Arnie Weissmann
One of the reasons I look forward to the World Travel & Tourism Council (WTTC) Global Summit each year is that it's an early warning system of sorts. It's often the first place I hear about specific Big Issues -- topics, trends and research that, over the coming year, assume a prominent place in economic, political, demographic or cultural discussions.
WTTC is composed of CEOs of global travel companies, so perhaps it's not surprising that these topics also begin to shape industry business strategies in order to take advantage of -- or counter -- trends that first surface at the summits.
Those attending the summit last week in Madrid once again got a peek just over the horizon, for better or worse.
Most speakers incorporated the summit's overarching theme of disruption and reinvention, which I previewed in a cover story a few weeks ago.
That article focused on three aspects of disruption: the sharing economy; the rise of mega-cities; and front-and-center issues facing sustainable tourism efforts. Sustainability and the sharing economy have become familiar territory (though Airbnb's outreach to the hospitality industry is an interesting development); new details about mega-cities trends suggest they will have a deep impact over a long time period.
Additional impactful issues arose at the event itself. Following the welcoming formalities, Richard Fenning took the stage to give the first keynote, and it was fascinating. Fenning is CEO of Control Risks, a consultancy that assesses and advises on political, security and economic risks.
His message was both reassuring and ominous. Rejoice! There are opportunities for significant progress in the Middle East! And, by the way, the global economic recovery may collapse.
So. All those things that keep you up at night -- ISIS? Putin? Ebola? Unless you are in their immediate vicinity, he said, these are not things that are likely to affect you.
ISIS, Fenning said, is "horrible and venal" but can and will be controlled. The Iraqi government will take back territory, though the conflict in Syria is likely to continue without clear direction. But even if you're in Turkey, Lebanon, Jordan or Israel, he reassured, "it will not consume the entire region."
As regards the bigger picture in the Middle East, he believes we have a "once-in-a-generation" chance for rapprochement with Iran. He can't predict whether skeptics on one side or the other will kill it, but "most people never thought we'd get this far." If a deal can be struck, he said, it provides a rare opportunity to completely redesign the Middle East.
"The readmission of Iran to take its natural place as a Middle East
superpower is extraordinary," he said, though he acknowledged it would mean disruption for some.
"It's a nightmare for Saudi Arabia," he said, but he generally views the deal in a positive light that could be "transformative" for the world.
As regards the conflict in Ukraine, he said he cannot recall a situation where the narrative on one side (Russia) was so completely different from that on the other (Europe and the U.S.). "For the moment," he said, neither side "knows how to get out of it."
Still, he doesn't believe that Eastern Europe or the Baltics are under threat of Russian territorial encroachment, and he believes the end result will be "the high art of low compromise ... no one will take home a deal they can be proud of."
Back to the good news: India is in a fantastic position.
"Their economic growth is higher than China's for the first time in years," he said. "Prime Minister [Narendra] Modi is a force to be reckoned with. This man is a breath of fresh air."
But -- and "but" might be Fenning's favorite word -- Modi may have undue expectations. Nonetheless -- his second favorite word -- he added, "I'm really optimistic that, given enough time and space to make reforms that India can cope with, India will move positively."
Even Ebola, Fenning said, should be looked at as a glass half-full.
"The countries that were so badly afflicted, which were the least able to cope with a crisis, managed to deal with it," he said. "Nigeria contained it before it even got started."
(Fenning was very upbeat about Nigeria. Acknowledging that it has significant issues, he called it the "engine room of African economic growth" and felt it was tremendously positive that recently, power changed hands peacefully following a "mostly" democratic election. "Do not expect miracles," he said, but the election was "an amazing feat.")
After having taken the audience on a global tour that seemed mostly to pacify troubled waters, the activity he identified as "the biggest risk facing us all" was something I had previously regarded as a known but not necessarily catastrophic threat: the slowing of the Chinese economy. Its first-quarter growth rate of 7%, reported last week, hardly seemed reason to panic. Europe, growing at 2%, could only wish for such bad news.
Fenning, however, put it in perspective by likening the Chinese challenge to a man running on a treadmill at 10 mph and being told it would be slowing to 6 but that while the belt kept moving, he would also have to change his shirt, shorts, socks, underwear and shoes.
What might prevent the runner from falling down? The Chinese economy, he said, has to move from a reliance on large-scale investment to Chinese consumers spending on goods and services made in China, in short order.
And unlike regional conflicts or health scares, should the world's second-largest economy trip while changing clothes on the treadmill, we all would fall. How the transition is handled could well disrupt the global economic recovery.
"Terrorism, the Ukraine, Ebola, corruption in Brazil -- all of these are eminently containable," Fenning said. "This one is systemic."
As an example of how thoroughly interlocked the U.S. and Chinese economies have become, he pointed on a map to the Strait of Hormuz, the channel through which 20% of the world's oil must transit. Most of the tankers coming out the Straits used to turn right and head to the U.S.; some headed left, to Japan.
The U.S. positioned the 5th Fleet nearby to keep Iran from doing anything rash that might disrupt the oil flow, and the fleet flagship, the USS Abraham Lincoln, proved to be an expensive deterrent; it cost the U.S. $5 billion to build and equip.
Today, far fewer ships turn right than left, thanks to increasing U.S. energy independence. But the fleet stays put, protecting the traffic turning left, most of it now headed to China.
China, in turn, is a big purchaser of U.S. Treasury notes, which helps keep the U.S. economy (and its navy) afloat.
Like almost everything Fenning described, there is a pro and a con to these types of interlacing arrangements.
"Interdependence causes worry," he said, "but it can also be the guarantor of safety and prosperity."
Only one other speaker touched on the topic of the slowing Chinese economy, and he was dismissive of Fenning's concerns. Chen Feng, chairman of HNA Group, which operates Hainan Airlines, said he has heard 20 years of warnings about economic risk in China: "I tell my people, 'They're never right, they're always wrong.'"
No ifs, ands, buts or howevers.
Chen's confidence notwithstanding, I will be much more tuned into discussions about the Chinese economic slowdown and its ramifications. WTTC keynote speakers have a disturbingly good track record.