2005 Travel & Tourism Trends - Randall Travel Marketing
2005 Travel & Tourism Trends - Randall Travel Marketing
2005 Travel & Tourism Trends - Randall Travel Marketing
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<strong>2005</strong> <strong>Travel</strong> & <strong>Tourism</strong> <strong>Trends</strong>
<strong>2005</strong>The economy is coming back to2000 levels - - but it is acompletely different world**major behavior changewill affect our future
Changing <strong>Travel</strong> Industry2000• Best year ever2001• Economy tightens• Decrease in business,group, convention• War generation aging out• 9/112002• Consumer confidencedrops• Continued decline inbusiness, meetings, groups• Terrorism fears• New behavior patterns2003• War, SARS, terrorism• Continued economicconcerns2004• Rebuilding – but not at2000 levels until <strong>2005</strong><strong>2005</strong>• Change is good
LodgingHotels: STAR:• 2000 occupancy rates = 63.7%• 2001 occupancy rates = 60.3%• 2002 occupancy rates = 59.1%• 2003 occupancy rates = 59.2%• 2004 occupancy rates = 61.3%• <strong>2005</strong> projections = 63.0%
LodgingExpected Future:• Business travel goes back tohigher quality• Leisure strong and growing• If they ask for a kingsize…..• Chains: “Pleasant surprises”• Customers demand Quality:– Mattress (currently being redesigned)– Linens– Wireless– No waiting in line– elevators• More local flavor- Furnishings reflect local culture
AirlinesAirlines: (Air Transport Assoc)• 2000: + 5% passenger volume• 2001: - 8% passenger volume (from 2000)• 2002: - 10% passenger volume (from 2000)• 2003: - 8% passenger volume (from 2000)• 2004: - 1% passenger volume (from 2000)• Prices still WAY below 2000 levels
AirlinesExpected Future:• Struggle with slow returnto pre-2000• Slow increase in prices• More consolidation• Growth of the smalls• Shrinking hub systems• Government support• 1-2 airlines will drop
Cruise IndustryCruise Lines (CLIA):• strong recovery (5% in 2002) (10% in 2003)• Aggressive selling in 2004 = +11% domestic gain(8.9 million North American in 2004 over 8 millionin 2003)• 10.5 million worldwide in 2004• Expect 11 million worldwide to cruise in <strong>2005</strong>
Convention/MeetingU.S. Business/Convention <strong>Travel</strong> (domestic):• 2001: 153.1 Million (person trips)• 2002: 142.4 Million• 2003: 138.2 Million• 2004: 143.7 Million (not confirmed)• <strong>2005</strong>: 148.9 Million (forecast)
Convention/MeetingExpected Future:• Back to 2000 and growth• Aggressive competition• Reluctant attendees• Destination first / programsecond• All-in-one site – no driving
Domestic LeisureU.S. Leisure <strong>Travel</strong> (domestic person trips) (TIA):• 2001: 912.3 Million• 2002: 929.5 Million• 2003: 956.5 Million• 2004: 972.7 Million (forecast)• <strong>2005</strong>: 989.3 (forecast)Increase has never faltered
Leisure <strong>Tourism</strong>Increases in Leisure travel• “ Respite”• Vacations demanded• Growth in family travel• Growth in affinity travel• Attendance to attractions down
Expected Future:• Beaches & Lakes• Mountains• National/State Parks• Recreation• Winterskiing/snowmobile/snowboarding• Increase in adults travelingwithout children• Year round leisure visitsDomestic Leisure
Consumer Confidence Index• 144.7 January 2000• 115.7 January 2001• 97.8 January 2002• 78.8 January 2003• 103.4 January 2004• 102.4 March <strong>2005</strong>Americans are optimistic, but cautious.CEOs = subdued expectations for <strong>2005</strong>Consumers are more optimistic than CEOs
Business <strong>Travel</strong>Business travel will finallyreturn to 2000 levels in <strong>2005</strong>• 70% will spend about the same as 2004(Business <strong>Travel</strong> Coalition)• 45% of business travelers in managedprograms used video-conferencing orsomething instead of travel in 2004 (NBTA)• Typically 1/3 of lodging occupancy
Group TourGreat Potential• Designed for Baby Boomers or other agegroups (Dr. on board)• Freedom without the hassle• Cruise ship on land• Something you can’t t get any other way• Blue collar tours• Wireless on board
AttractionsChallenges• Decline in attendance tohistoric sites and lessanimated museums• Boring vs. engaging• Give me fun or else• Desire for less structure• ½ price ticket & then sellfood, beverage, retail
Gains & Losses• Eastern mountain attractionsdown in 2004• Western mountains erratic• Hawaii rebounding• Major business destinationcities (New York, Chicago,Atlanta down 10+%) since2000- finally returning
Gains & LossesLas Vegas up – very aggressive 37.4 millionvisitors in 2004 over 35.8 in 2000
Gains & Losses• Yellowstone down ininternational, up in domestic• 4% increase in total visitationto national parks in 2004 over2003 – but still below 2000• Blue Ridge Parkway 17.9million visitors = largest
Changing Behavior• Americans are tired yet optimistic– want “respite”• Increase in travelto visit friends and relatives• Family reunions are atan all time high
TOP Ten <strong>Trends</strong> <strong>2005</strong>1. 3% % growth in overalltravel & tourism revenues• We must learn the newbehavior patterns
TOP Ten <strong>Trends</strong> <strong>2005</strong>2. Sleep late, nap, and goto the spa
TOP Ten <strong>Trends</strong> <strong>2005</strong>3. “Bargain-Brained”customers• Who paid more?• Expedia / <strong>Travel</strong>ocity / Orbitz• Endless price shopping
TOP Ten <strong>Trends</strong> <strong>2005</strong>4. Continued last minute tripplanning & purchase• 64% leisure = 1 trip at last minute• 24% planned all their leisure tripsat last minute (TIA)• 52% business & 17% of leisure planwithin 2 weeks (Penn, Shoen, , and Berland)
TOP Ten <strong>Trends</strong> <strong>2005</strong>5. Cost-contained businesstravel (affects conventions too)• Continued tight restrictions ontravel budgets• Per diem paid to employee• Consolidating meetings
TOP Ten <strong>Trends</strong> <strong>2005</strong>6. Technology-dependent• Over 50% of business travelers useinternet for trip planning/purchase• 59% leisure currently use internet fortrip planning/purchase
TOP Ten <strong>Trends</strong> <strong>2005</strong>7. Safety, personal comfort andconvenience are primary travelconcerns• Safety• Less hassle / non-stress• Give me comfortable• Up to 40% of decline in lodgingoccupancy related to safety andconvenience(PricewaterhouseCoopers)
TOP Ten <strong>Trends</strong> <strong>2005</strong>8. Changing demographicsGen Group 2000 <strong>2005</strong> 2010 2020 2030 2040War Gen 80 85 90 95 100Silent Gen 65 70 75 85 95 105Baby Boom 47 53 58 68 78 88GenX 29 34 39 49 59 69Gen Y 8 13 18 28 38 48By 2010 ½ of all Americans will be over 40
9. Vacations:TOP Ten <strong>Trends</strong> <strong>2005</strong>- Quick/short (4-5 5 day)- PLUS Longer “sabbatical”vacations• 4-55 short trips per year on avg.• 2 weeks + But not every year• <strong>Travel</strong>er looking for products that simplifylife or offer escape and luxury (Source:MarketResearch.com)
TOP Ten <strong>Trends</strong> 200410. The definition of“vacation” has changed(Go/See/Do vs. Chill & Immerse)<strong>Travel</strong>ers looking to escape
Other <strong>Trends</strong>Growth in off-season travel:•Increase in winter vacations.•59% for at least 5 days.• 55% = U.S.• 13% = Caribbean• 7% = Asia• 5% = Europe(Source: National Geographic <strong>Travel</strong>er and Yahoo!<strong>Travel</strong>)
Other <strong>Trends</strong>• Growth in RV market(2% growth/year)Last minute planning• <strong>Travel</strong>ing with pets –catering to pets
Thriving in <strong>2005</strong>Research is the answer to growwith the new behavior patterns!• Research as a foundation• DMOs must know theircustomer!
How to in <strong>2005</strong>?Research• Who & why (age, origin, trippurpose, etc.) Look for changessince 2000• Who is NOT coming & why• How do they choose destination?• What source of info do they use?• Expenditures – by category
Market Mix by Loudoun AreaGeographic Segment and (%) ofTotal Lodging Room InventoryHighway 7EastLoudoun(49.6%)DullesAirportSterling(33.6%)Town ofLeesburg(13.4%)WesternLoudoun(1.8%)Town ofMiddleburg(1.6%)Market SegmentTotal Convention/Meeting/Group(Corp, Gov’t, Sports, SMERF, Ass.)82.3%42.9%15.9%0.0%13.5%Individual Corporate/Business7.7%28.7%49.1%0.0%2.4%Total Leisure(Tourists, Weddings, VFR,Overflow)8.6%17.1%34.2%100.0%84.1%Group Tour0.2%3.7%0.4%0.0%0.0%Other0.4%7.6%0.0%0.0%0.0%Golf or golf package0.8%0.0%0.4%0.0%0.0%
Total LCVA FundingSupport and IncomeCategoryFY03%FY02%FY01%Loudoun County Tax Revenue$ 1,547,50082.2%$ 1,158,98287.9%$ 928,34081.1%Town of Leesburg$ 54,0002.9%$ 50,0003.8%$ 50,0004.4%Town of Middleburg$ 5,000.3%$ 5,000.4%$ 10,000.9%LCVA Partnership$ 47,9312.5%$ 49,5493.8%$ 46,0654.0%Cooperative Advertising$ 92,9344.9%$ 43,9963.3%$ 86,5357.5%Interest/Miscellaneous Income$ 4,903.3%$ 10,789.8%$ 24,2092.1%*Prior Year Designated OperatingFunds$ 131,2276.9%Total Revenue$ 1,883,495100%$ 1,318,316100%$ 1,145,149100%
InquiriesFY03FY02FY01Phone6,3377,0117,046Outside Fulfillment/Advertising3,6516,9844,560Mail562765Website Inquiries416Total Inquiries10,46014,02211,671Leisure Advertising Expenditure$ 113,992$ 80,002n/aTraditional Cost Per Inquiry$ 10.90$ 5.71n/aUnique Website Visitor Sessions*63,42154,435n/aTotal Inquiries( including unique website visitor sessions)164,37078,34455,628Lead generating advertising expenditure**$ 385,632$ 335,449n/aNew Cost Per Inquiry$ 2.35$ 4.28n/aWalk-ins22,82835,82033,202
Lodging Market MixEconomic Impact from Leisure <strong>Travel</strong>ers21,874 / 1.53 nights per travel party = 14,297 parties14,297 parties x $307 per party spending = $4,389,097$4,389,097 x $.07 sales tax = $307,237 taxes$307,237Sales taxes generated by leisure visitors!
Bartlesville, OKAverage daily expenditures:20032001CategoryAmount% ofwholeAmount% ofwhole1. Lodging$113.8030.28%$81.2134.11%2. Shopping$104.7027.86%$70.8629.76%3. Food / meals$57.7115.36%$31.4013.19%4. Transportation$50.5113.44%$28.5311.98%5. Attractions/amusements$49.0113.04%$26.0710.95%Average Daily Expense$375.73100.00%$238.08100.00%
Research FindingsAverage daily expenses & taxes generated:LodgingShoppingAttractions/PlaceFood/MealsTransportationTotalsAmount$99.73$73.41$63.18$41.81$29.10$307.235%Lodging$4.99$4.997%Sales$6.98$5.14$4.42$2.93$2.04$21.51
Return on InvestmentAdvertising and <strong>Marketing</strong> Return on Investment55,456 inquiries at a53.37%** conversion rateyields29,597 travel parties who stayan average of 3.72** nightsyields110,100 nights at an averagereported daily expense of $291.17**yields$32,057,817 in direct economic impactfrom advertising generated inquiries
Return on InvestmentConvention and Meeting Sales Return onInvestment40,999* room nights occupied at an estimatedaverage stay of 2.25 nights per attendeeyields18,221 attendees at an averagereported trip expense of $1,206.25**yields$21,979,081 in direct economic impactfrom convention and meeting attendees
Day vs. OvernightCategoryLodgingFood / mealsShoppingTransportation/FuelAttractions / AmusementWineriesOvernightExpenditures$295.12$179.34$151.43$128.27$108.80$78.64Day tripExpenditures$0.00$67.55$132.39$19.24$40.94$144.09Totals$941.60$404.21Average Length of Stay3.31 nights1 day
Convention & Meetings• Customer perceptions of your strengths &weaknesses• What types of meetings are you successful inrecruiting? (type, geography, price,demographics)• Which meetings had the highest satisfaction?• Which meetings spent the most?• Where are other similar groups?
Critical ReviewDetermine very strategically whichmarket segments• you can target• that will really be satisfied• and will spend the most.
New <strong>Tourism</strong> EconomyOld research & advertisingparadigms have changed also…
New <strong>Tourism</strong> <strong>Marketing</strong>• Research as foundation• Website/technology• Measured ROI• Niche targeting• Geographic targeting• Don’t t assume traditional advertisingwill do the job
Make Them Say “yes”1. HOOK: Compelling attractors2. “Cruise ship on land”…”…..make iteasy to have a good time and makeme want to stay longer3. Offer they can’t t refuse (value)4. Know thy competition5. No stress
Summary• Significant changes since 2000• Strategic market segmentationapproach works best now• You need research and a vision• Know which market segments offeryou the greatest potential• Create and promote uniqueexperiences for leisure tourismsuccess