one transformation pointed out by destination leaders interviewed (85% of them). 

According to the DMO Organizational and Financial Profile Study of 246 DMOs from the United States, Canada and Bermuda, in 2015, 88% of their funding came from the public sector, and the remaining 12% from private sources. 

The main public sources are hotel room and restaurant taxes; marketing fees; state tax fund sources; and dues-paying members.

The other transformations pointed out by the destination leaders in the BVK survey are:

  • Need to change or evolve their core offerings
  • Need to evolve or change their destination’s mission or purpose
  • Need to invest in new offerings

The big obstacles in transforming the DMO business model

The biggest obstacle in transforming the destination offerings in response to a disruptive change in the market is the battle for resources, according to the respondents in the BVK survey (76%).

Before the pandemic, budget cuts were something DMOs had to deal with. That was the case for Visit Florida back in 2019. 

With the pandemic, the situation just got worse. A Destination International poll run in March of 2020 showed that DMOs were expecting at least 50% on short-term budget cuts.

Other obstacles listed are:

  • Willingness to collaborate from public and private sectors
  • Lack of infrastructure
  • Buy-in from international stakeholders
  • Lack of compelling ideas of growth opportunities

How destinations can grow up revenue in the upcoming years

According to BVK research, 75% of DMO leaders have plans to expand their impact within existing markets to drive tourism-related expenditures.

The other ways to grow up revenue listed by destination leaders are:

  • Identify higher-value visitors who spend more money to drive incremental tourism-related expenditures
  • Enter new markets
  • Seek other sources of income

How smart tourism can help destinations recover after industry disruption

The shortage of funds is the main challenge for destinations during the pandemic and it is expected to remain an issue for the upcoming years.

One way to overcome that and increase the destination revenue is by investing in smart tourism. That means, digitalizing a destination to make it easier for travelers to find and consume tourism products.

Smart tourism solutions can connect accommodations and experiences and also highlight less-visited locations. That boosts the destination marketing efforts, attracts high-value visitors and drives tourism-related expenditures.

Check out Orioly’s smart tourism solution and have your destination ready for the industry rebound.

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