Outlook for Leisure Travel
however, are showing strengthening optimism. April
2012’s overall Traveler
Sentiment IndexTM, produced through
the quarterly TravelHorizonsTM
survey conducted by MMGY Global and the U.S. Travel Association,
stood at 93.5, representing not only a nearly ten point increase from
April 2011’s index of 83.9, but also marking its highest level since
April 2007 (96.2). All six components, comprising the overall
TSI, realized sizable gains over the past year with two key factors,
“affordability of travel” and “personal finances available for travel”
exhibiting the largest gains. While the April 2012 TSI
represents no change from February’s TSI of 93.6, the fact that
February’s increase was sustained in April, coupled with a near-record
high, bodes well for domestic travel during the next six
The survey also found that 64 percent of U.S. adults plan to take at
least one leisure trip between now and October, up three percentage
points from April 2011 and eight percentage points from April
2010. April’s leisure travel intentions are on par with both
April 2009 and pre-recession April 2007. Based on 241 million
U.S. adults 18 years of age and over, an estimated 154 million U.S.
adults expect to take at least one leisure trip between now and
October, the highest April level of potential domestic travelers on
record taking into account growth in the number of U.S.
adults. The outlook for travel during the upcoming summer and
early fall travel period is perhaps the most optimistic in years.
Also positive is a new analysis of online searches by Kayak.com showing that
U.S. travelers are planning more domestic trips this summer than in the
past. In contrast, searches for international destinations
plummeted. The growth in domestic travel may address a
surprising national condition: most American adults have not visited
some of the nation's best-known landmarks. For example, 72
percent of U.S. adults have never visited the Alamo; 65 percent have
yet to visit the Grand Canyon; 62 percent have never been to the Golden
Gate Bridge; and 57 percent have never visited the White
House, according to a survey of more than
2,000 adults commissioned by the website Hotwire and conducted by
There is reportedly also pent-up demand in the cruise market.
"When you look back to how robust things were in November and December,
we were all gearing up for a great 2012," according to Rick Sasso, president of MSC Cruises USA.
"There was a hiccup after January 13 [when the Costa Concordia was
wrecked in Italy], but the market returned quickly,” he said.
Cruise Lines International Association (CLIA) recently announced the launch of a new report, From Travel Agent to ‘Travel
Advisor’: Defining, Elevating and Promoting the Role of Travel Agents
for the Next Generation calling for a travel-industry
dialogue aimed at elevating the role of the travel agent industry,
a critical sales force for the entire travel and tourism industry.
Travel Growth Slows
ongoing uncertainty, the Global Business Travel Association
(GBTA) believes that business travel will reach its
pre-recession levels by 2012. Business travel spend is
forecasted to increase 4.6 percent this year on a slight (0.8 percent)
decline in person-trips. By comparison, spending last year
increased 7.2 percent to $251 billion, including $111.7 billion on
transient business travel, $107.7 billion on group business travel and
$31.6 billion on international outbound travel — while total
person-trip volume grew 1.8 percent to 445 million.
Although growth is expected to be strongest for transient business
travel, which grew 6.7 percent in 2011 and is predicted to grow another
3.7 percent in 2012, the outlook also is positive for group
travel. Group travel is expected to keep pace with transient
growth as long as no significant economic shocks take place.
Spending on group business trips in 2011 was up 7.2 percent over
2010. GBTA projects group travel spending will slow to
3.3 percent in 2012 as uncertainty in Europe and higher energy prices
continue to impact the overall economy.
GBTA notes that road warriors are accomplishing more per trip, making
more stops, staying away more nights per trip, and spending more on the
road. This is part of a long-term trend with GBTA reporting
that between 2000 and 2011, the volume of annual business trips
declined nearly 23 percent, while spending rose 3.3 percent.
These trends have also been repeatedly reported by the U.S. Travel
Association. Spending on international outbound trips by U.S.
business travelers has outpaced the overall business travel
market. It rose 8.5 percent in 2011 over the previous year,
but for 2012, GBTA foresees that growth rate slowing down to just three
Despite a continuing recovery in transient travel, group business
remains relatively anemic in terms of occupancy, ADR and RevPAR, according to Smith Travel Research
(STR). For luxury, upper-upscale and upper-tier independent
properties, year-over-year transient occupancy increased 4.5 percent in
March, while group occupancy rose just 2.1 percent. Transient
average daily rate grew four percent, while group ADR increased 2.3
percent. Based on key factors such as the reductions in both
the number of meetings and attendees, as well as tight budgets and
reduced extravagance, meetings continue to represent a buyer’s
market. But leading hotel industry analysts at STR and PKF
Hospitality Research, LLC expect the tide to turn starting later this
year. Some hotel chains are also reporting good results such
as Marriott that experienced an 11 percent increase in its meeting
business so far this year.
Meetings Under Scrunity Again
nascent recovery in the meetings sector, however, is now being
threatened once again by the latest high-profile scandal involving
government meetings. The after-effects of the U.S. General
Services Administration’s (GSA) mismanaged Western Region Conference
continue to ripple through the meetings industry. The GSA has
canceled 35 meetings this
year worth nearly $1 million.
Recently, GBTA postponed its National Travel Forum,
a meeting for government travel planners, because GSA employees now are
restricted from attending. The American Society of
Association Executives is collecting signatures in a grassroots effort to educate
lawmakers in the House and Senate as they work on bills aimed at
putting spending limits and other restrictions
on government conferences.
U.S. Travel has been speaking out against those arguing to investigate
a specific destination. “Any member of Congress who thinks
this issue is about a particular destination is missing the forest for
the trees,” said Roger Dow, president and CEO
of U.S. Travel Association. “Responsible and cost-effective
government travel is a must, no matter where it occurs.
Excessive government spending is wrong, no matter where it
occurs. Congress should consider nothing else beyond these
two principles when dealing with this issue—or they risk ostracizing
one group of hardworking Americans in favor of another,” he
said. U.S. Travel is working closely with lawmakers who are
considering legislation and additional regulations on federal travel to
ensure an appropriate and measured response, Dow said.
The U.S. Congress has voted to cut and freeze travel spending
by government agencies for five years and other oversight
measures. The measure would cap travel spending by government
agencies at 80 percent of their 2010 level through 2016 and other bills
and amendments also place new restrictions on this government travel.
Some travel experts predict the effect this time around will be
limited. Rossi Ralenkotter, president of the Las Vegas Convention and
Visitors Authority and chairman of the U.S. Travel Association, argues
that the business travel industry grew more united after the AIG
scandal and probably will continue to stress the importance of face-to-face
meetings. “We are better positioned now,” he
said. Mark Liberman, head of the Los Angeles Convention and
Visitors Bureau, agreed that the effect of the controversy should be
limited. “The business community has learned from past
experiences and this is an isolated incident,” he said.
International Travel Updates
biggest news in the international travel arena this past month was the
launch of the new Brand
unveiled at U.S. Travel’s International Pow Wow. Brand USA,
the public-private entity created two years ago and
charged with increasing our share of international visitors, is
mounting a $12.3 million media blitz via TV, the Web, billboards, print
advertising and social media which began May 1 in the U.K., Canada and
Japan. A second wave will include Brazil and South Korea,
with several other markets to follow. Research conducted for the campaign
found that depending on the market, 18 to 40 percent of those surveyed
were strongly predisposed not only to visit the U.S. but to recommend
it to their fellow citizens. Brand USA discovered that what
these people love about the U.S. is its diversity, and they're inspired
by America's endless possibilities. Subsequent to the
research, a slogan was developed: "Discover this land, like never
before." Rosanne Cash, daughter of Johnny Cash and an
accomplished artist in her own right, wrote a song that would fit the
theme and the campaign's goals.
“Our goal is nothing short of rekindling the world’s love affair with
the USA – the place, the spirit and the dream,” said Jim Evans, CEO of Brand USA.
“We want to spread America’s message of welcome around the world and
invite travelers to experience the limitless possibilities the United
States has to offer,” he said.
to the U.S. Department of Commerce’s Office of Travel and Tourism Industries
(OTTI), 4.2 million international visitors traveled to the
U.S. in February, a nine percent increase over February 2011.
The top inbound markets continued to be Canada and Mexico.
Visits from Canada increased eight percent while arrivals from Mexico
grew seven percent. All nine top inbound overseas regional
markets posted increases in visits in February 2012. For the
first two months of 2012, visitation (8.7 million) was up eight percent
compared to the same period in 2011.
|Top 10 Countries
(sort based on February 2012)
February 2012 vs. 2011
YTD February 2012 vs. 2011
Republic of China
(exludes Hong Kong)
Source: U.S. Department of Commerce's Office of Travel and Tourism Industries
expects four to five percent annual growth in inbound tourism to the
U.S. over the next five years and that 65.4 million international
travelers will visit the United States in 2012
alone. Tourists from all world regions are forecast
to grow over the five year period, ranging from a low for the Caribbean
(+9%) to a high for Asia (+49%), South America (+47%) and Africa
(+47%). All but three of the top-40 visitor origin
countries are forecast to grow from 2011 through 2016.
Countries with the largest total growth percentages are: China (+198
percent); Brazil (+70 percent); Argentina (+46 percent); Australia (+45
percent); Korea (+35 percent); and Venezuela (+35 percent).
The Commerce Department has also launched a new web-based
tool to provide the travel and tourism industry, as well as
foreign visitors, with information and statistics from the Departments
of Commerce, Homeland Security and State. In addition to
providing basic information like travel tips, the resource contains a
set of 15 regularly-updated graphs on visa wait times, international
arrivals processing times, and airline capacity in key
markets. This online travel resource follows President
Obama’s January 2012 executive order calling for the government to make
it easier for tourists to find basic information about visiting America.
Performance Better than Expected
to the International Air Transport Association,
global air traffic rose 7.6 percent in March compared to the same month
last year. Comparisons with March last year are affected by
events that depressed passenger demand in 2011, including the Arab
Spring, which disrupted travel in the Middle East and North Africa
beginning in February 2011 and the earthquake and tsunami in Japan in
March 2011 that impacted air travel across the Asia-Pacific
region. IATA estimates that the year-on-year rise in air
travel in March was about two percentage points higher than it would
otherwise have been in the absence of these events.
International air travel rose 9.6 percent in March compared to the
year-ago period, while domestic air travel grew at less than half the
rate (+4.5%). Airline industry confidence has improved
slightly over the past three months, according to IATA’s quarterly business confidence index.
The first quarter turned out to be rosier than expected for many U.S. airlines, with fare
increases offsetting higher jet fuel costs. Airline executives report that demand has
been strong and they expressed confidence for this summer.
According to Airlines for America (A4A),
domestic passenger enplanements rose 0.7 percent in March over
year-earlier levels and are up 2.1 percent for the year-to
date. International passenger enplanements rose 4.2 percent
in March and increased 2.2 percent year-to-date.
Airfares are likely to continue to rise through the summer and during
the months that follow. Summer fares for trips in the U.S.
are up three percent on average over last year and 18 percent compared
with 2010, according to Travelocity.
The increase is steeper for international trips, with the average
ticket costing 20 percent more than it did two years ago. The
good news here is that this will
tend to keep more Americans traveling at home.
Airlines have pushed through three fare increases so far in 2012,
following nine hikes in 2011 and three in 2010, according
to FareCompare.com. FareCompare’s CEO Rick Seaney predicts that airlines
will attempt three or four further fare increases before the summer
travel season begins, with some of them sticking.
In addition, fees will also continue to proliferate. It is
hard to predict what new fees will materialize, but Ryanair provides a
good example of what is possible. At the same time, airlines continue
to fight for the reduction in passenger taxes. According to A4A, taxes on air
travel jumped from five in 1972 to 17 this year. Those taxes
can raise the cost of a round-trip airline ticket by 20
percent. But more taxes may be coming. The Obama
Administration’s deficit reduction plan calls for
raising the passenger security fee of up to $10 per flight to $14.
Industry Expects Strong Summer
the U.S. lodging industry began its recovery in 2010, it was not until
last year that the improved prosperity was shared by nearly all hotels
in the country. In 2011, 80.5 percent of the properties that
participating in the PKF Hospitality Research, LLC
Trends in the Hotel Industry annual survey reported an increase in
total revenue, while nearly three-quarters (72.3 percent) of the
participants achieved growth in profits. On average,
participating hotels saw a 12.7 percent increase in profits in 2011 ,
according to R. Mark Woodworth, president of PKF-HR. Resort
hotels led the way, followed by full-service hotels. Suite
hotels lagged in profit growth.
The industry’s positive momentum continued in the
first of 2012 quarter against difficult year-over-year
comparisons. During the period from January to March, Smith
Travel Research (STR) reports that all key performance
metrics rose in year-over-year measurements. Hotel room
demand rose 4.1 percent, occupancy was up 3.8 percent, average daily
rate (ADR) increased 4.0 percent and revenue per available room
(RevPAR) posted a 7.9 percent gain. STR expects ADR growth to
continue at, or near, its current pace with some deceleration in
occupancy growth for the balance of 2012.
The U.S. hotel industry is expected to report strong performance
results in summer 2012, according to STR’s summer forecast. During
June, July and August, STR predicts demand to be up 2.1 percent,
occupancy to rise 1.8 percent, ADR to increase 3.9 percent and RevPAR
to increase 5.7 percent. The forecast predicts ADR this
summer will near the 2008 peak ADR of $107.74. The industry
is expected to surpass the RevPAR 2007 peak of $73.26.
Overall in 2012, STR predicts occupancy to rise 1.5 percent to 60.9
percent, ADR to be up four percent to $105.74 and RevPAR to increase
5.5 percent to $64.43.
Better performance has encouraged hotels to step up their
hiring. The number of Americans working at hotels, motels and
casino hotels rose 2.9 percent in February to 1.6 million from the same
month in 2010, outpacing a 2.7 percent increase for all employees,
according to the U.S. Department of Labor. A rise in leisure
and business travel is “creating employment opportunities all across
the country in the travel industry that is helping in the job recovery
and benefiting the economy,” said David Huether, senior vice president
of economics and research at the U.S. Travel Association.
About 7.6 million people or 5.7 percent of the U.S. workforce, held
tourism-related jobs in March.
Industry Continues Sustainability Efforts
the past few years, more
pressing issues such as health care reform, economic recovery and the
upcoming presidential election have eclipsed discussions about the
environment. Therefore, it is probably not surprising that
new results from the March 2012 Harris Poll continue to
show a decline in “green” attitudes and behaviors among U.S.
adults. The latest survey finds that many green behaviors,
including those capable of saving consumers money, continue to
decline. And perhaps more alarming, considerably fewer U.S.
adults now express concern for, and awareness of, environmental issues.
Despite this, the travel industry continues to make progress to become
more sustainable. Using data on 46,000 U.S. hotels provided
by Northstar Travel Media, and building energy data from the U.S.
Energy Information Administration, Brighter
Planet has applied its own lodging model to determine the
best and worst performing hotel chains when it comes to energy
efficiency and carbon footprints.
A Carbon Measurement Working Group
with representation from most of the leading hotel chains is currently
working to standardize the methodology and metrics used to calculate
and communicate carbon impact.
Sabre Holdings has just launched the Sabre Eco-Certified Hotel Program
that provides clear-and-easy access to sustainable properties,
including more than 4,700 hotels certified by globally-recognized
certification schemes. This builds upon Sabre-owned Travelocity’s Green
Meeting Professionals International has released a sustainability
report on its World Education Congress 2011, compiled using
the Global Reporting Initiative Event Organizer Sector Supplement
(EOSS). MPI helped develop the EOSS criteria, and
meeting professionals now can use the EOSS free of charge to measure
the sustainability of meetings of all
sizes by greenhouse gas emissions and waste, plus attendee travel, the
legacy of the event, and sustainability initiatives employed for the
- eMarketer expects U.S. retail
ecommerce sales to reach $224.2 billion this year, up 15 percent from
2011. To help marketers navigate this growth, eMarketer has
created a "roundup" of its most relevant recent coverage, including
eMarketer's most recent retail and ecommerce sales forecast through
2016 and updates on other trends affecting commerce and retail
trends are constantly evolving. Milestone Insights shares some of
the latest search trends and their impact on overall internet marketing
minute bookings are not a new phenomenon. What is new today
is that increasing numbers of travelers have the ability to search and
make a booking via a mobile device. In addition
location-based services, which allow marketers to target travelers with
relevant offers near their current location, are growing
rapidly. Recent research by EyeforTravel, provides
interesting statistics on and insights into this growing
spending on online travel is expected to reach nearly $120 billion this
year in the U.S., up a healthy 11 percent, according
to eMarketer. But compared to overall online retail
sales growth in online travel is slow, indicating maturity in the
market. The U.S. mobile travel market is growing more
quickly. eMarketer estimates 16 million
Americans will book travel via mobile this year, up from just over 12
million in 2011. By 2016, the number of mobile users booking
travel on their devices is expected to more than double to 36.7
million. And significantly more mobile users will research,
but not necessarily purchase, travel on their phones throughout the
forecast period: 37.8 million this year, rising to 74.3 million by
to a new Nielsen report, State
of the Hispanic Consumer: The Hispanic Market Imperative,
if the present U.S. economy substantially benefits from Hispanics, the
future U.S. economy will depend on Hispanics by virtue of demographic
change and the social and cultural shifts expected to accompany their
continued growth. Latinos have amassed significant buying
power ($1 trillion in 2010 and projected to grow 50% of $1.5 trillion
- On the
surface, very little appears monolithic about adult Millennials
(defined as those in the 18- to 29-year-old age group and also known as
Gen-Y). Yet, there are many generational ties that bind this
diverse group of young consumers and differentiate them from older
consumers. A new Packaged Facts report, Millennials in the
U.S., analyzes the
consumer attitudes and behavior of 18- to 29-year-olds, comparing them
to Gen-X consumers (those in the 30- to 44-year-old age group) and
consumers 45 years of age and older.
- Another free report by the Boston Consulting Group entitled The Millennial Consumer also provides useful insights into this new group of young adults that rivals the size of the Baby Boom generation.
young adults today are postponing marriage, delaying parenthood, and
moving back in with their parents. A new Census Bureau brief,
and Families, 2010 provides a detailed look at the
household and living characteristics of those 18
– 29 years of age.
that’s it for this month. While it is obvious that the travel
industry will continue to face challenges in the months ahead, a number
of indicators suggest an increased likelihood of better performance,
especially during the all-important summer season. Check out some of
the resources above to help you better understand some of the major
demographic and online travel trends that will be driving travel
behavior in the months to come.