By Kathleen Cassedy

More than 250 delegates attending the 2001 ATME conference, May 23-24, at the luxurious Sheraton Bal Harbour, Miami Beach, heard a plethora of travel industry leaders share their experiences and success stories during the packed-with-information program, Focus on Managing Customer Relations.

For the first time, ATME sponsored a trade show featuring 20 travel company exhibitors, held in the ballroom used for coffee breaks. Delegates had plenty to talk about and see in-between conference sessions. A conference highlight was ATME’s annual Atlas Awards Dinner, once again sponsored by Discover Business Services.

THE BIG PICTURE

During the conference’s opening presentation, travel marketers received more than a dollop of why, where and how travel trends are developing. The proprietary information provided by Peter Yesawich, president of Yesawich, Pepperdine, and Brown (YPB), the marketing, advertising and public relations agency, and Henry Harteveldt, senior travel analyst for Forrester Research, specializing in online travel, was probably worth the entire conference fee. Travel Trade publisher and editor, Joel Abels, shared his perspective on the impact technology has had on travel agents.

CONSUMER ATTITUDES

“Where we are today in the country is a place that we’ve never been before,” notes Peter Yesawich, president of YPB. “We characterize today’s consumer mood as one of ‘consumer schizophrenia.’” This means that although consumer confidence in the country’s economy has begun to decline as individual portfolio values have decreased, consumers are reluctant to give up particular aspects of their recently upgraded lifestyles, which followed the country’s unprecedented economic growth.
“We have the lowest level of consumer confidence that we’ve seen in four years,” Yesawich says. “Yet consumers are reluctant to give up vacations, which they consider a birthright. Not true when it comes to business travel.”

Because of diminished confidence, coupled with the desire for vacation travel, consumers will become much more aggressive in seeking out or negotiating the best prices.
This consumer information presented by Yesawich is from YPB and Yankelovich Partners’ National Travel Monitor, developed from an annual lifestyle survey of 2,500 U.S. households conducted each January.

As the economy softens, people will not stop vacationing but they will trade down in the level of accommodations they use (economy, moderate or luxury properties) and to where they travel. Several types of travel are likely to decrease in business over the next six-to-nine months, Yesawich says. They are:

• Discretionary business travel, typically corporate meetings;
• Overindulged vacations, i.e., holidays which consumers traded up for during the past three to four years; and
• Long-haul vacations.

Some types of travel will become more popular. These beneficiaries will be:
• Value-priced accommodations;
• Destinations that are closer to home;
• All-inclusive vacations; and
• Value-priced vacations, which are bundled.

Fewer consumers will purchase a la carte vacation packages because they now prefer to know the total cost of their vacations before they go, Yesawich says.

“I’m here to declare the concept of brand loyalty dead. Most travel marketers don’t want to hear that,” Yesawich says. “I realize that this is potentially a controversial issue when we’re talking about customer relationship management.”

Because consumers can access a wealth of travel information on the Internet, they are now shopping with a price in mind, and conducting online comparative research. This online information was not so available four years ago. “This is a different purchasing paradigm,” Yesawich notes.
Two-thirds of Americans say that the most important change created by the Internet is that it has given them greater control. “Isn’t that amazing? Because although two-thirds of Americans have not yet logged on, they believe that when they start to surf, it’s going to happen,” Yesawich notes.
“As consumers use technology, they discover the world is in fact about them,” he says. “[Their] strategic control is going to reinvent the travel marketplace.”

“Demand aggregation” is conducted online when thousands of online consumers are ready to purchase the same item. They can become part of a demand aggregate bargaining unit to negotiate a better price. Already dotcom companies, such as Priceline, Hotwire, and Fairair, provide consumers with a way to access the best deals.

A March 9th travel article is USA Today explained how consumers can get the best air fares online. This involves going to the supplier’s published fare; then checking fares on Hotwire.com; bidding at Priceline.com for a better fare; and if they did not receive a better price at Priceline, going back to Hotwire to purchase.

The same article could be written for finding the best room rates, or cruise and package vacations, Yesawich notes. “Take the convergence of a soft economy, the consumer who says ‘it’s all about me,’ and the use of technology. Stir that all up. You have an interesting future.”

ONLINE TRAVEL SPENDING

Senior travel analyst, Henry Harteveldt, with Forrester Research, shared projections based on Forrester’s annual survey of 100,000 U.S. and Canadian households.

This year, 57 percent of U.S. households have access to the Internet—5 percent more than the 52 percent Forrester previously forecast. Less than one-third of online households—18.9 million—will purchase travel online this year, which marks the first time online “bookers” will surpass the number of online “lookers,” who account for 16 million travelers who research fares and destinations online, then buy through traditional channels. (Forrester’s projected travel expenditures account only for airline tickets, hotel sleeping rooms, rental car fees, cruiseline sleeping accommodations, and vacation packages.)

Bookers in 2001 are expected to purchase $24 billion for travel products and services. This is an increase from essentially nothing five years ago, when online travel transactions were not offered. About $16.7 billion will be spent on leisure travel, and $7 billion on business travel, primarily managed travel.

In 2004, Forrester projects more than 29 million U.S. and Canadian households will spend $55 billion for online travel ($29 billion for leisure and $21 billion for business, both managed and unmanaged travel). “That amount will account for roughly 27 percent of total travel spending, which is 11 percent in 2001,” Harteveldt says.

According to Forrester, consumers this year intend to make the following online travel purchases: 80 percent will buy airline tickets; more than half will book rooms; 40 percent will book rental cars; 20 percent will buy vacation packages; and 10 percent plan to book cruise vacations.
“People go online for three reasons,” Harteveldt says. “Choice, convenience, and control.” The Internet allows people to go online at any time, from any computer location, and to comparative shop.

CELL PHONES & THE INTERNET

People who have traveled during the past year are more likely to use new technology than the population at large, Harteveldt says. The majority of first users who embraced the Internet were college-educated and affluent. Now more mainstream people surf the Web and purchase travel.
According to Forrester, people who have traveled on at least one trip during the past year have a higher propensity for owning technical devices, such as a palm pilot, that can be connected to the Internet.

Forty-eight percent of the U.S. households have cell phones, compared to 60 percent of U.S. travelers who have cell phones. (These travelers have taken at least one annual trip.) Of travelers, 4 percent have a Web-enabler phone, and half of those subscribe to an Internet service through their local phones. By 2003, Forrester projects 22 percent of U.S. households will have wireless devices. Currently, about 5 percent of U.S. households have palm pilots or similar devices, compared to 10 percent of travelers with these devices.

People probably will not buy airline tickets from their cell phones via the Internet, but they will use phones to access restaurant information and make reservations, and possibly to purchase event tickets.

Currently, people travel with their laptops, even on vacation, but in the future they will take their wireless online communication devices instead, Harteveldt says.

“I want you to take away this one thought,” Harteveldt told delegates. “What online marketing is all about is adding value. To accomplish that you must make your Web site relevant to the online traveler.”

People who have been buying travel online for the past four years are on average: men; in their mid-40s; have high annual incomes, approximately $70,000; are college educated; and take an average of four trips per year. The profile of people who began to buy travel online for the first time within the past year is more mainstream: their average annual income is $45,000; 40 percent are men; less than half are college-educated; and they average fewer than two yearly trips.

“People who are going online to buy travel are not the road warriors anymore. They are the average Joes and Janes. So the challenge that marketers face in selling travel online is: ‘How do you make the experience powerful, enjoyable, and efficient for everybody?’” Harteveldt asks. He also notes that people have expectations that are ever increasing. For example, 11 percent of travelers already have high Internet access from home. “How are you going to satisfy these customers?…It [marketing] will only get more complicated. But it will also become a lot more exciting.”

THE ROLE OF TRAVEL AGENTS

Because the Internet provides consumers with direct access to travel information and online transactions, some marketers and suppliers believe the role of the travel agent has diminished. Travel Trade magazine’s publisher and editor, Joel Abels, vehemently disagrees.
“I am absolutely 100 percent convinced that travel agents will be put out of business the day that real sex is replaced by robot sex,” he says. Abels points out that technology is helping agents sell more, especially in the leisure market.

Travel agents will never go away, but their role will be diminished—a trend that is already occurring, Harteveldt says. Simple travel purchases, such as shuttle airline tickets and direct flights, will be purchased online, but agents still will handle exotic and honeymoon-type trips. About half of online individual air travel purchases is bought at the supplier sites, and will probably account for up to 65 percent of total online travel sales. Online travel agencies serve airline customers who are brand neutral, price-sensitive, or first-time buyers on the Internet. He also notes that a person’s first online travel purchase is typically for an airline ticket, usually on Expedia’s or Travelocity’s Web sites and will be on the new site, Obitz.com.

A conference speaker and Atlas awardee, Derek Correia, senior vice president of marketing, Renaissance Cruises, notes that Renaissance, which had bypassed travel agencies for direct bookings, has redirected its marketing program to concentrate on travel agency distribution and partnerships. (See Atlas award story.)

BONUS: THE PICTURE IN DETAIL

Four travel marketers, representing different industry segments—a hotel company, a destination, a tour operator, and a theme park—spoke about how the current economic slowdown has impacted their businesses. One critically important activity they all share is their redirected focus on consumer satisfaction.

STARWOOD: ADDING VALUE

Jane Mackie, vice president of advertising and promotions, Starwood Hotels and Resorts Worldwide, is responsible for three brands—Sheraton, Four Points by Sheraton, and Westin. She notes that with today’s less-than-robust economy when consumers are more influenced by location and room rates than by brand loyalty, the hotel company is concentrating on gaining market share by adding value to its hotel products. To grow market share, Starwood must work just as hard to attract repeat customers as well as new customers, she says.

To attract customers in the short-term, Starwood can always lower prices, but a more sustaining incentive is to add value by providing quality experiences. “Motivate employees to take that extra step to keep customers coming back,” she advises.

Even as business trips are cut back, research shows that U.S. households with an annual income of $50,000 or more are reluctant to give up travel luxury products: two-thirds of this market are planning summer travel that will involve a hotel stay, and 40 percent plan to fly to the destination. Research also shows that people will pay more for the additional value provided in vacation packages, which is why Starwood is building both Sheraton and Westin Vacation Ownership products, Mackie says.
During a slowing economy when consumers are empowered, travel providers need to make it simple for consumers to buy their products. At Starwood, every advertising collateral and direct marketing piece is designed to be easily understood. “Put the offer, the value compensation in a headline, make it obvious, don’t make consumers work so hard,” she says. Advertising should also include an invitation to buy that is easy to transact.

In trimming marketing budgets, some areas should not be cut, Mackie says. These are the activities that offer relationship building, such as the general manager’s cocktail party, and customer research. “Get out, meet and greet customers, buy them breakfast, let them know that we care,” she says. “Keep your finger on the pulse of the consumer [through surveys] and don’t forget they are the ones with the power now.”

GLOBUS & COSMOS TOURS

Paolo Mantegazza is president and CEO of Group Voyagers, based in Littleton, Colorado, which markets Globus & Cosmos, among the world’s leading tour operators, to North American clients. The grandson of the company’s founder, Mantegazza is also responsible for overseeing sales offices in New Zealand and Australia.

Globus & Cosmos had successfully built its business providing guided tours to the World War II generation, but by 1995 that generation had peaked as a tour market. Mantegazza said the company had become fossilized, and was missing the baby boomer generation as an important market.
The company needed to adapt to the differences between the seniors and their children, the boomers. The senior market tends to be passive spectators, who like to be catered to. Whereas, boomers are active participants in their holidays. They want to be in control and know every aspect of the holiday in advance to ensure a terrific experience since time is a rare and valuable commodity for them.

“We had to fully change our philosophy to be much more customer focused,” Mantegazza says. Rather than conduct quantitative surveys, Globus-Cosmos conducted in-depth personal interviews to learn exactly what consumers desire in their guided vacations. The findings were surprising. For example, consumers were much more concerned about safety in the area around the hotel, if they wanted to take a walk, than in getting cheaper rates.

Based on the customer research, the company developed a customer-experience guide, which documents every aspect of the experience that customers want. These guides are given to everyone in the organization. “Customer focus must be embraced by the entire company so it becomes part of its culture,” Mantegazza says.

To satisfy consumers who desire to directly reach Globus & Cosmos, which has a 100 percent travel agency distribution, the company sought agency consultation to design its direct distribution system. “That’s helping us service our travel agencies better because we now have a better understanding of the relationship they have with customers,” Mantegazza says. In the future, he sees the company designing more products from the baby boomers’ perspective.

BAHAMIANS CREATE
GUEST EXPERIENCE

When tourists visit a destination, their experience encompasses much more than at their hotels or on golf courses. The holiday experience includes interaction with all native peoples, whether they are taxi drivers or shopkeepers.

Vincent Vanderpool-Wallace, director general of the Bahamas Ministry of Tourism, works to create an exceptional experience to visitors during their vacation to the Bahamas—a Caribbean nation comprising hundreds of islands and 300,000 residents.

“Every single person who lives and works in the Bahamas happens to be in the tourism industry. That person has an impact on whether a visitor comes back or not,” he says. Four years ago, research showed that Bahamians believed the country’s marketing slogan, “It’s Better in the Bahamas,” more than anybody else. “They did not want to change anything,” Vanderpool-Wallace recalls.

As a result, the government tourism office (GTO) began initiatives that helped involve the entire population in the business of tourism, which accounts for one-half of the country’s Gross Domestic Product, supporting roads, schools, hospitals, and other infrastructure.

The GTO adapted the expression made famous by the Clinton political campaign, “It’s the economy, stupid” to fit the Bahamian tourism. “It’s the experience, stupid,” relates Vanderpool-Wallace.
Bahamians are regularly informed of tourism initiatives, receipts and statistics through television and radio shows and a newspaper column, “The Voice of the Visitor,” reporting on visitors’ impressions. A local television show tells residents how they can better host visitors.

The GTO was able to use immigration cards, which travelers fill out, to effectively gather visitor information. The card includes the question, “What is your travel agency?” so that the GTO knows which agencies most support the islands. A departure form asks visitors, who would like to receive updates on the Bahamas, for their e-mail addresses. It also inquires about their vacation experience—Was anything wrong? How could it be fixed? This visitor feedback is provided to suppliers in an anonymous format to protect visitors’ privacy.

In the past four years, tourism growth in the Bahamas has been astonishing, says Vanderpool-Wallace, who calls this the “economic value of reputation.” A survey shows that 62 percent of visitors said that the attitude of Bahamians was better than they anticipated. Average room rates in Nassau and Paradise Island have also doubled.

The new marketing slogan became “The Islands of the Bahamas—It Just Keeps Getting Better.”
“That [visitor] experience comes from the people who deliver the ultimate products,” says Vanderpool-Wallace. “That’s something we will never forget.”

UNIVERSAL AIMS TO PLEASE

“In the last year, change is virtually in every aspect of what we’re doing,” says Fred Lounsberry, executive vice president of marketing for Universal Studios, Orlando, Florida. A year ago the most important tools for the marketing team were the sales and budget reports. Today marketers pay the most attention to the theme park’s guest satisfaction reports. “As our long-term future goes, guest satisfaction is more important than anything else we are doing right now,” Lounsberry says.

Universal was “running pretty fat” a few years ago, says Lounsberry. Now the company is re-examining what it has been doing for the past decade to create a better structured, more efficient, and focused organization. Universal is concentrating on improving its distribution systems: how it best reaches customers, including travel agents, meeting planners, and other business segments. This involves redesigning its Web site, which already receives 50 percent of all new bookings through its online Universal Studios Vacation store.

The other major company focus is to examine ways to provide a better park experience for guests. A year ago Universal undertook a huge capital investment to develop a reservation system to alleviate the long lines at rides and attractions. Visitors can now book reservations for their favorite rides earlier in the day, so they only have a 10-to-15 minute wait. As a result, “guest satisfaction scores have been off the ballot,” Lounsberry notes. The company is working to provide amenity for visitors before they arrive in Orlando.

Because repeat visitation to Orlando is critical for the theme park industry—more than 80 percent of guests return within five years—Universal Studios is focused in providing a great guest experience. According to guest surveys, word-of-mouth is still Universal’s No. 1 form of advertising.