Interview with Peter de Jong, President & CEO of PATA.
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Mark Elliott interview with Peter de Jong - President & CEO of PATA
Topic: PATA CEO Challenge: Confront Climate Change
30 January 2008
ME: Peter, please can you outline what your vision for PATAs CEO Challenge, and what you hope it will achieve?
PDJ: We have had a very good record over 50 years of having an annual conference that brings the industry together, and we felt that, as good as it was in terms of the networking and the programs we organised, it really didn’t go deep enough into the critical issues that all of us need to make decisions on. So we chose to replace that with a new event entirely which we called the PATA CEO Challenge - the mandate being that we bring industry leaders together for a topic that will be on their radar screen for the next 12 months and that they will have to have a position on and make decisions on. We wanted to get the format away from the traditional classroom-style scholastic dialogue between speakers and audience. We wanted a very different ‘out-of-the-box’ methodology, so we engaged two futurists - Anna Pollock and Rohit Talwar - who helped us create a new way of engaging industry leaders in a manner with would please them and would be productive. It took as a while to get this concept right, and that was preceded by us deciding on the theme. This wasn’t so difficult for us to choose as a few years ago when we were deciding global warming was just beginning to take centre-stage with consumers. They were looking for a response from the industry and there was no real coherent response, if one at all. The problem is that there are about 160 global warming conferences over the next 12 months, so we decided that rather than lament over the plight of the aviation sector, the percentage of emissions, or question the science, we would do something that has no yet been done. That is to get industry leaders to stand up in front of their piers and say, ‘here’s what we’re doing about global warming’. It could be an innovation, a new technology, a method to save energy - any number of things. But then we had to persuade CEOs to get up in front of their piers, and that was not so easy. In part because some CEOs - despite being leaders in their own industries we not sure if they were leaders on this issue, or how well their companies are performing. So we asked one of them to stand up on each of the challenges and asked them to be honest and humble about it. To say, this is what we’re doing but it may not be perfect, but we’re here to learn and share ideas. And in the course of the groups, other CEOs will be asked to chair different groups. This idea appealed to them. So we then began to collect a lot of important names, with word finally getting out.
What we hope to happen is that on the first day, after some inspiring words from Dr Pachauri (IFC Chairman and 2007 Nobel Peace Prize winner) that these CEOs will stand up and do a ‘green elevator pitch’ - 5 minutes to get and explain who they are, what they’re doing, and where they’ll be to discuss further. So we will have CEOs of TUI, Expedia, First Choice, Cathay Pacific, Air New Zealand, Marriott, Hyde Corporation, and a host of others who are now committed to this issue. So we’re aiming to have 300-400 people at the event coverage 8, 9, 10 challenges, sitting together with the head CEOs and moderators, sharing ideas and hopefully coming out at the end of it with several initiatives that have ‘buy-in’, so we can say to consumers, media and each other that this isn’t rocket science - our carbon footprint is something we can address; let’s just work together on this. So then we can demonstrate that industry talking to industry can produce results that are tangible, measurable and positive.
We’re hoping to get Rolls Royce, Boeing and Air New Zealand to champion their biofuel project. Imagine that 6-7 hotel chains with 3000-5000 properties between them adopt a common strategy. That would be immense progress, and that’s what this is about. This year the topic is global warming, and perhaps next year it will be something different, such as the human resource crunch, but it will always be an issue that all of us need to take a combined stance on, and that is what the CEO Challenge is all about.
ME: I’m sure you’ve heard some of the negative publicity surrounding this event; that you are struggling for delegate numbers etc. How do you respond to this?
PDJ: Firstly I’d like to say that these negative stories all derive from one author, who quotes anonymous sources. And beyond this critique, I haven’t read anything negative about the event.
ME: I understand, but is there any element of truth in the reports? How happy are you with delegate numbers at this stage?
PDJ: It took a lot of time to decide in the methodology and to convince the leaders of the industry to step up. We have only just begun to market this - this outline has only been out for a week. So while we have been making noises about this event for 8-9 months, we are now ready to start our sales cycle. Talk to me at the end of March and we will have 300-400 people on board. I have no doubt about this.
ME: And do you have any sales and marketing plans to increase numbers?
PDJ: Yes, to start with talking to the media, we have a CNN ad campaign from early February - prime time slots in early morning and early evenings. I will also be talking to my colleagues - CEOs of other travel trade associations who are keen to support me by mobilising their membership to attend. We have marketing materials which are being printed now and our regional directors have a mandate to go to regional events. As the saying goes; ‘the reports of my death are much exaggerated’!
ME: You mentioned having people in different areas around the world - do you have a person focusing on raising support in China?
PDJ: Absolutely. We have a director in Beijing for the Chinese market, an office in Dubai for the Middle East market, in Frankfurt for Europe, in San Francisco for North America and Sydney for the Pacific region. Our board members will probably provide over 100 new delegates alone.
Another thing suggested it that article was that we are relying on this event is very important to our financial health; it’s not. Our trade fair (PATA Travel Mart) makes money for us, but this event is not about making money. This is about connecting with the leaders of the industry, through PATA, on an important topic, so that if they have a good experience this year and take away some practical solutions to improve their business, when we hold the event next year they will be hard-pressed to say no. Should we be successful then the success of the event will not be determined by the size or money, but by the power of the people in the room coming together around a single focus. This will always have to be in a major city - one of the main 5 or 6 Asia Pacific hubs (as we intend to keep it in Asia Pacific), so it will meet the attendees’ criteria of being quick and easy to access. We’re happy now that we have the brand new Centara, who are excited about hosting the event, and TAT (Tourism Association of Thailand) is happy as it is showcasing one of their new hotels. TAT will be very involved with this, as will Thai Airways and a lot of local companies.
ME: One issue companies have with combating climate change is its cost-effectiveness. Do you think that recent stock-market uncertainty may be dissuading companies from attending for financial reasons?
PDJ: Absolutely not. Stock market fluctuations happen all the time, and if you look at our industry over the past decade, we’ve had SARS, Bali bombings, the tsunami; but we always bounce back and we keep growing. I’m not saying we’re immune to shocks but we’re accustomed to adjusting to them, and this is a much lesser issue than many others have been. No, I don’t think that’s a relevant issue for the people attending this event.
ME: Again on the cost issue, ticket prices have been mentioned as being rather steep - US$1,390 for early registration. Do you believe you priced this event correctly, and furthermore will you be either lowering prices or extending the early registration fee to get more people attending?
PDJ: When we set the price we looked at many events throughout the region, and we’re at the low-end of the price range. I’m not suggesting that it isn’t a lot of money, but it isn’t an event for everybody. So far we just haven’t had the feedback say ‘I would love to come but just can’t afford it’ so it would be a pretty impulsive decision.
If I have a concern it is for some PATA members who have to choose between two events that are happening very close to each other. In Sri Lanka at the beginning of April we have our World Direction Meeting, our Committee Meeting and our AGM. For a lot of people who might want to attend both some now may have to make a choice, and I would regret that. So I would be stupid if I were to say we were totally inflexible about ticket pricing, but for now it is not a concern.
ME: You mentioned earlier that there are so many global warming events on the calendar. This can be a double-edged sword; do you believe the message is beginning to sink in, or do you believe that compassion fatigue is taking hold?
PDJ: Good question. It’s rather hard to say; we’ve been very fortunate in that when we devised this idea we were approached by the UNWTO (World Tourism Organisation), who had their big events in Davos, London and Bali, and now they have our event, which is actually preceded by a week by an event in Geneva (International IIR Conference) which brings the aviation industry together. So we agreed between UNWTO and PATA to support each other - we would bring an Asia Pacific perspective to all their events, and they would support all our events. So given that, the public sector - government, association and tourist boards - will realise that these events are part of a continuum. While their events tend to be government led and driven, our events are industry-led and driven. Secretary-General Geoffrey Lipman who is the tourism expert in the UNWTO will be attending this event, so we are in a very unique position.
With regards to your question of a proliferation of climate change events, it’s harder to make inroads into other industries; for example who to talk to at Shell, or Exxon, or Toyota - we don’t know them and they don’t know us. They may be doing excellent work in their fields that we don’t know about because we only focus on tourism, so if we’re having any difficulty attracting new audiences it’s from outside the tourism sector. So perhaps in future years we need to broaden our focus outside the tourism industry. Back to your earlier question of marketing, we’ll be approaching the critical Chambers of Commerce here in Bangkok; the US, Japanese, Korean, Australian - all those with strong industrial presence here in Thailand, so see if they can participate in the debate.
ME: In terms of the success of the event, you’ve indicated that you would be happy if it didn’t turn a profit, or if it were to some extent a loss leader.
PDJ: Well I’d never be happy to be a loss leader! I was merely saying that this was never intended to be an engine to drive profits. Yes, I’d love to make some money from this event! But I won’t be frustrated if we break-even on this event, and if we make a modest loss I’ll have to explain that to our board as a CEO does. But you have to bear in mind that in any industry if you- launch a new product it can take 2, 3, 4 years to turn a profit, and while we’re all ambitious and want to make profit in the first year, we’re more ambitious about content and value. We’re not ambitious about money, really we’re not, because this event’s not about that - it never was - but to get very important people to an event costs money.
ME: Do you believe you are learning lessons from what is happening this year, and will you change your approach to future events?
PDJ: Of course, we’re just beginning to learn lessons and the biggest lessons we’ll learn will be during the event. Will the CEOs like the content and are they comfortable with such informality? Even in a media sense we’re trying to make it very different from previous events.
To an earlier point you made about cost-efficiency, this issue also has many money-making opportunities and there are people proving that, and some of these people will be there. If people just worry about costs, change the paradigm; turn it upside down and see the opportunity because if you do this right you can save costs and become more profitable. So it is the mind-set change from viewing this issue as a cost to viewing it as an opportunity is one we need to instil.
ME: This is a huge shift in the minds of companies and CEOs - do you believe it’s a realistic ambition?
PDJ: Absolutely. If talk to Sonu (Shivdasani - CEO) from Six Senses, or KP Ho (CEO of Banyan Tree) – they are showing this. There is also the inevitable legislation that is making companies think, ‘let’s do this ourselves before it is forced upon us, and start on the front foot rather than always being in a defensive posture. Let’s say ‘we embrace the climate change issue, we embrace carbon emission cutting, and here’s what we’re doing about it.’ That’s the message. A can-do attitude to climate change is what we’re looking for, and I think CEOs are ready for it. We can no longer ignore it; it’s here to stay and won’t just go away. We can’t fix it alone, we need to work together; to be innovative, transparent especially to your customers. We just haven’t examined our business practices sufficiently. For example hoteliers tend to be quite traditional in their mind-set, and if you apy US$300-400 for a room night in a five-star hotel and they tell you we won’t change your sheets and towels each day, the consumer perception is that this is just another way to make money from them. Now if we were to give them an incentive, such as a free breakfast, or extra points on his card, we’d be seen as doing it for the right reasons. It’s about attaching a message to the act to show customers what you’re doing.
ME: Well, this is the issue isn’t it? We all know that customers in hotels are notoriously unenvrionmentally friendly; leaving lights on, air conditioning on, taps running etc. Also going back to an earlier point, although Banyan Tree and Six Senses are making great strides, they are relatively small companies.
PDJ: That’s why Marriott are there, and they’re doing a lot of good things. Ed Fuller took up the challenge because they’re proud of what they’re doing. Accor are doing good things, as are the Rezidor Group. John Wallace from Hyatt have a story to tell and will be in attendance. Truthfully very few people can do what Sonu (Six Senses) is doing - making his Maldives resort fully carbon-neutral by 2010. It is too expensive to implement for a large hotel chain, so for our challenge this is too high a goal to emulate. So it’s nice to have the aspirational guys there but you need to bring it down to a working business model to make money.
ME: The attendance of the major hoteliers is very positive. There is always the danger of Marriott looking at Starwood or Hilton and saying ‘well they’re not doing anything - I don’t want to be the first one to make that step.’
PDJ: This is why it takes time. It took a while for Ed Fuller (Marriott) to be comfortable to stand up in front of his piers and tell them what Marriott is doing and how they’re doing it. They have corporate responsibility, they have disclosure issues; they are stock-market listed companies who have lawyers telling them what they can say or do. So it took some persuading and arm-twisting to get some of these big buys to step up, but they are and that’s what matter. Because you’re right, Banyan Tree has far fewer properties than Marriott, and it’s a whole issue of owners versus management, who have different profit appetites and different ideologies. It’s a very complex issue and not easy to resolve.
ME: You mentioned briefly before about the airline conference that is taking place in Geneva a week prior to the CEO Challenge. Are you worried about that?
PDJ: No, no. We chose the dates in dialogue with them, agreeing to attend and support one another’s events. I’ll be speaking at their event and they’ll be taking the latest initiatives and decisions they’ve made to our event, so it will be very, very fresh, which is great because it will give the aviation sector some good air time to show what’s being done in their industry.
We wanted it to be in April and it’s a good month for us. Our traditional PATA audience is used to us having an event at this time, so they have some diary space.
ME: Back to airlines, the larger operators are visibly doing some good work; Boeing, Airbus, Virgin. However the big growth at the moment is low cost airlines, and with the business model they adopt (buying older fleets, keeping lower costs), are you worried that while these companies are one of the most important parts of the green issues in Asia, the response from them - because of they way they operate - may not be so positive?
PDJ: Without trying to avoid your question, I don’t know enough about it. My colleague Mike Yeates went to the Asia Pacific LCC Congress in Singapore in March. But personally I’m not sure. We have invited them to participate but I’m finding that LCCs aren’t as likely to join events unless they are specifically about LCCs. Also in our membership we have most of the traditional full-service carriers, but not many LCCs, so access to them is limited. However no-one is immune to this green virus.
ME: There’s was a recent article that concluded that consumers are more than happy to increase their carbon footprint if it means saving a few dollars on air fares.
PDJ: You’re right, not all our customers are green thinking, just as not all the general public want smoking to be banned. But there is always a vanguard of people trying to push things forward, and on the environmental issue it’s a very powerful movement, most of which comes from Europe and North America. Which is good when it is doable; it becomes tricky when legislators in Brussels dream up all sorts of quotas and benchmarks, almost independently of the industries themselves. So when a new edict comes out saying you must be at such-and-such a level by 2012, we get caught out. So this is an attempt to show the industry that: a) you ca do something by learning from others and sharing best practices; b) you must work together; and c) you can work cross-sectorally. We need to cut a swathe across the industry sectors who have previously been working alone, because they all have the same customers. We are trying to create a platform for this cross-pollination to take place. And then, again, they will be encouraged to return next year, as they have been exposed to something new and useful, and put them in dialogue with people they wouldn’t normally talk to. Surprisingly enough CEOs don’t actually travel that much in a figurative sense, outside their own sector. For example real estate agents don’t consider themselves part of the tourism industry but they are. LCCs consider themselves more of a transport industry - like a bus company almost – rather than tourism. But for this region it just might be the first time people can sit down and make contacts they would never have made otherwise.
ME: And do you truly believe that you can come out of this conference with some real achievable, measurable goals?
PDJ: That’s certainly the intent, and it is shared by the people that are working with us, so yes, I’d be disappointed if we didn’t have any definite initiatives at the end of this. We won’t be signing documents with cameras and champagne, but if a group of companies can come out agreeing to adopt a single practice, that’ll be an achievement.
ME: And finally, would you like to give our readers, and those not yet decided whether they will attend the event, a message to say why they should attend the event and why it is so important?
PDJ: Each of us in our industry has a role to play in reducing the carbon footprint of our industry, whether you are a single-room hostel in New Zealand or a mega casino in Macau, or cruise liner in Hawaii or a tourist board in South East Asia. The PATA CEO Challenge exposes you to some of the best and latest doable and affordable ideas, technologies and initiatives that are out there. You can’t miss that. You need to be there to learn from it because no matter what size your operation or what sector you’re in, there’ll be something for you- to pick up. That makes you a better company, it shows your customers that you care about the environment, and in the end, though it seems like a cost to you now, it will work for you and will be a benefit to you. So join us on the 29-30 April 2008 at the Centara Hotel.
Interview ends.
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