As we lead up to the industry’s largest and most important trade event, INBOUND REPORT offers its take on this year’s trends.
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The weak Euro will depress bookings in the key country markets (Germany, France, Italy and Spain) of the Eurozone: Our estimate is that bookings from the Eurozone nations will be off by two to four percent in 2016. Here’s why: Most of what the INBOUND REPORT has gleaned from its community of U.S. based tour operators/international distributors, subscribers and major trade shows we attended of others, as well as its own events, suggests that the free fall of the value of the euro vs. the U.S. dollar since the last ipw will finally have an impact on 2016 bookings.
At mid-May 2014, the euro was pegged at US $1.37. It then fell 23 percent (to US $1.06) as ITB took place in Berlin a little more than two months ago. By mid-May this year, it had floated upwards to $1.12—still down from its level of a year ago.
Click on this link for an up-to-date presentation of the euro’s trend line vs. the U.S. dollar over the past year: https://www.ecb.europa.eu/stats/exchange/eurofxref/html/eurofxref-graph-usd.en.html.
What, exactly, will the impact of a 10-to-20 percent year-over-year decline in the value of the euro vs. the dollar mean? Carol Rheem, vice president, research and analytics at Brand USA, told a March 12 meeting of the organization’s board of directors that, for every 10 percent decline in the value of a currency vs. the dollar, there is roughly a two percent decline in visitors, which suggests a two-to-four percent decline in visitor arrivals from markets in the Eurozone. “We do expect to see some impact on arrivals for the next year,” said Rheem, adding, “We are expecting lower arrivals.”
And during a panel discussion regarding the euro-dollar exchange rate and its impact on business at the recent NAJ RTO Summit in Manhattan, Uschi Brunner, director of groups and incentives for New World Travel and Janice Becker, managing director, Reis Tour & Travel-RTT Services–indicated that there was sense among receptive last year that Euro was and would soft against the dollar, and both companies began taking hedging actions.
For New World, which is a part of DerTour, the second largest travel company in Germany, it has meant diversifying into Scandinavia, Brazil, Australia … and “a little in the Middle East.” It has also meant, Brunner and Becker said, servicing smaller groups and relying more on CVBs to find new product. They are now asking hotel partners to maintain group rates at groups as low as five passengers.
DerTour, TUI and Kuoni-owned brands will not be impacted in summer 2015 for escorted or FIT as their ability to hedge may result in having the lower prices than those of OTA’s or smaller operators who did not hedge.
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The impact of ceaseless in-country promotions by Brand USA, a massive investment in a trio of new tourism attractions in Orlando by UK-based Merlin Entertainments, an explosion in the number of British tour operators attending ipw, along with the elimination of its costly Air Passenger Duty for British children who travel overseas, will result in increased business from the UK next year.
Orlando is already the number one destination for British travelers to the USA many of whom traditionally stay two weeks or longer . The number of tour operators coming to ipw is at an all time high (170 vs. 123 five years ago). Also, a group of travel agents is taking part in the second Mega Fam trip that covers destinations in 22 states.
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A huge increase in the number of tour operators from China may be enough to help push the double-digit annual percentage increases in passenger arrivals from the country to another year of record growth in arrivals. Malcolm Smith, the U.S. Travel Association’s senior vice president of business development and general manager of ipw told delegates to NAJ’s RTO Summit in Manhattan earlier this month that there was “an explosion” in the number of tour operators from China coming to ipw in Orlando—from 17 five years ago, when ipw was lat held in the destination, to 109 this year.
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A concerted push by Brand USA, U.S. suppliers and second- and third-tier destinations will succeed in convincing overseas visitors to go “beyond the gateways” and include smaller and lesser known cities and regions of the USA. One indication of this outreach is the 2015 Mega Fam 2 for the UK trade this month which is providing more exposure for destinations beyond the gateways. The fam trip for travel agents, which is being conducted in partnership with British Airways and American Airlines, will be visiting many second- and third-tier destinations. The Mega Fam has stops in 22 states, 12 of which have not previously been included in the Mega Fam itineraries. The challenge for these destinations will be convincing (and educating) hoteliers and attractions to offer tiered rates necessary to attract international wholesale interest.
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Watch for More niche markets as operators look for what’s new and hot. LGBT, MICE, “farm stayers” and adventure travelers, to name a few—and make their numbers a more significant component will be more apparent this year. For example, although a significant and important segment in the inbound leisure travel mix, LGBT travel first had a visible presence at the show with space in the concourse at the Las Vegas Convention Center during the 2013 ipw in Las Vegas. And now, gay-themed tour operators are an integral, and growing, part of the mix. As for the MICE segment, ipw general manager Malcolm Smith has pointed to an increase in the number of MICE operators. From France, for instance, where the number of buyers in the leisure market has remained stagnant, the number of MICE buyers is up to 14 (vs. none five years ago).
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The Ability to Register for the Global Entry Program at ipw is a welcome Service for Industry Road Warriors. Perhaps most interesting example will take place at the booth of U.S. Customs and Borders Protection (CBP) officers will be on hand Monday through Wednesday to conduct in-person enrollment interviews for CBP’s Global Entry Program. Global Entry allows expedited clearance for preapproved, low-risk travelers upon arrival in the United States. Participants may enter the U.S. using automated kiosks located at 42 U.S. airports, and 12 preclearance sites in Canada, Ireland, Abu Dhabi and Aruba. Those interested can get the process started by first going to http://www.cbp.gov/global-entry/about and enroll.
Crashing the San Francisco Travel party. If you haven’t received your invitation to the “partito di tutte le parti,” the late Tuesday night soiree at the Hilton Orlando hosted by the San Francisco Travel Association, it means that you did not make the cut for the most sought-after social function ticket at ipw. We’re not sure how they’re authenticating invitees this year, but there were unsubstantiated rumors that SF Travel team members would be standing by with cotten swabs for DNA testing this year. Read the INBOUND REPORT for our take on the event, along with (for the first time, due to our new format) any photos that are suitable for viewing.
EDITOR’S NOTE: Inbound readers are welcome to visit NAJ staff at www.THETOUROPERATOR.Com booth at IPW (booth 855, next to Disney). Also, watch for THE TOUR OPERATOR, our annual state-of-the industry magazine, which will be distributed with Monday’s ipw Daily.
