Tourism Industry Trends and Forecasts by ypy11747

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									Tourism Industry Trends and
         Forecasts
Travel – Taking its Punches


 9-11


                              FLU
Where we stand – Down but some positive
signs
Leisure Travel Trends

• In decline since Q3 „08

• Travel still viewed as a “right”

• Shorter, closer-to-home trips

• Trading down, not out

• Frugality reigns – a “New Normal”?

• Some early signs of recovery in leisure travel
Business Travel Trends
• 51% of executives report declines
  in business travel in recent months
  and reductions in budgets,
  averaging 35% (Kellogg Study)
• Contraction is expected to
  continue across nearly all types of
  business trips. (Oxford Economics Study)
• Duel challenges - Image and
  Technology
• A “New Normal” here too?
Visitor Volume Through First Six Months
         Domestic                    Domestic
                                                            International                   Total
          Leisure                    Business




           - 3.5%
                                      - 6.3%                                               - 4.5%
                                                               - 10.2%



Sources: U.S. Travel Association; Oxford Economics/Tourism Economics; U.S. Department of
Commerce-Office of Travel and Tourism Industries
Visitor Spending Through First Six Months
            Domestic                   Domestic
                                                              International                 Total
             Leisure                   Business




             - 11.0%
                                        - 12.5%                                            - 11.9%
                                                                  - 14.7%

Sources: U.S. Travel Association; Oxford Economics/Tourism Economics; U.S. Department of
Commerce-Office of Travel and Tourism Industries
But some light on the horizon
Transportation demand beginning to rise
 Transportation Demand
  y-o-y % change                            Domestic Passenger Enplanements
  20
                                            Amtrak Ridership
  15                                        Rural Arterial Vehicle Miles

  10

   5

   0

   -5

  -10

  -15

  -20
        Jul   Aug   Sep   Oct   Nov   Dec   Jan   Feb   Mar    Apr   May   Jun   Jul
        08                                                                       09
  Source : ATA, Amtrak, FHA
Declines in U.S. airline traffic “less bad”
Air Passenger Enplanements
yoy % change
                                                  Domestic Passenger
 10                                               Enplanements
                                                  International Passenger
                                                  Enplanements
  5


  0


 -5


-10


-15
      Jul   Aug   Sep   Oct   Nov   Dec   Jan   Feb   Mar   Apr   May   Jun   Jul
      08                                                                      09
 Source : ATA
Hotel demand “improving” as well
Lodging Demand
yoy % change                                                 occupancy rate
  2.0                                                                      80

                                                                           70
  0.0
                                                                           60
 -2.0
                                                                           50

 -4.0                                                                      40

                                                                           30
 -6.0         Room Demand
              Occupancy Rate                                               20
 -8.0
                                                                           10

-10.0                                                                      0
        Jul    Aug Sep   Oct   Nov Dec Jan   Feb Mar   Apr May Jun   Jul
        08                                                           09
Source : Smith Travel Research
But at a great cost to lodging industry
Revenue per available room
$ RevPAR                                           yoy % change
80                           RevPAR yoy % change             10

70                           RevPAR
                                                               5
60
                                                               0
50
                                                               -5
40
                                                               -10
30
                                                               -15
20

10                                                             -20

 0                                                             -25
     Jul   Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun   Jul
     08                                                  09
Source : Smith Travel Research
International visitation to U.S. continues to be
depressed
US Inbound
yoy % change
 30                                        Canada Inbound
                                           W. Europe Inbound
 20                                        Asia Inbound

 10

  0

-10

-20

-30
      Jun   Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
       08                                               09
Source : US Department of Commerce, OTTI
 Some destinations doing better than others
• Larger attractions with bigger price tags having more difficult
  time than smaller attractions
• Theme park attendance down in most places
• Casino operators are struggling
• Museums tending to do better with attendance but hurt by
  declining donations and public financing
• Zoo attendance up across the Midwest
• County fairs doing booming business
• National park visitation up 4.5 percent during first half
• Tennessee has benefitted from many of these trends
 Economy Bottoming Out?
• Signs that economy about to turn positive accumulate
• Real GDP down only 1% in Q2 ‟09
• Housing sector is stabilizing
• Government continues to stimulate the economy
• But improvement should not be confused with a return to
  normality
• Declines in payrolls have slowed but unemployment up to
  9.7%
• Unemployment rate expected to keep rising - surpassing 10
  percent early next year
Consumer Confidence on the rise
  But, still far below minimum level (90) generally associated with a healthy economy




                                                                               54.1




    1985 = 100
    Source: The Conference Board
Traveler Sentiment IndexTM (TSI) improving




  Source: U.S. Travel Association/YPartnership travelhorizons™
“Affordability” Index surges




  Source: U.S. Travel Association/YPartnership travelhorizons™
 Due to declines in the cost of travel
Prices: TPI and CPI relative to Jul 2008
Indexed: Jul 08 = 100
110
                                                Travel Price Index
                                                Consumer Price Index
105


100


 95


 90


 85


 80
      Jul   Aug   Sep   Oct   Nov   Dec   Jan    Feb    Mar   Apr    May   Jun   Jul
      08                                                                         09
Source : Bureau of Labor Statisitcs, U.S. Travel Association
But, “Money Available for Travel” Index
still weak




  Source: U.S. Travel Association/YPartnership travelhorizons™
Looking Forward Through Early 2010
Leading Travel Indicator heading up
 TE Leading Travel Indicator
 y-o-y % change, 6mma
                                     TE Travel Demand Index
  2
                                     TE Leading Travel Indicator
  0

  -2

  -4

  -6

  -8

 -10

 -12
       Jul   Oct        Jan    Apr         Jul         Oct         Jan
       08    08         09     09          09          09           10
  Source : Tourism Economics
But, obstacles to leisure travel remain
Reasons among U.S. adults with no leisure travel intentions between Aug 2009 and Jan 2010




    Source: U.S. Travel Association/Ypartnership‟s Travelhorizons™
Gas prices down, but consumers still wary of
price increases


5.0             $4.11
4.0                                    $3.80
3.0                                                $2.58
2.0
1.0
0.0
        Record High - 7/14/08         14-Sep-08   14-Sep-09




Source: AAA Daily Fuel Gauge Report
www.aaa.org
However, leisure travel intentions higher than
same point last year
                  Percent of U.S. adults intending to take leisure trip in next six months




               100
                80                     60.9%                                       63.1%
Percentage




                60
                40
                20
                 0
                                      Jul '08                                      Jul '09

               Equates to potential 5 million more U.S. adult leisure travelers


             Source: U.S. Travel Association and Ypartnership‟s Travelhorizons™
Marketing Implications:
Leisure travel intentions vary by generation
    Plan to take a leisure trip between August 2009 and January 2010




  Source: U.S. Travel Association/YPartnership „s Travelhorizons™
Intentions also vary by household income
      Plan to take a leisure trip between August 2009 and January 2010




  Source: U.S. Travel Association/Ypartnership‟s Travelhorizons™
As well as by region of residence
      Plan to take a leisure trip between August 2009 and January 2010




  Source: U.S. Travel Association/YPartnership „s Travelhorizons™
   Early signs leisure travelers willing to spend
   more…But still an issue
Changes in leisure travel behavior in next six months compared to same period in 2008




     Source: U.S. Travel Association/Ypartnership‟s Travelhorizons™
 Financial issues may be easing
 Factor affecting leisure travel plans


Financial Issue                              Apr „09              Jul „09    Change
High level of credit card debt                  56%                50%       6 points
Value of investment portfolio                    53                     47   6 points
Declining value of real estate                   52                     46   6 points
Market bailout                                   54                     48   6 points
Price of theme park/attractions                  52                     48   4 points
Volatility of stock market                       51                     48   3 points
Possible increases in monthly                    53                     50   3 points
rent
Price of lodging                                 43                     41   2 points
Job insecurity                                   53                     51   2 points
       Source: U.S. Travel Association/Ypartnership‟s Travelhorizons™
Meetings Under Assault
Business travel intentions down compared to
last year
                      Percent of U.S. adults intending to take business trip in next six months




               100
                80
Percentage




                60
                40                            23                                            19
                20
                  0
                                           Jul '08                                        Jul '09




             Source: U.S. Travel Association/Ypartnership‟s Travelhorizons™
Modest improvement in intentions for some
types of business travel
  Plan to take a business trip during the next six months




  Source: U.S. Travel Association/Ypartnership‟s Travelhorizons™
Some improvement in expected number of
business trips
Average number of business trips expected to be taken in next six months




 Source: U.S. Travel Association/YPartnership
 travelhorizons™
One-in-five expect to take fewer business trips in
the next six months




Source: U.S. Travel Association/Ypartnership‟s Travelhorizons™
Economy still the culprit
 Among business travel planners


• Reasons cited for expecting to take fewer
  business trips
   – Current economic conditions                                 40%
   – Company travel restrictions due to economy                  25%
   – Have made job change                                        14%
   – Reduction in number of people attending
     conferences/meetings                                        14%
   – Reduction in number of client-related trips                 12%
   – Using technology at alternative to travel                    5%
Source: U.S. Travel Association/Ypartnership‟s Travelhorizons™
Travel: Frivolous or Necessary?
Unnecessary                          Necessary
Dispensable              Core Business Function
Frivolous / Luxury                Commonplace
The Return on Investment of
U.S. Business Travel

Study conducted by Oxford Economics and Synovate with
 oversight by U.S. Travel Association.

Informed by 3 surveys: 500 U.S. business travelers (Synovate);
 300 U.S. corporate executives/business travel decision makers
 (Synovate); and 400 corporate executives/business travel decision
 makers (U.S. Travel/Kellogg School).

Econometric Analysis (Multi-factor productivity).
Business Travel Spending in U.S. in 2008
              Total = $246 Billion




                              Sources: U.S. Travel Association; Oxford Economics; TNS TravelsAmerica
Categories of Business Travel Spending




                            Sources: U.S. Travel Association; Oxford Economics; Synovate
Top Business Travel Spenders

 Business Services
  • $60 Billion

 Finance, Insurance and Real Estate
  • $48 Billion

 Manufacturing
  • $31 Billion

 Education and Health Care
  • $18 Billion
                              Sources: U.S. Travel Association; Oxford Economics; Synovate
Business Travel: Key Findings

$1 invested drives $12.50 (avg.) in increased
revenues, $3.80 in new profits

Suspending business travel for 2 years can cost the
average U.S. business 17% in profits. After reinstating
travel, revenue recovery can take up to 3 years.

Four other major benefits of business travel, meetings
and incentives identified.

                                    Sources: U.S. Travel Association; Oxford Economics; Synovate
Benefits of Business Travel,
Meetings and Incentives

                    Keep Existing
                     Customers




          Develop
                                    Convert New
          Human
                                     Prospects
          Capital




                     Build New
                    Relationships
                                      Sources: U.S. Travel Association; Oxford Economics; Synovate
Travel Snapshot for 2009
                                 Meetings &               Transient
                  Leisure                                                                 International
                    (Domestic)   Incentives               Business
                                    (Domestic)                 (Domestic)




  Demand           - 2.5%           - 8.9%                    - 4.2%                             - 8.9%




Expenditures       - 7.5%          - 11.5%                    - 8.1%                           - 12.9%


                   Travelers
                                 Has possibly          Slight uptick                       Surpass
Silver Lining   trading down,
                                  hit bottom           begins 2010                      record in 2013
                    not out
                                                                     Sources: U.S. Travel Association; Tourism Economics;
                                                 U.S. Department of Commerce-Office of Travel and Tourism Industries; TNS
                                                                                                            TravelsAmerica
U.S. travel industry will lose an estimated $68
billion in 2009
  2008 versus 2009 Expenditures




                          Total Direct Travel Spending
                          $772.9 Billion/$704.6 Billion

                                                International Travel
    Domestic Travel Spending
                                                Spending in the U.S.
   $662.4 Billion/$608.5 Billion
                                             $110.5 Billion/$96.1 Billion
What to Expect in 2010
(Assuming no swine flu pandemic in U.S)

• Slow improvement in the economy and the travel and tourism industry;

• Often smaller losses rather than positive gains;

• More reductions in air flights – return to immediate post-9/11 levels

• Increases in international visitation, but return to previous levels not
 likely to occur until 2013;

• Consumers still wary of spending money on large-ticket items;

• Rising unemployment dampening ability of consumers to support
 economic growth

• A “New Normal” in both leisure and business travel?
 Expected “gains” in 2010
Domestic      Domestic      International   Domestic     Int‟l
 Leisure      Business         Visitors     Spending   Spending
 Volume        Volume




               1.1%
 2.2%
                               3.0%                      3.1%

  Remember: Increases coming off
        a really bad year

                                             6.4%
The U.S. lodging industry – Nothing to write
home about




 Source: Smith Travel Research
   International Visitors to U.S. (2000-2010)
                 Arrivals in Millions




        2000:
 Unmatched
 record year
for overseas
      arrivals
     (26.0 m)




                                 Sources: U.S. Travel Association; Tourism Economics; U.S. Department of Commerce-Office of Travel and Tourism Industries;
                                                                                                          Secretaria de Turismo (Mexico); Statistics Canada
If swine flu reaches pandemic porkportions in
U.S. – All bets are off
2009 U.S. Travel Association Priorities


              •Addressing Industry Needs
               in a Struggling Economy


              •Effectively Working With
               the New Washington
Taking the Message to Washington
Travel Promotion Act
Website
DiscoverAmerica.com:
Title to U.S. Travel, Industry, Members
ValueGoes here

Visibility and   • Advisory Council
                 • U.S. Travel Board
    input


   Control       • Brand and content



                 •   Free domestic ads/offers in 2009
Free, low-cost   •   Free Travel Specialist Program
                 •
opportunities    •
                     Low-cost international marketing ops
                     Low-cost participation in domestic site
Swine Flu (H1N1) - A potential nightmare
for travel
Rapid Response: Swine Flu (H1N1)

  Comprehensive Action
Provided members with responsive
 communications plans

Issued media statements and
 appeared on mainstream outlets

Launched websites

Utilized relevant research and data

Coordinated with Administration and
 global health and tourism organizations
Swine Flu (H1N1): Next Steps

    Engage          • Work alongside federal partners
  Government        • Outreach to White House
   Agencies         • CDC, HHS, DHS, Commerce, Transportation


    Develop         • Establish industry task force
 Comprehensive      • Create communications plan
  Industry Plan     • Goal: Even better effort than spring „09


Align With Global   • World Health Organization
 Health Officials   • U.N. World Tourism Organization
The “Green” Traveler
Concern about global warming rising




     Source: U.S. Travel Association and Ypartnership, TravelhorizonsTM
79% of U.S. adults consider themselves to
be “environmentally conscious”




    Source: U.S. Travel Association and YPartnership‟s TravelHorizons ™
Level of environmental consciousness
increases with age




  Source: U.S. Travel Association and YPartnership‟s TravelHorizons ™
88% turn the lights off when leaving room




      Source: U.S. Travel Association and YPartnership‟s TravelHorizons ™
5% drive a hybrid car -- up from 2% in 2007




      Source: U.S. Travel Association and YPartnership‟s TravelHorizons ™
Major gains in “Green” Behaviors
2007 2009

60%        76%         Recycle trash
67%        75%         Regulate A/C when not at home
60%        70%         Turn off water when brushing teeth
59%        69%         Use more efficient CFL light bulbs
53%        61%         Keep showers short
22%        32%         Buy environmentally safe products
20%        27%         Walk/bike instead of drive when possible
 9%        19%         Car pool/ride share
Source: U.S. Travel Association and YPartnership‟s TravelHorizons ™
But purchase of carbon offsets lags




  Source: U.S. Travel Association and Ypartnership‟s TravelHorizons ™
Impressive gains in familiarity with
“Green Tourism” and “Carbon Footprint”
     Familiarity with Green Tourism                         Familiarity with Carbon Footprint




      Source: U.S. Travel Association and YPartnership‟s TravelHorizons ™
Those with highest awareness of “green”
concepts, most likely to be:
 • Men
 • Older
 • Well educated
 • Active travelers – especially upscale travelers




   Source: U.S. Travel Association and YPartnership‟s TravelHorizons ™
One-Third influenced by travel suppliers‟
environmental responsibility
                Factor important in selecting travel provider (Top 2 boxes)




   Source: U.S. Travel Association and YPartnership‟s TravelHorizons ™
Travel companies perceived to be
engaged in…

51% - Recycling
46% - Increasing energy efficiency
42% - Water conservation
41% - Reducing waste
39% - Using environmentally-friendly products
34% - Being committed to environmental
     responsibility
34% - Using renewable energy sources


  Source: U.S. Travel Association and YPartnership‟s TravelHorizons ™
Less than 10% will pay more for “Green” Travel but
1 in 4 “might”




    78% say willing to pay less than 10% more


    Source: U.S. Travel Association and Ypartnership‟s TravelHorizons ™
Americans positive about travel and
suppliers‟ environmental responsibility
 70% No need to stop traveling to protect environment
 58% Travel companies‟ programs could have positive effect
 55% Visiting destination makes me want to protect its
      environment
 48% Necessary to support environmentally-friendly travel,
      even in a downturn
 45% Travel fosters environmental responsibility
 34% Aware of more environmentally-friendly travel programs
 32% Travel Companies already engaged

   Source: U.S. Travel Association and YPartnership‟s TravelHorizons ™
But some hold less positive views

 63% There is too much “greenwashing” in travel marketing
 29% Easy to find out about travel suppliers‟ “green”
      programs

 22% Plan to travel less in future to help protect environment
 17% Feel travel is bad for the environment




 Source: U.S. Travel Association and YPartnership‟s TravelHorizons ™
Opposition to government intervention but
sizeable minority voices concerns
 60% Would oppose new environmental taxes or travel
      restrictions
 41% Feel it is their inherent right to travel, regardless of
      environmental impact

 But:
 34% Support proposed climate change legislation
 49% Believe we need more government regulation of
      business

    Source: U.S. Travel Association and YPartnership‟s TravelHorizons ™
Conclusions
• Core market for “green” travel ~10%

• Another 20% are environmentally oriented

• 40% now neutral but could be attracted

• Affluent, educated and higher-end travelers are the
  most sustainability-oriented
Conclusions
• Awareness of the issues and environmentally-
  responsible behaviors increasing

• Travelers are becoming more environmentally-
  conscious and are beginning to make decisions
  based on sustainability criteria

• While majority opposes government taxes and
  restrictions, and won‟t pay more to be “green”,
  sizeable minority feels more needs to be done
 The time to learn, collaborate, and act is now!
• Increase financial competitiveness - becoming sustainable
  can save you money

• Can also help you gain market share among sustainability-
  minded travelers

• Enhance the travel experience

• Prepare for legislation that is on the way

• Tourism has potential of increasing public awareness and
  appreciation of environmental and sustainability issues
TravelGreen.org
Case Studies on TravelGreen.org
 • Visionary Planning
 • Sustainable Operations and Education
 • LEED Certification for Existing Building
 • Dollar Savings and Empowering Staff
 • Green Meetings and Training Program
 • Lessons Learned
Tennessee is a leader
 Research Resources

                           U.S. Travel Outlook
                           Distributed monthly
                           to membership




  USTravelTracker.com
    Online subscription
service from U.S. Travel
                    and
    Tourism Economics
The New Normal




   October 26-28, 2009 - Little Rock, Arkansas
    Questions to be Addressed at 2009 MOF


•   When will the recovery arrive?
•   What will it look like?
•   Who will benefit?
•   And why?
•   How can you succeed in the “new normal”?
www.ustravel.org




     scook@ustravel.org

								
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