ATME's luncheon panel discussion on January 27 covered the state
of the travel industry both present and future, from a wide range of
The panelists included Bob Sharak, Executive Vice President
and CMO of the Cruise Line Association of America (CLIA); Bob
Whitley, President of the United States Tour Operators Association;
Marshall Calder, Senior Vice President of Luxury Hotels
of the World; Frank Camacho, Vice President Marketing
of Hertz; and Joanne Smith, Vice President of Marketing
of Song. The moderator was ATME's chairman Gary Sain,
Executive Vice President and Partner of Yesawich, Pepperdine, Brown
Asked what kind of year they envisioned for 2004, the basic mood was
upbeat. Calder expected to see his members attain or exceed the levels
of 2000, and Whitley said most of his members shared that view. Smith
envisioned more air travelers in general, but a lower yield than 2000.
And Sharak cited the growing capacity of cruise ships as both a challenge
and a cause for optimism, noting that even as the immense Queen Mary
2 enters the market, a larger ship is already in the works.
Smith said her new carrier is listening closely to consumers, and putting
more money into the customer experience in an effort to "underpromise
Sharak stated that today's consumers demand an array of choices, and
the cruise industry is taking steps to provide that kind of variety.
He also noted that the industry still has little overall penetration,
which translates into huge potential: 44% of travelers would like to
try cruising, and thanks to the high satisfaction levels, some 90% of
first-timers are inclined to sail again.
Sain asked what marketing issues kept the panelists up at night, and
Whitley cited the crucial question of how customer flow would ultimately
split between travel agents and the internet. Calder expressed concern
about the "commoditization of travel" -- the tendency to sell
online strictly on a price basis. Luxury destinations can't undercut
the low-price players, and have to keep the focus on value in order
to come out ahead. In short, "We have to make people understand
the value of that extra star."
Camacho noted the confusing multiplicity of brands and choices, which
can reach a point where the consumer simply decides to go with the lowest
price. He noted an acute industry need for increased emphasis on branding
to combat this growing problem. And he said the leisure side of the
market is now dominant, especially as baby boomers become empty-nesters.
In fact, while business travel is not yet back to the levels of 2000,
leisure travel has already surpassed those high marks.
Sain inquired about perceived threats to travel, beyond the essentially
uncontrollable elements of terrorism, disease and currency shifts.
For Smith, a big threat is the emergence of more low-cost competitors
all trying to capture the "$79 traveler". Noting that today's
consumer is inundated with clutter, she said Song's ads deliberately
don't look like airline ads. Acknowledging the clear targeting of women,
she added: "Where women go, men will follow."
The cruise business sees the key threat as continuing low yields, said
Sharak, adding that while major cruise lines were currently profitable
the pricing had to increase to more normal levels.
Another consumer shift and industry challenge is today's shorter booking
cycle. Cars, hotels and airlines that were typically booked well in
advance now have little notice, and there are far more last-minute and
drop-in travelers. Cruises, once booked four to six months ahead, are
now arranged just a few weeks before departure. Adjusting to this on-demand
world is difficult, but Whitley saw signs that this shrinkage of lead
time is finally abating. And when Doug Burke of the Philadelphia Inquirer
asked how panelists coped with this move to last-minute booking, Whitley
said, "Easy. Put an ad in the Sunday Philadelphia Inquirer."
The improving economy bodes well for the industry, of course, and Calder
said that the rising tide will benefit hotels, cruises and all discretionary
travel. But business travel will also recover, and he anticipates the
number of corporate travelers in luxury hotels going from 5 to 7 percent
-- a 40% increase in business customers. In addition, over half of business
travel now includes some leisure component -- at its best, a visit to
provincial France after a talks with the client in Paris or Brussels.
The panelists saw a bright future for travel agents who've adjusted
to new realities. Camacho said agents remain his biggest source of business,
with notable increases in group sales, and will continue to play a vital
role. Whitley said the USTOA knows agents will do well, with more of
them becoming home-based.
Whitley was also pleased with the comeback of the tour industry, especially
in Europe despite the strong Euro. He also noted that the industry is
changing its product, avoiding the rush through too many countries,
adding leisure time, and changing "tour" to "vacation".
Sain noted a YPB&R finding that Italy, Spain and the United Kingdom
are up most -- leaving the impression that this might relate to these
U.S. allies positions on Iraq war.
Sharak, too, noted the need to change perceptions. The public view of
cruisers as "newlywed, overfed or nearly dead" has yielded
to a new and active image. "It's nice to have customers who will
repeat before they expire", he added.
For Smith of Song, the challenge is making air travel as easy as possible,
by streamlining check-in and taking all other steps to provide a hassle-free
and even rewarding experience.
Responding to a question from Hugh Riley of the Caribbean Tourist Organization
about growth areas, Calder cited "experiential travel", which
goes beyond the physically active idea of adventure travel to encompass,
say, an arctic cruise. It was noted that adventure travel may be fast-growing,
but it still comprises a very small segment of overall travel. Sharak
said that the real growth areas may be honeymooners, extended families,
and families traveling with children.