‘Smart Cities’ The next standard in tourism?

 

In the past decade, smart cities have become an industry buzzphrase. A race to innovation has emerged across the globe. By 2020, it is expected that investment in smart cities will increase significantly, reaching USD 1.5 trillion compared to USD 400 billion in 2015, according to data by Frost & Sullivan. Ralph Nader, CEO of Amber Consulting, tells us more

 



Smart solutions: A global movement
European and American cities are pioneers in smart city solutions and are investing heavily to cope with aging urban infrastructure. In Southeast Asia, Singapore’s ambition is to become the world’s first smart city-state: a record USD 2.82 billion worth of technology tenders were called in 2016 alone. India has selected 109 cities to be part of the nationwide ‘Smart City Mission’, and there are no less than 300 pilot smart cities being developed in China, according to ‘Smart Cities in China', a report by EU SME Center. In the Middle East, fueled by the Expo 2020 winning bid, Dubai is leading the smart city race with an estimated investment of USD 8 billion in smart city infrastructure.

Defining smart cities
The cosmopolitan smart city concept is a great marketing stunt. But who can really pretend to belong to this elite circle, in a market that is yet to be standardized? To limit abuse of the concept, the European Union set a standard definition, though it is very scarcely used. IHS, the leading market research firm, is stricter, and narrows the definition to describe cities “that have deployed—or are currently piloting—the integration of information, communications and technology (ICT) solutions across three or more different functional areas of a city. These functional areas include mobile and transport, energy and sustainability, physical infrastructure, governance, and safety and security.” IHS identifies only 33 smart cities today, a number that clearly doesn't include the hundreds of other so-called smart cities currently in development.

From smart cities to smart destinations
Today’s tourism market represents the ideal sector in which smart solutions can be implemented. From the notion of a ‘Smart City’ we move on to its derivate - ‘Smart Tourism’ and ‘Smart Destination’. The need is here, with lower travel barriers leading to a more competitive environment, as tourists become more demanding. The traveler’s experience has never been more important, and advanced technologies can undoubtedly act as a driver for improvement. The large amount of data generated by tourists through their travel-related activities can be tracked and analyzed to understand consumer behaviors. It also forms patterns used to develop applications. Smart solutions in tourism are diversified, including optimized transportation, augmented reality in museums and smart crowd management.

Benefits for tourism authorities
All tourism stakeholders, whether they belong to the public sector or the private sector, like hotel operators, can only benefit from smart destination initiatives. Understanding the tourist's mindset through heavy data collection will allow cities to propose tailored experiences and products that are adapted to the needs and behaviors of the visitor. It also improves branding. Singapore, for example, is known for its innovative environment and tourists come, in part, to discover a destination that has often been mentioned as the ultimate smart city. Additionally, a visitor that has not spent hours in traffic will obviously have more free time and will want to visit more attractions. A comfortable tourist, who’s in harmony with the city he is visiting, will also be more inclined to purchase goods and souvenirs or to pay for that extra bottle of wine in a fine dining restaurant. And lastly, high customization in tourist attractions will push tourists to expand their visits and come back for another experience, at the same destination. Imagine visiting a museum three times, and having a different experience every time.

Benefits for the accommodation sector
Reduce costs: Smart utility systems implemented at city level that optimize the use of resources (such as water, waste, and energy) can directly reduce the bills of high-consumption businesses, like hotels. Smart cities also guarantee smoother tourist flow through improved transportation systems. Tourists will no longer be late at their checkout and will be able to go to and from hotels smoothly and comfortably.
City branding spillover: Hotels will benefit from the smart city branding by being associated with the development of smart solutions. Additionally, anticipating customer needs in real-time will increase satisfaction. The ‘wow effect’ will be noted and the word spread in customer reviews. Finally, hotels that implement smart solutions gain efficiency, reduce human- related mistakes and generally improve their customers' experience.

Smart Tourism: Beware of the challenges
Not all use of technology or apps turns an urban area into a smart city. Developing smart tourism initiatives also produces major challenges that should be considered by city leaders:
Up-scaling challenge: While pilot projects are often efficient on a small scale, it is

challenging to adapt the solution to a larger city-wide scale. Feasibility on a large scale is hard to assess and usually evaluated by means of experience or observation.
Holistic integration: Many smart city projects are largely an amalgam of small, limited initiatives. The multiplication of smart services can often confuse the visitor. It is advisable to develop a single vision project rather than standalone initiatives using different interfaces and platforms.
Privacy and data piracy: Most smart city entities are aware of information security issues, but few have developed and implemented comprehensive solutions to address the problem. “The big, big elephant in the room is protection of privacy and ensuring security,” says Vivian Balakrishnan, Singapore’s foreign affairs minister and minister-in-charge of Smart Nation.
Measuring financial returns: While smart projects offer intangible benefits, for instance, city branding and prestige, their returns on investment (ROIs) are hard to measure and reached only after long-term periods. It is sometimes challenging for city leaders to justify large investments and attract private investors without developing a clear understanding of the financial benefits.
Tourist engagement: The involvement of tourists in using applications, generating useful data and providing feedback has to reach a critical level to produce actionable and positive results for the city.

What’s next?
Despite the challenges generated by the development of smart cities, urban centers around the world should invest in transforming into smart cities. The smart tourism applications are not expected to slow down in the next decade. It is now clear that technology and innovation lies at the core of tourism's future.
The most important challenge is to implement solutions that really address tourist's needs, rather than just apply gadget technology. Tourism is, and will always be about visitors enjoying their experience, with or without smart technology.
Cities currently investing in smart solutions are mostly rich and developed urban areas, such as Singapore and Dubai. However, the cities that need it most are the ones with hostile infrastructure, overwhelming tourist experience and swarming crowds, but incredible culture and history (think Beirut or Marrakech). They are also the ones with the lowest financial and technical means. Will they be able to become smart cities one day?

amber-consulting.com

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