ATME's luncheon panel discussion on January 27 covered the state of the travel industry both present and future, from a wide range of perspectives.

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 and Russell.

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 and overdeliver".

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.