Digital Transformation and the Future of Spains Tourism

Industry
Introduction
Spains economy is heavily reliant on tourism and it will continue to be in the future.
The countys government is focused on increasing tourism, as a central source of
revenue and economic improvement. In order to meet these growth goals, Spain
must do more than invest in its tourism services, it must compete for tourist
mindshare against alternative travel destinations around the work. To do so
effectively, Spain must invest in understanding who their target customers are, how
they make decisions about travel, and how to influence these decisions.
Based on my exposure to various leaders from Spains tourism industry, this paper
proposes that the process travelers use to make destination decisions is changing
and in order to remain competitive in the global tourism market, Spain will have to
evolve their marketing strategy in recognition of the digital consumer. I will explore
Spains tourism industry, the Spanish tourist, shifts in how tourists use digital
technology, and propose a framework that government and tourism agencies may
use to improve their strategic marketing plans.
Importance of Tourism for Spain
Before delving into tourism marketing strategy, it is important to acknowledge the
significance of the tourism industry to the Spanish economy. Relative to other
countries, Spains tourism is the 8th largest tourism economy in the world. In 2014
the total contribution of travel and tourism to Spains GDP was $180bn, or 15.2% of
Spains total GDP. This revenue includes travel and tourism spending, government
1

spending like promotion, administration and sanitation services, and domestic

purchasing of good and services by organizations that deal directly with tourists,
like hotels and resorts. The total contribution of travel and tourism to Spains GDP
is expected to rise by 4% in 2015. (World Travel & Tourism Council 2015).

The reasons for Spains travel and tourism economy can be broken down into a
number of diverse sub-sectors including adventure tourism (surfing, hiking,
climbing, caves and parks), cultural tourism (celebrations, gastronomy, wine,
language learning, religious travels), blue tourism (yachting, sailing, and beaches),
and business tourism (events, conferences, and business meetings).
This amount of economic activity has an obvious impact on employment levels. The
total contribution of travel and tourism to employment in 2014 was 2,652,500 jobs,
equating to 15.3% of total employment. This number is forecasted to increase by
3.5% in 2015. (World Travel & Tourism Council 2015).

Currently Spain suffers from

very high unemployment numbers. The jobs associated with the growth of the

tourism industry are critical to the countys return to healthy employment numbers.
According to The Economist Intelligence Unit, a specialist publisher serving
companies establishing and managing operations across national borders, Spains
2014 unemployment reached 24%. This pain was acutely felt by the countrys
working-age youth, with 52% of these young adults reporting joblessness. (World
Travel & Tourism Council 2015)

Tourism is a critical economic driver for Spain, will increasingly be so in the future,
and the industrys growth represents an opportunity to improve the countrys
woefully high unemployment numbers.
Organizations Encouraging Spanish Tourism
Tourism is such an economic driver for Spain, public and private organizations have
been established to steward the industrys growth. These entities work to increase
general awareness of Spain as a tourist destination and educate visitors on the

variety of attractions and activities available to visitors. I had the privilege of

meeting various leaders from these entities during my recent trip to Spain.
A notable government entity is TURESPAA, part of Spains Ministry of Industry,
Energy and Tourism. This organizations remit is to promote Spain as a destination
abroad. They do so by focusing on a diverse set of activities including:

promotion and marketing of tourism products and destinations in

international markets,
collaborating with the regional authorities, local authorities and the private

sector,
developing tourism policy, supporting Spanish tourism firms abroad and also

expediting international tourism cooperation and relations,

analyzing knowledge and intelligence of the tourism economy and bringing it

to wider notice,
building plans and programs to foster innovation, quality, sustainability and

competitiveness of tourism products and destinations,

driving the modernization of the tourism sector, improving its scientific and
technological capacity, and enhancing the effectiveness and efficiency of
management processes.

(http://www.tourspain.es/es-es/Paginas/index.aspx)
More granularly, cities themselves also invest in government agencies that focus on
improving and growing subsectors of their local tourism industry. Mr. Xavier
Amador, from Barcelona City Hall, works to increase sports education, city welfare,
social cohesion, clubs, international projects, and economics (including sports
tourism). It conducts activities like building a 10 year strategic growth plan for
sports in Barcelona. This plan involves investments in new sports facilities and
brainstorms on ways to attract large-scale sporting events to the city. A part of their
4

remit is to innovate on sports experiences and sports information tools to increase

sports-related tourism spending.
There are other government-related organizations like Barcelona Tourism, managed
by their CEO, Mr. Jordi William Carne. Barcelona Tourism operates a network of 20
tourist information points. It also provides a direct source of business to more than
800 companies in the Catalan capital through the marketing and sale of third-party
tourism products and services. Jordi and team seek to increase hotel occupancy,
managing booking volume fluctuations and promote local tourism. Jordi and his
team create and share tourism promotional materials, like brochures and
pamphlets.
Other organizations that invest in the promotion to tourists are of course, the actual
tourist destinations themselves. These include wineries, football stadiums,
museums, historic sites, churches, restaurants and other popular tourist
destinations.

These entities invest to promote their experiences and services to

those evaluating Spain as a tourist destination and to visitors already in the country,
seeking to fill out their itinerary.
Conventional Planning and Marketing Tactics
These government entities seeking to promote Spain as tourist destination leverage
a variety of strategies and tactics to pursue their goals. They develop marketing
plans, launch communications campaigns, and track a variety of metrics to measure
their results. In order to explore exactly how some of these organizations seek to
promote tourism, it is helpful to review their strategies and plans in further depth.

The strategic marketing plan of TURESPAA, the government-run tourism promotion

agency, is an example worth exploring. The stated goals of their 2012 strategic
marketing plan include:
1.
2.
3.
4.
5.
6.
7.

Increase tourism and profitability

Generate quality jobs in the tourism industry
Encourage market growth
Improve international positioning
Improve cohesion and brand awareness of Spain
Encourage public-private responsibility
Encourage the seasonality of tourism

(http://www.tourspain.es/es-es/Paginas/index.aspx )
The plan analyzes the types of tourism in Spain, trends in tourism activity
preferences, and benchmarks Spain tourism to other European countries. The
strategic marketing plan also proposes measuring not only the awareness but other
phases of the tourist acquisition cycle. From knowledge to the recommendation of
destination, through purchase intent (travel) and consumption (the visit to Spain),
the plan proposed offering broader view of the Spains target market.

In another example, in 2008 the Tourism Agency of Barcelona developed a twentyfive page strategic plan designed to guide the healthy growth of tourism for the
next twenty years. Three committees were established, the Technical Committee,
Advisory Committee, and Board of Directors, to steward the development of the
plan. The objectives of the plan were:
1. Fostering improvements to tourist activity in Barcelona.
2. Ensuring that tourism fits in better with the needs of the city.
In order to achieve its set objectives, the plan focuses on four major proposals:
1. To determine the impact and effects generated by tourism activity in the city
itself, taking into account its different manifestations, in qualitative and
quantitative terms.
2. To reflect on the model of tourism in the city.
3. To set the tourism development of Barcelona within a framework of
sustainable growth.
4. To foster the positive involvement of the community in the citys tourism
project.
(City of Barcelona Strategic Tourism Plan, 2014)
A final example of a marketing plan worth evaluating is that of the private
organization, Barcelona Tourism. Barcelona Tourism manages brick-and-mortar
retail outlets accessible all throughout the city. This organization attempts to
promote tourism by producing and providing pamphlets, booking information, and
employs individuals to answer visitor questions about a wide range of sights and
experiences. In addition to their retail presence, Barcelona Tourism publishes a
website that allows visitors to learn more about local attractions and even book
tickets to many of the activities in advance of their visit. Under new leadership, the

marketing plan is currently being developed. A big priority, according to their CEO,
was understanding how to leverage digital media more effectively, however, little
specifics have been established thus far.
The Target Tourist
Are these plans, strategies and tactics the right approach to win over deliberating
travelers? Do these strategic plans, marketing strategies and awareness
investments effective at reaching their target market? To answer this question, it is
first important to understand who to Spanish tourists are, where the opportunity for
tourism growth exists, and how these segments make travel decisions.
According to The World Tourism and Travel Council, 86.9% of Spanish tourism in
2014 was leisure spending, with the remaining 13.1% due to business spending.
Clearly leisure spending is the most popular type of tourism revenue. While there
certainly is opportunity to increase business tourism spending, the drivers of this
spend are largely related to the amount of business opportunities in Spain and have
less to do with Spain as a vacation destination. For the sake of evaluating
improvements in tourism revenue, this paper will focus on the leisure segment. Of
the total tourism spend in 2014, 47% came from foreign visitor spending, while the
remaining 53% was from domestic spending. (World Travel & Tourism Council 2015)
The high percentage of domestic spending can be accredited to the common
practice of Spaniards summering in the south of Spain, enjoying one of their exotic
islands in the Mediterranean Sea, or visiting family in different cities over the
holidays. This paper will explore the growth potential of the foreign tourist
segment, which is the segment that likely has the most to benefit from improved
marketing strategy.
8

Diving deeper into who the leisure-seeking, foreign travelers are, it is important to
consider their age and their values. According to a study conducted by MMGY
Global, a global travel consultancy, millennials (those 18 to 35 years old) are
expected to spend more on travel than any other generation in the next 12 months.
This surpasses the previously most lucrative travel segment, Generation Xers.
Steve Cohen, VP of the travel consultancy shares that Six in ten Millennials would
rather spend their money on experiences than material things. He goes onto
suggest that presumably this is one of the reasons why they have surpassed other
age cohorts in travel spend.
TripAdvisor invests understanding their sea of traveler data to identify insights on
travel trends. They state that there are eight key factors that truly differentiate
millennial tourists from older generations. These differentiators include:
1. Millennials spend less time planning ahead. They are much more likely to
book a trip on a whim and determine their adventure as they go.
2. Millennials choose destinations by activities and reviews. Per the graph
below representing influence level on the y-axis and age groups on the x-axis,
millennials travel destination is much more influenced by online reviews than
the hotel selection or the restaurants and shopping available.

3. Millennials choose accommodations by more than just price. They are

however influenced by special offers and sustainable travel. Conversely,
Millennials are slightly less likely to care about brand name, proximity to the
beach or water and prior travel experience.
4. Millennials are more likely to book upon arrival. They feel secure in their
ability to quickly and easily find a hotel, hostel or share-space online the
night of.
5. Millennials are less likely to book via the accommodations website. They
prefer websites that allow them to compare options, read reviews, and book
quickly.
6. Millennials like some things to be old-fashioned. They do prefer having
hardcopy reading materials onsite which allows them to learn quickly and
make travel decisions.
7. Millennials compromise to make travel happen. The will and forgo day-to-day
comforts and save their money in order to travel to their top choice
destination.
8. Millennials are flocking to Asia and Europe. Spain cracks the top ten of
millennials expected travel destinations across 2014.

10

1.
2.
3.
4.
5.

U.S. (20%)
Japan (14%)
Italy (13%)
UK (13%)
France (12%)

6. Thailand (12%)
7. China (11%)
8. Spain (11%)
9. Germany (10%)
10.Indonesia (8%)

11

11. (http://www.tripadvisor.com/TripAdvisorInsights/n2357/meet-your-lucrativemillennial-traveler#sthash.U17b2n77.dpuf)
12.These preferences are in some ways unsurprising. The internet continues to
grow and consumers lives are increasingly intertwined with the digital world.
This is especially true for millennials, many of whom grew up digitally native.
Millennials have increased access to information allowing them to compare
options and shop for deals, have the ability to share their feedback and
communicate directly with brands, and are influenced by others experiences,
information that is deemed more credible than company-sponsored content.
13.As Steven Cohen, VP of MMGY Global states, The implications for destination
and travel-service marketers are quite profound, as Millennials planning,
booking and sharing habits are significantly different from those of older
leisure travelers.
14.(http://www.tnooz.com/article/millennials-plan-vacation-2014-sayssurvey/#sthash.y1TM3Fna.dpuf)
15.An Opportunity for Improvement
16.Contrasting the strategies and tactics of government tourism agencies to the
preferences and habits of todays traveler, it becomes clear that it is time to
refresh the marketing plan. Todays strategies and tactics seem to focus on
understanding what services travelers are taking advantage of,
benchmarking performance to other countries tourism volume, and ensuring
tourism doesnt degrade the local resident experience. From our trip to
Spain there were a number of examples that reinforce this point. The wine

promotion entities seem to understand that the younger generation requires

different positioning and promotion yet continue to market wine as a product
only for the knowledgeable and design wine tourism experience for those
seeking a Michelin Star dining experience in intimidating architectural
surroundings. Barcelona Tourism manages physical information booths, yet
has largely ignored the largest information source of them all the internet. I
disagree with the CEO that tourism is an experience that simply cannot be
captured or promotes through digital channels like Twitter. Barcelona City Hall
seeks for promote sports tourism, but struggles to launch mobile applications
that inform visitors of upcoming sporting events and activities.
17.Tomorrows strategies and plans should take a dive into the target traveler
and promote specific marketing tactics to effectively reach these audiences.
I propose that these entities explore a number of modern marketing
approaches to better target potential tourists.
18.

Proposed Suggestions:

1) Advances in Customer Lifetime Value: All good marketing plans should

start with an understanding of the customer. That said, not all customers are
of equal value. Customer lifetime value (CLV) theory states that
organizations should seek to understand that the present value of the total
revenue of a customer over the lifetime of their relationship with the
organization, minus customer acquisition costs. Applied to the tourism
industry, this would involve first identifying what tourist segments exist,
second understanding which of these segments represent the most value in
terms of spend levels, repeat visit potential, their propensity to give positive

word of mouth recommendations, and finally estimating customer acquisition

costs. This process would help Spains tourism marketing entities to focus on
the right kind of visitors. I would hypothesis, based on my cursory analysis,
that the millennial generation would be represented strongly in this customer
segmentation exercise.
2) Customer Journey Mapping: Once high-value customer segments have
been identified, investments should be made to understand who these
individuals make travel decisions. What is the process travelers use to make
location decisions? Do they make decisions fast or slow? Where do they go
for information at the various stages of their buying journey? What
influences them at each stage? For Spain, this could be an enlightening
process, as research shows that the majority of millennials conduct their
purchase research online. A generic example of a customer journey map is
included below.

19.

20.(http://customerthink.com/digital-transformation-impacting-customerjourney/)
21.
3) Outcomes-Focused Marketing Planning: At each stage of the of the
buyer journey, tourism marketers can determine what outcomes they want to
drive at each stage. Is the marketer driving general awareness early on in
the travelers research? Or alternatively, maybe it is more important to focus
on buyer conversion at the later stage of their evaluation process? The
outcomes being driven at each stage can change, which impact the following
components of their market strategy.

4) Strategic Partnership Identification: As a marketing entity with limited

resources, it can be helpful to think through a build, buy or partner strategy
at each customer buying stage. Sometimes it makes sense to build your own
information platforms. Other times it makes to buy exposure through
investments in advertising, search-engine-optimization or other types of
marketing communications spend. Here many companies chose to invest in
adverting on popular mobile platforms like Facebook or Instagram. Finally,
and maybe the option with the most potential, is to think about valuable
partners to work with at each stage. Companies like TripAdvisor, Buzzfeed,
Pinterest, and other platforms that already have audiences that are exploring
their future trip destinations.
5) Modern Channel Selection: Once desired outcomes have been identified
and build, buy or partner strategies have been defined, only then should
tourism marketers think through what communications channels (social,
content marketing, digital advertising, traditional media, et.c) make the most
sense. The channel should be selected because it is the ideal channel to
influence the outcome desired within that specific stage of a buyers journey.
For example, if we are targeting millennial travelers when they are in their
consideration phase, maybe research indicates that an influencer-strategy is
ideal. This knowledge may lead to a marketing campaign focused on
celebrities with large followings posting vacation pictures on a beautiful
Spanish beach via Instagram. The channel is selected (Instagram) because
the outcome desired (influence) is important at that stage of buying
(consideration) for that target segment (millennials). Today many tourism
marketers select the promotional channels that theyve used in the past,
regardless of the changes in target audience and their buying processes.

6) Modern Metric Selection: Once the ideal channel has been identified, the
appropriate metrics should be selected to measure the effectiveness towards
that outcome. In our previous example, maybe Instagram likes or shares
are the right metrics to track consideration. Maybe it is click throughs from
that Instagram photo to information on the Spanish beach destination being
promoted. Ultimately marketers should think about how what they are
tracking corresponds to the outcomes they are attempting to drive.
7) Test and Learn Structure: Tourism marketers may wish to implement testand-learn strategies when implementing digital marketing strategies. Given
the less expensive, more data providing nature of digital media, marketers
can experiment, capture what works, and iterate. A/B testing is a common
strategy for most marketing organizations seeking to learn what digital
techniques yield the best results.
8) Big-Data-Led Targeting: Jordi Carne from Barcelona Tourism expressed an
interest in designing targeted offerings based the interests of those tourists
coming into Barcelona. My belief is while this strategy may be effective at
capturing more spend form those tourists already planning on visiting Spain,
there is more to be gained from increasing the sheer volume of visitors.
Another way to think about leveraging big data analytics is to identify
commonalities of individuals that choose to visit Spain, and refine their
segmentation knowledge so the marketers can more intelligently target the
right kinds of visitors. Once identified, it may be possible to send tailored
offers prior to the tourists visit, helping them to make decisions on
attractions, events, and destinations well in advance of their arrival.
9) Influencer Strategy: We operate in an environment where buyers have
access to so much information, content, and perspective that is generated by
peers, not companies or agencies. Most individuals place more credibility

and trust in the information that is peer-generated. In order to be effective in

this kind of environment, leading organizations are equipping their fans to be
advocates and equipping their most vocal advocates to be even more
impactful.
22.Conclusion
23.In conclusion, tourism is a major factor in the economic well-being of Spain
and increasingly so in the future. The country is investing in a number of
organizations that are focused on increasing tourism and these organizations
are deploying a number of traditional planning and marketing tactics to
accomplish this goal. At the same time, the tourists themselves are
changing. Todays travelers are more digitally savvy, have so much
information at their fingertips, and are influenced by non-traditional sources.
In order to effectively target todays tourists, Spains tourism promotion
organization should develop marketing strategies reflect their target
customers changing behaviors. Modern marketing techniques that can be
employed include customer segmentation and lifetime value analysis,
customer journey mapping, channel partnerships, modern metric selection,
and test-and-learn planning. By adopting modern marketing frameworks and
tools, I believe that Spain can be more competitive in the global tourism
market and in turn, improve its economy.
24.