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February
6, 2006 |
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Over
150 travel industry marketing executives joined the popular annual
Travel Marketing Forecast lunch at the New York Yale Club on January
30, 2006. All the panelists reported excellent results in 2005 and
predicted that 2006 would be better than the previous banner year of
2000.
Here is a synopsis of the proceedings of the panel.
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Upcoming
Events:
Save
the Date!
The ATME 2006 Travel Marketing Conference will be held May 22-24, 2006 in
Las Vegas at the MGM Grand. This year's theme is: "Innovation at Work: Distinction
through Revolutionary Thinking." Confirmed speakers include: Vicki Freed,
SVP Marketing, Carnival Cruise Lines; Terry Jicinsky, SVP Marketing, Las
Vegas CVA; Steve Short, VP, Enterprise Rent A Car; Jeff Senior,
CMO, Fairmont Hotels & Resorts; Henry Harteveldt, VP Travel, Forrester
Research; David Levine, CEO, E Suites; Jim Anhut, SVP Branding,
Intercontinental Hotels & Resorts; Shirley Tajoya, SVP, Travelzoo; John
Rindlaub, EVP, EOS Airlines; Ron Andruff, CEO, Tralliance; John
Russell, CEO, NYLO, (New York Lofts). Registration will be live online by
2/14/06 |
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A Banner Year Projected for 2006
Moderator Gary Sain, Chief Marketing Officer and Partner, Yesawich, Pepperdine, Brown & Russell, began the panel session by asking the 150 attendees if anyone had not had a good 2005. Virtually no hands went up, confirming the excellent overall shape of the travel industry at this moment. Figures show that the travel sector overall was stronger in 2005 than it was in 2000, and he said this year looked stronger still. YPB&R’s research reveals that most Americans say they like to travel, and 62% looked forward to vacationing in 2006. That figure was up 3 1/2% overall, and 4% in the leisure area.
Bob Sharak, EVP and CMO of CLIA, said that the cruise sector was extraordinarily strong in 2005, with total clients up 7% to 11.2 million. Occupancy was 103%, even with the addition of three new ships and three [reintroduced??] ships. This year will see six new ships, and a predicted 11.5 million customers. Cruise is increasingly aspirational, which bodes well for the future.
Frank Camacho, Hertz’s Staff Vice President of Marketing for North America, said that 2005 finally saw the return of the business traveler. Small businesses and startups led the way, since big corporations are still laying off workers and slashing costs. Totals were up between five and ten percent. 2006 should be stronger, though the increased destruction from hurricanes is a potentially negative factor. With many companies deciding not to hold meetings in the southeast, Hertz is concentrating more of its fleet elsewhere, notably in Hawaii and on the West Coast.
Jeff DeKorte, Vice President of Travel of AOL, said more than $12 billion was spent on online advertising last year, and the figure should hit $15 billion this year. That comprises more than 5% of all advertising expenditures. He added that amid all the strength, the emerging metasearch side didn’t grow quite as rapidly as expected.
Marc Kazlauskas, President of Insight Vacations, said that despite international political friction there had been no backlash in terms of travel. Europe is back, with Italy up the most and other areas like Russia, Croatia and the Dalmatian Coast not far behind. China and South America are also strong.
Marshall Calder, Senior Vice President-Marketing of Leading Hotels of the World, noted that the luxury segment is more important than ever as the number of high-net-worth individuals in the world keeps rising by about 7% annually. There are now more than 8 million with net worth of more than a million dollars. Many are from emerging markets like Russia, Dubai, Mumbai and China. Meanwhile, the number of Europeans booking online risen sharply to 12% from around zero just six year ago and the Continent is set to surpass the U.S. in online sales. The tech people are in charge, he said: “We used to call them geeks; now we call them boss.”
Joel Chusid, principal of Joel Chusid & Associates which specializes in airline marketing worldwide, was “cautiously optimistic,” but not ready to guarantee good times for that troubled sector. In addition to the fuel cost problem there is excess U.S. capacity and the fares are simply too low. There are also labor issues, which grow worse as stock prices and executive pay rise; unions, after givebacks, feel entitled to ask “What about us?”
Challenges Remain...
Gary Sain asked panelists about particular challenges they faced.
CLIA’s Sharak said that simply getting more travelers to try cruising was the key objective, since so many first-time clients conclude that the value is “unparalleled in the industry”. Just 16% of travelers have cruised, and so outdated perceptions – just for old people, not for kids, too expensive – are still too prevalent.
Hertz’s Camacho said that for some 20 years, the price of cars had not increased as U.S. manufacturers sold them to the industry at cost. This is no longer the case, so costs will rise. But the company is offering greater choices to the “indulgence traveler”, who realizes that a vacation should offer a taste of luxury and demands the appropriately luxurious car. Gas costs $5 a gallon in Hawaii, he noted, and yet these wealthy or aspirational travelers often choose Hummers.
AOL’s DeKorte said a crucial challenge was guaranteeing that suppliers deliver on what they promise. Also, marketers must learn to use the internet correctly – often a mass email causes recipients – even those who have asked to receive it – to hit the “Report Spam” button. As a result, some big sites have been shut down and lost revenue.
Kazlauskas of Insight Vacations said in response to changing demands, tour operators are changing the nature of the experience they offer. Instead of visit city/see sights/repeat, they are offering more cooking tours and other educational and experiential specialty tours. These tend to generate exceptional repeat business as well as good word-of-mouth and other recommendations. He also noted the difficulty caused by intense and sometimes sensationalized media coverage of areas prone to problems and incidents.
LHW’s Calder said the challenge was to create a genuine distinction, given the enormous clutter and clatter of advertising aimed at consumers who are entitled to feel besieged. “Too many people claim to offer luxury”, he added, citing the perceived need to create six-star properties. Word of mouth is the best form of selling, he said, while other ways of overcoming the “trust barrier” include effective CRM and 1-to-1 strategies that build loyalty and repeat business. “Talk to your customers as individuals and build a relationship,” he advised.
Joel Chusid said that there is a concerted attack on the frequent flyer programs, and noted EOS offering miles for travel on other carriers. He praised Air Canada for essentially reinventing itself in ways that offer examples for other airlines.
...But There are Definite Bright Spots
Sain asked panelists to cite outstanding industry examples that can offer lessons to other companies, in terms of brand promise and brand equity that resonates with the public.
Sharak thought first of Las Vegas, while Calder immediately named JetBlue as an easy choice, adding “Every touch is perfect,” he said, “and it makes travel easy and fun. It’s the antithesis of luxury, but I still seek it out.” Kazlauskas named Westin, with its Heavenly Bed and its consistency, as a marketer who’s doing thing right,
DeKorte cited Royal Caribbean Cruise Lines for innovative ideas like having people vote for a “Cruise Godmother” among essentially average American women, resulting in more people signing on. He urged attendees to learn about Web 2.0 – “What the industry expects to become” -- to see an important shift from official websites to content created by communities, linking blogs and creating buzz. Trip Advisor and other models like Trip Comment serve to build networks, enabling people to find friends – or friends of friends – who share experiences and information about all aspects of travel.
Camacho said that Marriott Courtyard, while not a top-end chain, met a genuine need by providing consistent service and experience. They may all look alike, but “road warriors appreciate the predictable”.
Sain mentioned Marriott’s Vacation Club time share group as an important addition to the traveler’s list of options, and also noted the rise of the condo hotel as an emerging factor.
Chusid unabashedly praised Hertz as a company that consistently does more things right. When it was suggested that the presence of a Hertz executive might be influencing his choice, he denied the charge. “I recently left a bag containing dirty clothes in the back seat of my Hertz car,” he said. “I called, and they promised to hold them until I returned for it. A week later I got them back. Cleaned.”
Audience Question: What About Macro-Economic Indicators?
Attendee Dwight Sholes of Quotient Marketing asked for comments about key macroeconomic indicators and their effect on the market, citing America’s negative rate of savings as an example.
Sharak noted that overall wealth was increasing despite that deficit, so it was a long-term issue. Kazlauskas said that America’s seniors tend to focus on the short term. Calder stated that luxury customers were not bothered by these problems, but noted that there are emerging worldwide business opportunities that we will be missing. “We are not producing mathematicians and scientists” to drive innovation and investment, “but we will lead the world in massage therapists.”
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The
Association of Travel Marketing Executives (ATME) is
a 25 year old professional association made up of senior
level travel industry marketers representing all segments including:
airlines,
hotels and resorts, cruise lines, tour operators, online
travel, international tourist offices, CVB's, state and local
tourism
offices, car rental companies, technology providers, etc.
ATME is the only worldwide organization of its kind to provide members with an
ongoing forum for the exchange of creative ideas and effective marketing solutions.
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