CEO Message #62

Tourism 4.0 is Millennial Tourism

Tourism 4.0 was born along with the availability of big data on the behavior of travelers that can be collected via apps and sensors which are then processed to create a seamless and personalized traveling experience.

Seamless and personalized experience can be realized because of the role of Fourth Industrial Revolution technologies (4.0), they are: artificial intelligence, internet of things (IoT), big data analytics, robotics, augmented reality, cloud computing, blockchain, and so on. These are various technologies that are now often referred to as Technology 4.0.

The Fourth Industrial Revolution

Source: World Economic Forum

As it has known, we have now entered the era of the Fourth Industrial Revolution which according to the World Economic Forum (WEF) was marked by the birth of “cyber-physical systems” that combined human and machine capabilities (robots).

The First Industrial Revolution took place in the 18th century (1784) marked by the rapid advancement of steam engines and human replacement engines. The Second Industrial Revolution occurred at the end of the 19th century (1870) marked by the advancement of a system of mass production and electrical energy. While the Third Industrial Revolution occurred since 1969 marked by advances in electronics, ICT (information and telecommunications), and automation.

WEF predicts that the application of 4.0 technology will produce a “disruptive effect” that will fundamentally change the face of various industries including the tourism industry. Various technological advancements 4.0 enable the realization of various applications that are able to enrich traveler experience on the one hand, and drastically boost the productivity of the tourism industry on the other side.

At the airport, for example, it is possible to have a robotic airport guide / helper that help travelers check-in and boarding. Besides, on-demand service for transportation services is very practical and efficient. In hotels, e-concierge, m-payment, or personal assistant services can be developed by utilizing augmented reality (AR) technology. While in tourist destinations, all destination information is no longer through brochures or explanations of the guides, but already utilizes virtual reality technology via smartphones in hand.

Various Tourism Applications 4.0

Source: MonitorDeloitte

In short, the Fourth Industrial Revolution will fundamentally change and disrupt the tourism industry because of the realization of cost value (“more for less”), experience value (“personalized”), and platform value (“resources sharing”) that travelers will enjoy. Therefore we must be able to make technology 4.0 a source of new competitive advantages in the global market.

Tourism 4.0 Global Best Practices

The concept of Tourism 4.0 is new in the world. We can just try searching on Google, surely we don’t find much material about this concept. Various countries are still experimenting to take maximum advantage of this Tourism 4.0 trend. Because it’s true when Jack Welch said, “Not Invented Here”, we must take lessons from other countries that have implemented it so that we don’t repeat the mistakes they have made.

In Europe, the most developed country implementing Tourism 4.0 is Spain. We know that Spain is one of the most advanced countries in the business of bringing in foreign tourists. In 2017 Spain ranked second position with 82 million foreign tourists. The contribution of the Spanish tourism sector reached 15% of GDP, absorbing 15% of the workforce which reached more than 2.8 million. Therefore, Spain is very serious in fixing its tourism sector by placing technology 4.0 as a source of competitive advantages.

This effort is manifested in the Smart Destination initiative that utilizes 4.0 technology: big data, open data, mobile apps, free WiFi, geo-location systems, QR codes, and video-mapping / holography techniques in all parts of the city that become tourist destinations. There are currently 11 smart cities in Spain that are already equipped with 4.0 technology infrastructure. The aim is to simplify, comfort, and deepen the experience of every tourist visiting Spain.

Smart Destination: Technology Infrastructure 4.0

SourceSEGITTUR, Spanyol

In addition to seeing Spain, it helps us also look at the Malaysian experience. This neighboring country and our closest competitor also seem to have implemented the Tourism 4.0 concept, which was launched early last year. This initiative is called Smart Tourism 4.0, which is collaborating with the Chinese digital giant Tencent Holding as a technology partner. This initiative is the first milestone of the Malaysian tourism sector roadmap for the next 10 years. In this case, Tencent will help Malaysia to build digital ecosystems in its various tourist destinations to attract inbound tourists from China.

This initiative is aimed at attracting the millennial traveler segment that is growing rapidly and has a very large foreign exchange value. We know that millennial travelers are tech-savvy segments, so they are just right if given a touch of technology 4.0. Malaysia has ambitions to attract foreign tourists up to four times from around $ 25 billion at present to $ 110 billion in 2030.

How about Indonesia?

I see the urgency of Tourism 4.0 in Indonesia from the perspective of consumers, which is the fact that consumer behavior has become very digital and the increasingly dominant millennial travelers in the composition of our tourists. It’s around 70% of travelers search and share via digital. More than 50% of our inbound travelers are digital savvy millennial. They are an important segment because not only is the size of the market large and growing, but also the influencing power is extraordinary (“Big and Loud”).

Therefore, in order to be more real, what I mean by Tourism 4.0 is millennial tourism which indeed all aspects of life are dependent on digital. In essence, millennial demands a digital experience from every point in their consumer journey.

The chart below depicts millennial traveler trips (call it Traveler Journey 4.0) on trips ranging from inspiration (getting vacation ideas), doing research and vacation planning, booking planes and hotels, being at airports, arriving at destinations and enjoying them, to enjoying them after the holidays are over. In this chart, you can see how technology 4.0 can simplify and enrich the experience at each touch point so that overall it can dramatically increase the value of a vacation.

Traveller Journey 4.0

Source: MonitorDeloitte

Therefore we cannot help building a tourism ecosystem where digital experience must be present at every point in the traveler’s journey. To make it happen, we will indeed build a technology platform and infrastructure 4.0. But this initiative requires enormous costs and careful long-term planning, therefore we must do it in stages.

To realize Tourism 4.0, I started not from building the technological infrastructure (“hard aspect”) first because the investment was expensive and long-term in nature, but rather from HR (“soft aspect”). That is why the 2019 National Coordination Meeting I which we will be holding this week (February 27 to March 1) deliberately takes the theme of developing tourism human resources to welcome the era of Tourism 4.0.

I hope through this National Coordination Meeting I, we have a roadmap of the steps we need to take to build HR 4.0 starting from mapping and developing digital competency 4.0; developing digital talent 4.0 throughout the tourism industry ecosystem; digital literacy 4.0 for the wider community and SMEs; link & match 4.0 in the tourism industry; to grow startup 4.0 in the tourism industry.

Regards,

Dr. Ir. Arief Yahya, M.Sc.

Tourism Minister