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Preview
ATME Event Review
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February 7, 2007
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Upcoming
Events:
ATME CALENDAR - Save the dates!
April 25, 2007 - ATME Travel Marketing Issues Forum - NY Yale Club
June 6-8, 2007 - ATME Annual Conference - Red Rock Resort, Casino & Spa, Las Vegas
September 25, 2007 - ATME Travel Marketing Issues Forum - NY Yale Club
December 14, 2007 - ATME Travel Marketing Issues Forum - NY Yale Club
January 28, 2008 - ATME Travel Marketing Forecast - NY Yale Club
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ATME TRAVEL MARKETING FORECAST REVIEW
January 29, 2007
Moderated by Gary Sain, CMO/Partner, YPB&R (newly appointed President of the Orlando/Orange County CVB)
Panelists:
Bob Whitley, President, USTOA
Hugh Riley, Director of Marketing, Caribbean Tourism Organization (CTO)
Jeffrey Glueck, CMO, Travelocity
Eliot Friedman, VP Travel Industry Marketing, The Hertz Corporation
Jack Mannix, CEO, Ensemble Travel
Conrad van Tiggelen, Director, Netherlands Board of Tourism & Chair of ETC
Gary Sain’s
TOP TEN TRENDS TO WATCH IN 2007
As we enter the beginning of 2007 our thoughts turn to the year ahead and what we can expect from the cautiously optimistic, yet still volatile, market environment in which we now operate. So here are our predictions:
1) Demand for leisure travel services will continue to outpace that for business travel services, as more business travelers attempt to use the latest technology as a surrogate for business travel whenever possible and appropriate (and to manage the escalating cost of air transportation and lodging);
2) Family travel (adults with children) will continue to grow at a faster rate than all other forms of leisure travel, as both parents and grandparents continue to look at travel as one way in which to “reunite” families in a contemporary world that is increasingly dominated by the demands of work…even if only for a few days;
3) Practically all travel suppliers will attempt to raise fares and/or rates, as demand for travel services continues to grow, capacity becomes more strained, and operating costs escalate (on both airlines and in lodging accommodations, particularly in popular destinations like New York);
4) The role of the Internet will continue to dominate the travel-planning/booking headlines, yet the incidence of Internet usage by both business and leisure travelers to plan some aspect of travel will remain flat, while the incidence of its usage to actually book reservations will continue to grow but at a significantly lower rate than we have observed during the past three years;
5) Comparison shopping of suppliers’ fares and rates (and the corresponding “price transparency”) will become more commonplace as consumers discover the power (and intrigue) of the nascent meta search engines such as kayak.com, qixo.com and the like;
6) The new “lifestyle” hotel brands such as NYLO, ALOFT, etc. will continue to gain both exposure and popularity among the next generation of travelers (the Millennials), as well as more mature travelers who wish to look, act and feel like Millennials;
7) The concept of “inclusive pricing” (one price for a bundle of basic services) will grow in popularity beyond destination resorts to include commercial hotels seeking to provide road warriors with good value for “just the basics” (a comfortable bed, a good working desk, breakfast, High Speed Internet access, and reward points);
8) Interest in spa-going will continue to grow as more consumers seek ways to manage the mounting stress in their lives (thereby igniting the next generation of spa development in commercial hotels);
9) The cruise industry will continue to enjoy remarkable growth (precipitated by the arrival of exciting new ships, an aging population, and general marketing prowess), thereby becoming an even more formidable competitor of destination (land-based) hotels and resorts;
10) More travel suppliers are going green in an effort to do the right thing and to match the growing consumer trend.
Most importantly, barring the impact of any catastrophic political, economic, social or terrorist event in the months ahead, 2007 should be another year for the record books.
2007 OUTLOOK & CHALLENGES
Gary Sain asked the panel about their segments outlook for 2007 including opportunities and challenges.
Elliot Friedman, Vice President of Travel Industry and Partnership Marketing, The Hertz Corporation stressed the growing importance of “luxury leisure”. He noted the good public reception of the company's Prestige Collection, including Jaguar, Infiniti, Audi and Cadillac models. But he also pointed out that the company depends on airlines, and when Delta cuts flights it presents a challenge to growth.
Jack Mannix, CEO of Ensemble Travel, said that despite predictions to the contrary, travel agents are still very much a part of the industry today, with plenty of business out there. While the traditional approach no longer works, the real professionals who know how to sell their expertise are thriving. However, he noted that customers don't always know they need a retailer. With agents no longer chasing $10 commissions, they are free to do the things they excel at - using their expertise and relationships to save time and money for serious travelers.
Bob Whitley, President of USTOA, said that in the organization's 29 years he has never been more bullish. Bookings are simply amazing, he added, running as much as 40% ahead of last year with South America strong while London and Paris are leading the charge - the strong Euro simply has no impact on bookings. He predicted that the industry's record set in 2000 would be bested this year by a wide margin. “The American consumer has decided to travel,” he said, “and that consumer is more sophisticated than ever.”
Conrad van Tiggelen, Director, North America, Netherlands Board of Tourism and Chairman of the European Travel Commission NA, said that 2006 was a great year and that 2007 is going very well with flights up, more direct flights, and increased lift. The fact that passports are now needed for Caribbean travel offers a powerful opportunity for Europe. But he noted that Europe's market share is holding at 50% excluding the Caribbean and Mexico, rather than increasing. And while the Euro at about $1.30 is not deterring travel, a rise to $1.50 could present a problem.
Jeff Glueck, CMO of Travelocity, said that the number of Americans holding passports has risen by some 2 million, to 27% of the population. The passport requirement has not been a problem for the Caribbean or Mexico. However, domestic airline capacity among the top six airlines has dropped by 20% in the last two years - a profound challenge for Travelocity, where business in 90% domestic. There's a silver lining for this cloud, however: It gives the industry a chance to transition away from the commoditization that jeopardized profitability in recent years - to “take price out of the equation”, just as Starbucks did for coffee, and to focus on what is special about the travel experience rather than lure customers with $39 hotel rooms. He said a key effort is to make Travelocity a full-service travel agency by providing 24-hour service, including telling people about changes and offering a chance to rebook - with 60% calling this “useful” and 10% saying it “saved my vacation”. He also noted that Travelocity had spent $1 million to promote Gulf Coast Volunteer Vacations to rebuild Katrina-devastated areas.
Hugh Riley, Director of Marketing, CTO, said that the area had been stressing special values while meeting the challenge of informing the public about the passport requirement, but that the impact of the rule has not been determined yet. He explained that Caribbean governments and hotels have gotten together to create the Caribbean Development Company, which will work to create a brand and an image as a total entity. The region's four-star hotels represent an opportunity to attract top-flight travelers - but airline mergers and the accompanying threat of higher costs from reduced competition are a potential problem.
CHANGES AND TRENDS
Sain asked panelists about major changes and trends, and Travelocity's Glueck said that the Internet now accounts for half of all bookings, as well as a huge percentage of public travel researching.
USTOA's Whitley pointed out that the age of ADC (“Another Damn Cathedral”) travel was over, and that Americans are more interested in “site-doing” than in mere sightseeing. He also noted that Americans are no longer the leading purchasers of international luxury travel - in fact, the new class of wealthy Russians now outbids everyone else for top accommodations and for air capacity as well.
Ensemble Travel's Mannix said that when travelers call an agency today, they've probably already researched Zimbabwe pretty thoroughly, and that whoever takes that customer had better know a lot about that particular destination - and countless others as well.
Hertz's Friedman said that the booking window, which had been growing steadily shorter as more travelers made last-minute decisions, has finally stopped decreasing. This may be because of today's more crowded airplanes, or because they are no longer sure that waiting guarantees the best deal. He added that the company is devoting more attention to groups.
Travelocity's Glueck said that the effectiveness of Google has been declining. The industry now often overpays on buying search terms, and that it's easy to lose money on, for example, Hawaiian destinations. In fact, there is a shift of money offline.
Joe Byrne of (Irish Tourist Board) asked the panel whether anti-American attitudes should be a concern for travelers abroad. Bob Whitley, who proudly wore a Yankees cap and a flag pin in his travels, said that the anger was not directed at Americans but rather at President Bush, and was never a problem. Van Tiggelen agreed that it was not a problem.
But Sain noted that tourism to the U.S. is down significantly, and that we need to be more welcoming to foreign visitors, a view widely shared by others.
CONSUMER GENERATED WEB CONTENT
Sain also asked about the move to consumer-generated content on web sites, and Elliot Freidman said that HERTZ was still in the process of deciding whether or not to carry consumer blogs. Hugh Riley said that the new Caribbean Development Company will have a supersite - using Travelocity's booking engine - that will let people talk about their experiences. Asked about the impact of a possibly unfair negative comment, he said that the situation was essentially self-correcting, with fast consumer refutations of unfair or inaccurate complaints.
Jack Mannix said the phenomenon was here to stay, adding “we can't harness it; we can only raise our standards.”
Conrad van Tiggelen has embraced Web 2.0 and the blog, saying his office sent 40 active bloggers to the Netherlands last year with no conditions. He stated that “people trust other travelers more than tourist offices”, so the potential gains outweigh the problems.
Jeff Glueck said, “we have bloggers, with structural blogging and people rating everything.”
PANELISTS' FAVORITE VACATION
And where, asked Sain, would panelists prefer to spend their own vacations?
Friedman chose a beach and golf break; Mannix said he travels so much on the job that his ideal destination was his own house; Whitley voted for the Riviera Maya where he has a vacation home, with South America, Hong Kong and Italy coming in second; van Tiggelen said his favorite destination was New York City.
Glueck, who spent his honeymoon working with an orphanage in Rwanda and also enjoying a safari there; and Riley said his destination was certainly the Caribbean, with the only question: “Which beach?”
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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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