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Outlook on U.S. Travel and Tourism - Cal Poly Pomona

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Outlook on U.S. Travel and Tourism

        Suzanne D. Cook, Ph.D.
        U.S. Travel Association
Suzanne‟s Top 10 Trends for 2010 & 2011




       Outlook Improves from
       “Awful” to “Ho Hum”
Trend #10…
You call this a recovery?
 Economic Trends…
 “Uncertainty” rules the day

• Recovery underway but has slowed. Gradual
  acceleration expected.
• Business conditions remain favorable
• Gains in employment starting to encourage
  spending, but unemployment remains high
• Housing market remains key problem
• Corporate and consumer uncertainty is slowing the
  recovery
• Oxford Economics forecasts growth of 2.6% this
  year and 2.5% in 2011.
Trend #9…
It’s the Consumer, Stupid!
Consumer Confidence Improves Slightly
 But, we consumers are still in a funk



        111.9




                                                        61.4


                                                               50.2

                                                 25.3




1985 = 100
Source: The Conference Board, October 26, 2010
  Traveler Sentiment IndexTM
  Reverses three quarter decline…just barely
          March 2007 = 100




Source: U.S. Travel Association/Ypartnership, travelhorizonsTM
  “Affordability of Travel” still positive, but…
  Down 16 points from October 2009
          March 2007 = 100




Source: U.S. Travel Association/Ypartnership, travelhorizonsTM
 Travel prices up 4.2% YTD
 Gas prices “only” 22% higher
      Percentage change through September 2010


                Does not include
                  various fees




                                                     Source: Energy Information
                                                     Administration




Source: U.S. Travel Association Travel Price Index
  “Money Available for Travel”
  Continues to be troublesome
          March 2007 = 100




Source: U.S. Travel Association/Ypartnership, travelhorizonsTM
  “Interest in Travel”
  First increase in four quarters, but 9 points below October
  2009
          March 2007 = 100




Source: U.S. Travel Association/Ypartnership, travelhorizonsTM
  “Time for Travel” somewhat seasonal
   On par with October 2009
         March 2007 = 100




Source: U.S. Travel Association/Ypartnership, travelhorizonsTM
Trend #8…
Travel finally getting off the bottom?
It‟s been a very rough ride…
Enjoy the recovery!
 Change in U.S. visitation 2009 vs. 2008…
 How the year ended or things to forget
   Domestic             Domestic
                                            Domestic           International       Total
    Leisure             Business




     - 2.4%
                                               - 3.4%
                                                                                   -3.4

                                                                   -5.3%
                           - 6.5%                                   -6.3% (Overseas)



Sources: U.S. Travel Association; Oxford Economics/Tourism Economics;
U.S. Department of Commerce-Office of Travel and Tourism Industries
 Visitation was down… but reduced spending
 really hurt, 2009 vs. 2008
   Domestic             Domestic
                                            Domestic         International*   Total*
    Leisure             Business




     - 7.3%
                                              - 7.9%
                                                                              - 8.8%

                          - 12.2%

*Excluding international airfares                                   - 14.4%
Sources: U.S. Travel Association; Oxford Economics/Tourism Economics;
U.S. Department of Commerce-Office of Travel and Tourism Industries
  New Forecasts:
  Expected “gains” in U.S. travel in 2010
 Domestic              Domestic             International           Domestic     International
  Leisure              Business                Visitors             Spending      Spending*
  Volume                Volume




   2.8%
  (-2.4%)
                        4.2%
                        (-6.5%)

                                                                          7.2%
                                                8.0%                  (-7.9%)
                                                                                     7.9%
*Excluding international airfares               (-5.3%)                            (-14.4%)
Note: Numbers is parentheses are 2009 data
Source: U.S. Travel Association and Tourism Economics; 2010 Projections
Trend #7…
Leisure travel – back to normal?
  Percentage of U.S. adults traveling for leisure
  on the decline
        Percent of U.S. adults taking a leisure trip in past 12 months




Source: U.S. Travel Association/Ypartnership, travelhorizonsTM
  But, leisure travel intentions for next six
  months up modestly
          Plan to take a leisure trip between November and April




Source: U.S. Travel Association/Ypartnership, travelhorizonsTM
  Opportunities exist to entice over 49 million
  “not sures” to take a leisure trip

                                  Not Sure
                                     21%
                                  49 Million
              No Plans to Travel
                     24%
                  56 Million




Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, October 2010
  Frequency of leisure travel plans unchanged
  Little change in past five quarters
    Leisure travel plans for next six months compared to last year at this time




Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, October 2010
  Average number of planned leisure trips
  stable




Source: U.S. Travel Association/Ypartnership, travelhorizonsTM
  Leisure travel behavior…
  More spending & strong drive market
 Changes in leisure travel behavior in next 6 months compared to same period in 2008 and 2009




Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, October 2010
 Leading Travel Indicator declines…
 Six month outlook “worrisome”
TE Leading Travel Indicator
y-o-y % change, 6mma
10


 5


 0


 -5

                                    TE Travel Demand Index
-10
                                    TE Leading Travel Indicator

-15
      Aug   Nov        Feb    May       Aug          Nov          Feb
      09    09          10     10       10           10            11
 Source : Tourism Economics
Most destinations report growth in domestic
visitors in 2010…different picture than 2009




Source: U.S. Travel Association, October 2010
And an even more positive picture for 2011…
None expecting declines




Source: U.S. Travel Association – Survey of 348states/cities, October 2010
             Attractions Industry Performance in 2009
                                                 • Segments that performed better
                                                   than average:
                                                    • Aquariums
                                                    • Zoos
                                                    • State/National Parks
               +0.1%                                • Water Parks, and
                                                    • Botanical Gardens
                 in 2009                         • Segments that performed below
                                                   average:
       Aggregate Attractions                        • On and Off Broadway Shows
             Industry                               • Science Centers
                                                    • Sporting Events, and
                                                    • Theme Parks

Source: Jerry Henry, Herschend Family Entertainment
     Projection for 2010—and Beyond

                                               • Mixed bag of results once
                                                again. Only this time, it is the
                                                  “destination attractions”
                                               that appear to be posting the
        +0.9%                                         largest increases while
                                           attractions in urban destinations
        in 2010
                                                appear to be trailing behind.
Aggregate Attractions                     • The diversity of the industry
Forecast
                                             prevents wholesale decreases
                                                   and likewise caps large
                                                                increases.
      Source: Jerry Henry, Herschend Family Entertainment
       Projection for 2011—and Beyond




• 2011 and beyond expected to provide slow and steady
  improvement (+1.5%). But much is riding on a return of
  consumer confidence and an increase in employment. True
  recovery will not begin until these two factors return to a
  more normal range.
                                                           30
 National Parks Outlook
• After a surge in visitors in 2009, slight retreat in 2010
   – But, Yellowstone set a new record; Yosemite and Glacier also
     saw increases
   – Lesser known parks doing better than iconic parks
   – Value-driven itineraries
   – Deepwater Horizon Oil Spill – negatively affected several parks

• 2011 expect 0.9% increase – greatest strength in National
  Capital, Intermountain and Northeast regions

• Implementation of Strategic Plan – key demonstration
  projects:
  – Discover our Shared Heritage Travel Itinerary Series
  – CW150 – Sesquicentennial of Civil war (4 year campaign)
 Source: National Park Service
 Civil War Sesquicentennial…
 Marketing opportunity
• 17 states have programs in place; 80 sites in NPS
  have primary focus on Civil War
• 31% of U.S. adults (72.2 million) are Civil War
  Enthusiasts
• Interest across all demographic sectors and regions
  of U.S.
• Civil War Enthusiasts have a higher interest in many
  other activities than travelers overall
• Excellent marketing opportunity to promote domestic
  and international visitation

Source: David Sheatsley, Jason Stienmetz and Dean Reeder; travelhorizons™ – U.S. travel
Association and Ypartnership
 Other nature-based
 tourism trends positive
• Most components of the recreation industry reported gains in
  2010; outlook for 2011 is optimistic.
• Many state parks saw increases this summer but some faced
  budget-related park closures.
• RV parks and campgrounds generally comparable with last year
• Ski industry – strong 2009-10 season (skier visits up 4.2% and
  spending up); even better 2010-11 season forecasted
• Snowmobile industry optimistic – show attendance up
• Purchases of expensive recreational items/adventures
  recovering unevenly from large declines.
• RV shipments up 44.8% in 2010; for 2011 expect another
  8.2% gain

Source: American Recreation Coalition, Recreation Vehicle Industry Association
Trend #6…
Business travel climbing by seat of its pants
   Percentage of U.S. adults taking business
   trips continues to fall
               Percent of U.S. adults taking a business trip in past 12 months

 45
                  40%                       39%
 40
 35
 30                                                                   29%

 25                                                                               23%
 20
 15
 10
   5
   0
                Oct '07                    Oct '08                   Oct '09     Oct '10


Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, October 2010
  Shares of business travel by type…
Percent of U.S. adults taking a business trip in past 12 months




                                            Oct 2009    Oct 2010
                  40              37
                                       34       33 33      32 32
                  35
                       29
                  30
     Percentage




                  25        23                                     22 22
                  20
                  15                                                         10 9
                  10
                   5
                   0
                       Total     Transient Co Meeting Conf/Conv Trade Show Incentive


Source: U.S. Travel Association/Ypartnership, travelhorizonsTM
  Average number of business trips taken…
  Transient business up, but the rest?
        * Percent of U.S. adults taking a business trip in past 12 months




Source: U.S. Travel Association/Ypartnership, travelhorizonsTM
  Convention & Trade Show Attendance…
  Title Goes 2014
  Looking to here as the new target
 Average attendance to U.S. convention centers

     400,000


     350,000


     300,000


     250,000


     200,000


     150,000


     100,000


      50,000


          0
               2004       2005   2006     2007   2008   2009   2010




Source: PriceWaterhouseCoopers
Exhibition and Events Trends…
Title Goes of “dreadful”
Coming offhere

• 10,000 exhibitions and trade events in U.S. each year
• 2008 and 2009 Experience “dreadful”!
• Q2 „10 CEIR Index : Overall -1.4%
• Both exhibit space and number of exhibiting companies
  down but attendance up (+4.5% )
• Modest recovery forecasted for Q4 ‟10
• Outperforming sectors include energy, (particularly
  “green”), healthcare, and technology
• Sectors performing most poorly include automobile,
  construction, manufacturing and food
Source: International Association of Exhibitions and Events
    A New Era: Meetings and Corporate Social
    Title Goes here
    Responsibility
•    “Using sustainability to strengthen my business while also having a positive impact
     on society”
•    McKinsey Global Survey - positive economic results from sustainability initiatives:
      – 53% report improved operational efficiency
      – 48% report increase in brand loyalty
      – 39% report gaining access to new markets
•    MPI Survey:
      – 80% report increased requests for CSR meeting components
      – 90% believe will grow even more in future
•    Skeptic/distrustful consumers
      – 74% skeptical of hotels environmental claims
      – 25% skeptical of all green claims
      – More than 40% look for third-party certification
•    Booming sector for certification and standards

    Source: Meeting Professionals International
  Business travel intentions…
  Stability reigns
               Plan to take a business trip between November 2010 and April 2011




Source: U.S. Travel Association/Ypartnership, travelhorizonsTM
  Frequency of business travel plans…
  No change in past five surveys
    Percent of U.S. business travelers‟ plans during November 2010 through April 2011




Source: U.S. Travel Association/Ypartnership, travelhorizonsTM
Trend #5…
Hotel Industry – positive signs
Hotel demand…
2010 gains outpacing 2009 declines




       Aug    Sep   Oct   Nov
                                Dec   Jan   Feb   Mar   Apr   May   Jun   Jul   Aug   Sep




Source: Smith Travel Research
Scales – Demand Percent Change
September YTD 2008, 2009, and 2010




                                                         2010 Smith Travel Research, Inc.



    Largest Demand recovery at upper end, esp. Upscale (trade-up)
US Regions – Demand Percent Change
September YTD 2008, 2009, and 2010




                                                        2010 Smith Travel Research, Inc.


                 New England & Mid Atlantic strongest
Revenue Per Available Room positive…
But a lot of ground to make up



       Aug   Sep    Oct   Nov Dec   Jan   Feb   Mar
                                                      Apr   May   Jun   Jul   Aug   Sep




Source: Smith Travel Research
% change in RevPAR through Sep 2010




                                 7.5% or more
                                 5.0% to 7.4%

                                 2.5% to 4.9%

                                  0% to 2.4%

                                  Decrease

 Source: Smith Travel Research
What we see in Q4 2010
Key Performance Indicator Outlook Scenario (% change vs. Prior Year)
Year-end 2010F

                  Hotel Industry Performance Scenarios

                                              2010
                               Low                             High
                                             Forecast
  YTD Aug                     Growth                          Growth

    2.3           Supply       2.4             2.2             2.1

    7.4         Demand         6.2             6.6             7.3

    5.0       Occupancy        3.8             4.4             5.2

    -1.0            ADR        -0.5            -0.1            0.4

    4.0         RevPAR         3.3             4.3             5.6
Total United States
Key Performance Indicator Outlook Scenario (% change vs. Prior Year)
2011F

                  Hotel Industry Performance Scenarios

                                              2011
                                Low                          High
                                            Forecast
                               Growth                       Growth

                   Supply       1.3           1.1            0.8

                 Demand         2.1           2.5            3.0

               Occupancy        0.8           1.4            2.2

                      ADR       3.4           3.9            4.4

                 RevPAR         4.2           5.3            6.6
Trend #4…
Air travel…believe it or not satisfaction is up
Transportation demand “unsettled”
Transportation Demand
y-o-y % change
15
            Domestic Passenger Enplanements
            Amtrak Ridership
10          Rural Arterial Vehicle Miles


 5


 0


 -5


-10
      Aug   Sep   Oct   Nov    Dec   Jan   Feb   Mar   Apr   May   Jun   Jul   Aug
       09                                                                      10
Source : ATA, Amtrak, FHA
International enplanements zooming and
domestic “less bad”
Air Passenger Enplanements
yoy % change
 15
            Domestic Passenger
            Enplanements
 10         International Passenger
            Enplanements

  5


  0


 -5


-10
      Aug   Sep   Oct   Nov   Dec   Jan   Feb   Mar   Apr   May   Jun   Jul   Aug
       09                                                                     10
 Source : ATA
Lately, a few tough years for air travel
                                   2007
                               Flying high!
                                                                                                                                  2010
                                                                2008
                                                                                                                      Putting it all back together
                                                        At the end of a barrel
               10.0%


                                                                                            2008 & 2009
                                                                                 Oh, yeah, it‟s the economy stupid!
                5.0%




                0.0%
     Yr/Yr %




                -5.0%




               -10.0%




               -15.0%
                    Jan 2007                      Jan 2008                           Jan 2009                         Jan 2010


                                                       Revenue Passenger Miles (System)

54       Source: Bureau of Transportation Statistics
“Capacity discipline”
Airlines begin to put
capacity back but
have not made up
for deep reductions
in „08 and „09




5   Source: Innovata SRS - Schedules Reference Service
Trend #3…
International Visitors…Welcome Back!
                            World Tourism Arrivals & Receipts
                                                                  (2002-2009)

                         Number of Travelers                                                     Traveler Receipts
                                         (millions)                                                      ($billions)




       Source: U.N. World Tourism Organization
       2009 estimates are preliminary subject to revision. All others are revised .

Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce                 57
                                  Top Origin Markets for
                            International Travelers to the U.S.
    Origin of Visitor                                                 2009p                        09 / 08            10/09 Jul. YTD
                                                                          (000s)                     (% change)              (% change)

    International Total *                                            54,958                              -5%                  12%
    1  Canada                                                          17,973                             -5%                 13%
    2  Mexico                                                          13,164                             -4%                 11%
       Overseas **                                                     23,756                             -6%                 12%
    3     United Kingdom                                                3,899                            -15%                 -3%
    4     Japan                                                         2,918                            -10%                 21%
    5     Germany                                                       1,687                             -5%                  1%
    6     France                                                        1,204                             -3%                  7%
    7     Brazil                                                          893                             16%                 40%
    8     Italy                                                           753                             -3%                 10%
    9     South Korea                                                     744                             -2%                 51%
    10    Australia                                                       724                              5%                 27%
    *      International travelers include all countries generating visitors to the U.S.
    **     Overseas includes all countries except Canada and Mexico.                                      Record year for travel to U.S.
Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce                                     58
                                                Short-Term Forecast
                                                    Inbound Travel to the U.S.

               Visitor                       Actual         Change                                  Change            Change
               Origin                         2009           09/08                    2010f          10/09      2011f  11/10
                                              (000s)            (%)                    (000s)            (%)    (000s)   (%)

      Grand Total                           54,958            -5%                   59,956               9%    63,374    6%
      North America                         31,202            -5%                   34,241           10%       36,150    6%
          Canada                            17,973            -5%                   19,760           10%       20,946    6%
          Mexico                            13,229            -3%                   14,480            9%       15,204    5%
      Overseas *          23,756                             -6%                    25,715            8%       27,223     6%
          Europe          11,550                            -10%                    11,658            1%       11,907     2%
          Asia             5,669                             -8%                     6,738           19%        7,381    10%
          South America    2,742                              7%                     3,180           16%        3,507    10%
          Caribbean        1,206                              5%                     1,264            5%        1,328     5%
          Oceania            872                              2%                     1,028           18%        1,139    11%
          Central America    758                             -2%                       770            2%          814     6%
          Middle East        666                             -2%                       752           13%          795     6%
          Africa             294                             -7%                       325           11%          353     8%
        •          Overseas includes all countries except Canada and Mexico.
        Sources:   OTTI; Statistics Canada; Banco de Mexico - October 2010 forecast

Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce                         59
             Long-Term Forecast – Top 10 Future Markets
                                                    Inbound Travel to the U.S.

           Visitor                           Actual         Change                                 Change            Change
           Origin                             2009           09/08                    2015f         15/09      Change 15/09
       (Ranked by 2015)                       (000s)            (%)                    (000s)            (%)    (000s)    (%)

              Grand Total                   54,958            -5%                   82,848               9%    27,889    51%

              1. Canada       17,973                         -5%                    26,432            8%        8,459     47%
              2. Mexico       13,229                         -4%                    19,742            8%        6,513     49%
              3. United Kingdom3,899                        -15%                     4,719           10%          819     21%
              4. Japan         2,918                        -10%                     4,285            9%        1,367     47%
              5. Brazil          893                         16%                     2,662           20%        1,769    198%
              6. China           525                          6%                     2,341           35%        1,816    346%
              7. Germany       1,687                         -5%                     2,273           12%          586     35%
              8. Korea           744                         -2%                     2,015           20%        1,271    176%
              9. France        1,204                         -3%                     1,566            8%          361     30%
              10. India          549                         -8%                     1,226           18%          677    123%


        Sources:   OTTI; Statistics Canada; Banco de Mexico - October 2010 forecast


Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce                          60
                               Corporation for Travel Promotion



            Al Weiss                 Daniel Halpern,             David Lim            Roy Yamaguchi        Lynda S. Zengerle         Mark Schwab
      President, Worldwide         President and CEO,      Chief Marketing Officer, Owner and Founder,     Partner, Steptoe &    Senior Vice President-
     Operations, Walt Disney      Jackmont Hospitality,     Amtrak, Washington,      Roy’s Restaurant,        Johnson LLP,      United Airlines, Chicago,
       Parks and Resorts,         Inc., Atlanta, Georgia            D.C.                California          Washington, D.C.             Illinois
        Orlando, Florida




        Caroline Beteta         Stephen Cloobeck               George Fertitta                 Tom Klein              Diane Shober
         President and          Chairman and CEO,               CEO, NYC &                  President, Sabre        Tourism Director,
        CEO, California          Diamond Resorts               Company, New                    Holdings,            State of Wyoming,
       Travel & Tourism          International, Las              York, N.Y                  Southlake, Texas         Cheyenne, Wyo.
       Commission, CA               Vegas, Nev.

Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce                                              61
 Trend #2…
 Doing more with less




Source: Rick Newman, 17 Ways Consumers are Changing, January 15, 2010
% Change in STO Budgets: Average
FY04/05 – FY09/10




 * Projected
 Source: U.S. Travel Association, Survey of U.S. State and Territory Tourism Office Budgets
In this travel environment…
“If you’re not at the table, you’re on the menu.”
 Brand building…
 Remember the good ol’ days when it was just
 TV, print and travel guides?




Source: Lynn Carpenter, California Travel and Tourism Commission
   Implications for the travel industry…
   First person to develop a successful social media
   ROI gets to retire
 • Opportunity to bring travel alive in new ways with video, sound,
   tools, interactivity
 • Ability to update in real time with integrated content management
 • Potential for customer data collection
 • Opportunity to close loop with travel transactions, direct links
 • New business models:
    – Paid vs. free content?
    – Travel advertising support?
    – Specific apps vs. comprehensive digital publications?
    – Costs to drive awareness and demand?

Source: Barb Newton, Sunset Publications
Trend #1…
2011 will be a better, but not a great year
Looking forward to 2011…
Still digging out of the hole?
Looking forward to 2011…
A long, slow climb
   Sustained, but slow growth expected in 2011
 Domestic              Domestic             International           Domestic     International
  Leisure              Business                Visitors             Spending      Spending*
  Volume                Volume




     1.6%
    (2.8%)               2.6%
                         (4.2%)
                                                 3.7%
                                                (8.0%)                  4.5%
                                                                        (7.2%)


                                                                                     10.0%
*Excluding international airfares
Sources: U.S. Travel Association; Oxford Economics/Tourism Economics;               (7.9%)
U.S. Department of Commerce-Office of Travel and Tourism Industries
 Good News:
 Travel spending on the rebound
          Billions of Dollars




Source: U.S. Travel Association and Tourism Economics
 What to expect in 2010 and 2011
• 2010 better than 2009; growth will slow in 2011 but will
  be sustained
• Corporate/consumer anxiety and conservatism-
  reluctance to add jobs and spend money
• Domestic travel up modestly – business better than
  leisure
• High unemployment dampening consumers’ willingness
  to spend - leisure travel’s growth will be constrained
• Nascent recovery in international visitation generating
  strong growth in 2010; also expected to slow in 2011
• Top down recovery for lodging industry; rates
  strengthen
• Welcomed improvement, but don’t confuse with return
  to “normal”
2011 – Above water?
Suzanne Cook, Ph.D.
  Senior Advisor
scook@ustravel.org
 www.USTravel.org

				
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