What Happened? Traffic Count from Key European, Other Markets, Plummeted in First Quarter of This Year
Ever since last November, when UK operators at the World Travel Market told us of sluggish booking activity, and through last winter and into early March at ITB in Berlin when we heard more reports of flat business growth in Germany as well as a slowdown in other European markets, we’ve waited for some sort of statistical corroboration of what the trade was telling us.
It came last week, in a torrent of red ink—the font color that the U.S. National Travel and Tourism Office (NTTO) uses to record a decline from one measuring period to another—that was spread throughout NTTO’s first report on international arrivals for the First Quarter of 2015. (NTTO has been hampered in providing monthly and quarterly numbers in more timely fashion by the behind-schedule release of data collected by the U.S. Department of Homeland Security.) More than half the Top 15 overseas inbound source markets experienced year-on-year decreases in arrivals to the United States for the First Quarter of 2015, while six markets experience a year-on-year decline for the month of March.
Notable among the numbers were those indicating a drop-off-the-cliff decline in arrivals from France and the Netherlands for both the First Quarter and for March 2015. It is challenging to find a single thesis that explains the decline except to suggest that the combination of a stronger dollar and a weaker euro (see rest of article below the tables) help to do so.
Following are tables that present the numbers for the USA’s top overseas markets for both Q1 and the month of March 2015.
Top 15 Overseas Source Markets
First Quarter Arrivals
2015 vs. 2104
| Country/Market | Arrivals | Arrivals | Change |
|---|---|---|---|
| First Quarter 2015 | First Quarter 2014 | 2015 vs. 2014 | |
| 1. UK | 705,942 | 731,927 | -3.40% |
| 2. Japan | 843,005 | 901,322 | -6.50% |
| 3. Brazil | 574,043 | 531,859 | 7.90% |
| 4. China† | 561,916 | 472,243 | 19.00% |
| 5. Germany | 356,071 | 354,149 | 0.50% |
| 6. France | 254,764 | 300,574 | -15.20% |
| 7. South Korea | 373,847 | 321,769 | 16.20% |
| 8. Australia | 228,755 | 235,590 | -2.90% |
| 9. India | 196,818 | 166,070 | 18.50% |
| 10. Italy | 143,203 | 162,751 | -11.90% |
| 11. Colombia | 168,513 | 146,425 | 15.10% |
| 12. Spain | 126,972 | 116,341 | 9.10% |
| 13. Argentina | 175,755 | 188,918 | -7.00% |
| 14. Venezuela | 120,817 | 150,998 | -20.00% |
| 15. Netherlands | 91,784 | 107,552 | -14.70% |
† Does not include Hong Kong
Source: U.S. Department of Commerce, International Trade Administration, National Travel & Tourism Office
Top 15 Overseas Source Markets
March 2015 Arrivals vs. March 2014 Arrivals
| Country/Market | Arrivals | Arrivals | Change |
|---|---|---|---|
| Mar-15 | Mar-14 | March 15 vs. March 14 | |
| 1. UK | 296,450 | 290,774 | 2.00% |
| 2. Japan | 320,670 | 355,041 | -9.70% |
| 3. Brazil | 156,026 | 164,861 | -5.40% |
| 4. China† | 149,039 | 125,448 | 18.80% |
| 5. Germany | 161,385 | 151,690 | 6.40% |
| 6. France | 87,510 | 120,214 | -27.20% |
| 7. South Korea | 106,441 | 95,627 | 11.30% |
| 8. Australia | 75,449 | 78,288 | -3.60% |
| 9. India | 67,496 | 59,343 | 13.70% |
| 10. Italy | 52,613 | 62,931 | -16.40% |
| 11. Colombia | 68,439 | 51,529 | 32.80% |
| 12. Spain | 58,106 | 46,457 | 25.10% |
| 13. Argentina | 62,774 | 50,923 | 23.30% |
| 14. Venezuela | 49,868 | 42,108 | 18.40% |
| 15. Netherlands | 31,962 | 41,445 | -22.90% |
† Does not include Hong Kong
Source: U.S. Department of Commerce, International Trade Administration, National Travel & Tourism Office
One Possible Explanation: There seems to be a strong correlation between the decline of the euro (and other currencies, for that matter) against the U.S. dollar during the booking window for First Quarter and March 2015 bookings—the six month period from mid July-2014 to mid-January 2015, which takes in both traditional advance booking windows as well as late (60 days or less before a trip) booking. During the six months from mid-July 2014 to mid January 2015, the euro plummeted in value by 17 percent.
| Changes in Selected International Exchange Rates During July 15, 2014-January 15, 2015 Booking Cycle | |||
|---|---|---|---|
| 15-Jul-14 | 15-Jan-15 | %Chg | |
| Euro | $1.36 | $1.16 | 14.70% |
| British Pound | $1.71 | $1.52 | 11.00% |
| Australian dollar | $0.94 | $1.82 | 13.00% |
| Brazilian Real | $0.45 | $0.38 | 16.10% |
| Japanese Yen | $0.01 | $0.01 | 13.20% |
However, the Chinese yuan and South Korean won remained at the same level against the dollar for the same period. Not surprisingly, arrivals from both China and South Korea.
How Have Receptives Been Impacted: While the Inbound Report and other analysts try to distinguish between and causation, we were able to see how the NTTO data, which is based on survey data, squared with the actual impact on the activity of one receptive tour operator—Tourico Holidays, one of the largest travel businesses in the United States. Uri Argov, Tourico’s founder and CEO, shared relevant data with the Inbound Report.
We learned that the percentage change in Tourico’s business volume in some top overseas source markets (the top eight are listed below) year-over-year differs in some respects from the percentage point changes in the NTTO arrivals data for the same markets, but also seems to confirm the notion that the strong U.S. dollar has indeed had an impact on markets where the exchange rate has favored the dollar.
| Country/Market | Year-on-Year Change (%) | |
|---|---|---|
| UK | -6.35% | |
| Japan | 14.03% | |
| Brazil | -23.04% | |
| China | 22.78% | |
| Germany | -16.55% | |
| France | 7.43% | |
| South Korea | 1.01% | |
| Australia | -20.81% | |
Source: Tourico Holidays
For another account of the actual impact on U.S.-based receptive tour operators, we turned to Stephan Forget, president and owner of San Francisco-based Go West Tours, which has a strong presence in France and French-speaking markets (it has sales offices in both Paris and Montreal). Forget told us that he found the NTTO figures on arrivals from France “interesting,” but said that his company had not experienced such a decline. In fact, overall, Go West Tours’ overall business is up 14 percent, while market from France is flat compared to last year—for both leisure and MICE segments.
Forget suggested that it will be more interesting to see if the trends suggested by the NTTO arrivals data continues beyond the first quarter of 2014. He also pointed out that the first quarter is not a very significant business period for Go West Tours, accounting for just nine percent of its annual revenue.
Don’t Expect the German Market to Expand Dramatically—Possibly Not in Our Lifetime
It’s not all about the strong dollar vs. the weak euro. The latest monthly report from GfK, the Nuernberg-based research organization that surveys 1,200 travel agencies in Germany on a regular basis, contained some more news on business activity that, while not discouraging, is not encouraging, either. Worse, when one steps back to put the current, sluggish news, in a broader context, the outlook for any meaningful growth in the number of visitors from Germany to the U.S. is gray for as far as the statistical horizon stretches: In its most recent long-term forecast (through 2020), the U.S. National Travel and Tourism Office (NTTO) projects that inbound traffic from German will remain at about the same in 2015 as it was in 2014. And then it won’t increase more than 2 percent in any year between now and 2020.
But beyond that, there are factors—not the kind that NTTO configures into its forecast—suggesting that the long term outlook is even less encouraging: Specifically, Germany is already the oldest country in Europe and has little chance of becoming younger in the near term, as it now has the lowest birth rate of any major nation in the world. That means fewer workers to replace the German workers now in their prime who will grow older, and then fewer people to replace those now in the prime travel-age demographic who will grow out of it.
First, the latest snapshot: The latest news is that overall sales revenues for German travel agents declined by 3.1 percent in August, following an overall decline of one percent in July. Also, there was no last-minute “sales boom” this year as there was in 2014. Revenues from late sales of summer holidays fell by as much as 8.3 percent last month, said GfK.
Second, the long view: Information that has been released from different sources over the past year, when taken as a whole, comprises the long-term bad news. A study published by the German auditing firm BDO with the Hamburg Institute of International Economics (HWWI) says Germany’s birth rate has slumped to the lowest in the world. It has dropped below Japan to have not just the lowest birth rate across Europe but also globally, according to the report. In Germany, an average of 8.2 children were born per 1,000 inhabitants over the past five years, according to the study. It said Japan saw 8.4 children born per 1,000 inhabitants over the same time period.
Right now, the median age—half the population of this nation of 81 million people is older than the median and half is younger—is 46. Of all the nations in the world, only Monaco (population, 36,371 in 2011) has a higher median age (51). Here’s how the German population breaks out into age categories.
Breakdown of Population of Germany, USA, by Age Group
| Age Group | Germany | USA* |
|---|---|---|
| 0-14 years | 13% | 20.10% |
| 15-24 years | 10.60% | 13.40% |
| 25-54 years | 41.70% | 40.60% |
| 55-64 years | 13.60% | 12.50% |
| 65 years and older | 21.10% | 14.40% |
Arrivals from Germany
2005-2020
(000s)
| Year | Arrivals | % Change over Previous Year |
|---|---|---|
| 2005 | 1,416 | 7% |
| 2006 | 1,386 | -2% |
| 2007 | 1,524 | 10% |
| 2008 | 1,782 | 17% |
| 2009 | 1,687 | -5% |
| 2010 | 1,726 | 2% |
| 2011 | 1,824 | 6% |
| 2012 | 1,876 | 3% |
| 2013 | 1,916 | 2% |
| 2014 | 1,969 | 3% |
| 2015? | 1,989 | 0% |
| 2016? | 2,008 | 2% |
| 2017? | 2,048 | 2% |
| 2018? | 2,089 | 2% |
| 2019? | 2,131 | 2% |
| 2020? | 2,173 | 2% |
Source: U.S. Department of Commerce, International Trade Administration, National Travel and Tourism Office
ᶠ Forecast
Near-Term Outlook for Japan “is Dim,” Says Latest JATA Report
Not mincing any words in the latest report based on the results of its quarterly survey of the Japanese travel trade that was released late last week, the Japan Association of Travel Agents (JATA) said that “despite the recovery trend seen in the (last) quarter, the results are dim.”
Using its Diffusion Index (DI)† measurement, JATA’s results indicates the outlook for Hawaii and the USA/Canada are less optimistic than they were in the previous quarter and down 15 percent from what it was a year ago. And it is down another three percent for the next quarter (October through December). The survey results indicated minimal optimism in the demand for China and Europe. Meanwhile, the overall outlook for the final quarter of 2015 was expected to improve over the current quarter, yet remain lower than it was last year.
Trends in Overseas Travel Demand
(by Destinations)
| Destination | 1 Year Ago | 9 Months Ago | 6 Months Ago | 3 Months Ago | Current 3 mons | Next 3 months | |
|---|---|---|---|---|---|---|---|
| July-Sept. 2014 | Oct-Dec 14 | Jan-Mar 15 | Apr-Jun 15 | Jul-Sep 15 | Oct-Dec 15 | ||
| Hawaii | -6 | -10 | -11 | -9 | -6 | -9 | |
| USA/Canada | -26 | -34 | -31 | -31 | -30 | -31 | |
| Europe | -11 | -30 | -39 | -41 | -40 | -38 | |
| Oceania | -45 | -45 | -39 | -43 | -47 | -40 | |
| Micronesia | -32 | -27 | -31 | -33 | -37 | -38 | |
| China | -81 | -75 | -73 | -64 | -62 | -61 | |
| Asia | -17 | -13 | -13 | -5 | -20 | -21 | |
| S. Korea | -79 | -73 | -72 | -66 | -96 | -74 | |
| Overseas overall | -21 | -27 | -38 | -36 | -38 | -33 |
Trends in Overseas Travel Demand
(by Market Segment)
| Destination | 1 Year Ago | 9 Months Ago | 6 Months Ago | 3 Months Ago | Current 3 mos. | Next 3 months |
|---|---|---|---|---|---|---|
| July-Sept. 2014 | Oct-Dec 14 | Jan-Mar 15 | Apr-Jun 15 | Jul-Sep 15 | Oct-Dec 15 | |
| Honeymoon | -37 | -49 | -37 | -41 | -38 | -34 |
| Family | -24 | -44 | -44 | -45 | -41 | -43 |
| Female Office | -39 | -47 | -46 | -47 | -50 | -49 |
| Worker | ||||||
| Student | -52 | -56 | -49 | -59 | -62 | -64 |
| Senior* | -9 | -17 | -23 | -25 | -31 | -22 |
| Incentive** | -28 | -32 | -39 | -31 | -31 | -27 |
| Business-Technical | -9 | -9 | -23 | -14 | -15 | -15 |
* Senior: Customers aged 60 or older
** Incentive: Travel offered as an incentive to business and organization employees
SOURCE: Japan Association of Travel Agents
†A Note on the Methodology and the DI (Diffusion Index): The JATA Survey of Travel Market Trends is designed to grasp trends in the travel market based on responses to questions on current conditions and those anticipated over the next three months. The survey asks participating companies to rate their sales results for each destination and customer segment by choosing from three categories: “good,” “average,” and “poor.” For items outside their business scope, respondents select “do not handle.” Each share of “good,” “average,” and “poor” is then divided respectively by the denominator, which is equal to the total number of responses minus the “do not handle” (including “no reply”) responses. Finally, each share is processed into the Diffusion Index (DI) by subtracting the percentage of “poor” from the percentage of “good.” The highest possible index figure is +100, and the lowest is -100. Survey period—Aug. 6-27, 2015; Registered companies—602; Responding companies—327; Response rate—54.3 percent.
What’s New In International Air Service this Month
| Carrier | From | To | Date | Comments/Aircraft/ |
|---|---|---|---|---|
| Frequency | ||||
| American Airlines | Tel Aviv, Israel | Philadelphia, PA | 8/20/2015 | Cancels service |
| Norwegian | Copenhagen, Denmark | Boston, MA | 5/12/2016 | Boeing 788; one flight weekly |
| Norwegian | London Gatwick | Boston, MA | 5/13/2016 | Boeing 788; 4 times weekly |
| Norwegian | Oslo, Norway | Boston, MA | 5/13/2016 | Boeing 788; 2 times weekly |
| Philippine Airlines | Cebu, Philippines | Los Angeles, CA | 3/15/2016 | Airbus A340-300; 3 times weekly |
New and Interesting Product
Billie Holiday to Headline Tours at the Apollo Theatre—via Hologram: The Apollo Theatre in New York City’s historic Harlem community—the Apollo attracts some 1.3 million visitors a year—is about to offer a first with the impending return to the entertainment venue of the legendary Billie Holiday (1915–1959), the jazz musician, singer and songwriter who has inspired both films and books about her career. Holiday will return in the form of a hologram made by Beverly Hills-based Hologram USA, the same firm that produced a hologram of Tupac Shakur (1971-1996), the late rap artist, for the 2012 Coachella Music Festival in California. Though a firm date hasn’t been set for the launch of the hologram, it is due to be available for viewing during the Apollo’s daytime tours. “Billie is going to be able to talk about the history of the Apollo,” said theatre president Jonelle Procope, told the New York Tines arts blog. “She can take questions from the audience in an interesting way. She can sing some songs.” For more information, visit: www.apollotheater.org/programs/tours, or call Billy Mitchell, tour director, at 212.531.5337.
Erotic Objets d’Art Featured at Miami Museum: Curators of the World Erotic Art Museum in Miami Beach have been going through additional items left behind by Naomi Wilzig, the attraction’s founder who died earlier and whose collection provided the basis for the displays and exhibits in the facility, which is located in the city’s Art Deco District. Already in the museum’s inventory are 4,000 items, including statues, paintings and photographs that cover eroticism in Greek mythology, Bible stories, Oriental and South American cultures, and even such fetishes as bestiality and sadomasochism. According to all accounts, Wilzig—she was 80 years old when she died last April—was a conservative person who nonetheless felt it important to “rescue from extinction” the articles in her collection. The exhibition is divided into 20 sections that trace or outline expressions of eroticism in different cultures down through the ages, divided by themes. Noteworthy among the items is a giant golden sculpture of an erect penis. For more information, visit: www.weam.com, or call 305.532.9336.
In NYC, “The Ride” Begets “The Tour.” Spurred on by the success of The Ride—it takes place in a specially equipped tour bus in which passengers are seated theater-style and look out one side of the vehicle as it travels 40 blocks in Manhattan, stopping so patrons can see 10 street acts along the way—the company behind the ride (The Ride LLC) has launched TheTour, a 90-minute ride through Manhattan during which passengers see video clips and hear music specific to what they are viewing, such as a video of The New York Philharmonic Orchestra as the bus passes Lincoln Center. The Tour’s itinerary includes famous New York neighborhoods and landmarks such as Times Square, Columbus Circle, Lincoln Center, Central Park, Fifth Avenue, Rockefeller Center, Radio City Music Hall, the Garment District, Empire State Building, Madison Avenue, New York Public Library, Bryant Park, and more. The Tour retails for $45 for adults and $35 for children. For group rate information, visit:
http://thetournyc.com/groups/leisure/
Rebuilding of South Street Seaport District Continues—Famous Chef Signs on to Operate Restaurant: Howard Hughes Corp. has announced that worldwide famous French chef Jean-Georges Vongerichten has been signed to open a new restaurant that will be a major anchor in the new South Street Seaport complex in New York City—an area that was obliterated in late October 2012 by Hurricane Sandy. Vongerichten, a native of Alsace who operates restaurants in La Vegas, London, Paris, Shanghai and the eponymous Jean Georges in Manhattan, and his business partner, Phil Suarez, have signed a lease/partnership contract with Hughes to launch two major Seaport projects—a 40,000-square-foot, seafood-themed marketplace inside the Tin Building and a 10,000-square-foot restaurant in a rebuilt Pier 17.
The Seaport marketplace will not be ethnically focused like French-themed Le District or Italian-inspired Eataly, but simply built around seafood. Retail counters will be mixed with communal tables and noshing counters for “chowders, raw bars, sushi, shrimp,” Vongerichten said. The Pier 17 restaurant, on the second floor, will include a 2,500-square-foot al fresco patio facing the Brooklyn Bridge. Pier 17 is a centerpiece of Hughes’ $1.5 billion master plan for the Seaport, which is also to include a marina, a widened esplanade, shops, arts studios, a revitalized Seaport Museum, housing, as well as a condo tower that has created some controversy. For more information, visit:
http://www.southstreetseaport.com/, or call 212.732.8257.
UK Bytes
Despite a Q1 That’s in the Red, 2015 Looks OK for UK: The latest monthly report from the UK Office for National Statistics (ONS) corroborates the First Quarter 2015 arrivals report issue last week by the U.S. National Travel and Tourism Office (NTTO). That is, the ONS data show that departures to North America (the U.S. is the dominant market) fell by 2.3 percent, while NTTO data indicate a slightly larger year-on-year decline in the First Quarter of 3.4 percent.
However, departures for the next four months showed enough of an increase that the year-to-date (through July) figure is 4.3 percent greater than it was for the first seven months of the year in 2014. Further easing the impact of the Q1 decline is the fact that the First Quarter comprises the smallest quarterly volume for departures of the four quarters.
UK Departures for North America
January-July
2014 vs. 2015
(000s)
| Month | 2014 | 2015 | Change |
|---|---|---|---|
| January | 238 | 236 | 0% |
| February | 155 | 191 | 23% |
| March | 226 | 178 | -21% |
| April | 323 | 290 | -10% |
| May | 289 | 350 | 24% |
| June | 330 | 340 | 3% |
| July | 293 | 350 | 16% |
| Year-to-date total | 1,854 | 1,935 | 4.30% |
Source: UK Office for National Statistics (ONC)
For the Same Price, Reed Offers a Three-Day WTM instead of a Four-Day WTM: Reed Travel Exhibitions has announced that, beginning next year, delegates to its World Travel Market in London will be able to pay the same prices it charges buyers, exhibitors and others to attend the event as it is charging this year. And, in return, it will reduce the event from a four-day show to a three day show.
This year’s WTM takes place on Nov. 2, 3, 4 and 5. The 2016 WTM will operate Nov. 7, 8 and 9.
Opening hours will be extended from 10 a.m. to 7 p.m. for all three days. The announcement is not entirely a surprise. Surveys of WTM delegates have indicated dissatisfaction with the fourth day of the show as one of little value for both exhibitors and buyers, as consumers stroll the aisles of the ExCel and real business opportunities are limited.
Brits Like to Hang with One Another, Not Locals, When on Holiday: From the responses of more than 3,000 of its customers to a Holiday Hypermarket questionnaire, we have just learned that:
—More than 80 percent of the people surveyed said that they had made friends during their last vacation
—66 percent said that they had made friends with other British tourists who were visiting the same destination.
—17 percent of respondents said that they socialized with local people during their holiday.
—17 percent said that they spent time with European tourists who were not from Great Britain.
—One of every four people surveyed claimed that they spent time socializing with people who worked in the place where they were staying.
—Just 3 percent of Hypermarket’s travelers developed friendships with people traveling with children.
HODGE PODGE—Shifts, Shakeups and Occasional Shaftings in the Tour and Travel Industry
After serving for nearly nine years as vice president of sales for Universal Studios Hollywood, Tom See is leaving to take a position with Beverly Hills, California-based Live Nation Entertainment as chief revenue officer of its concert division. This is a newly created position with the company. A long time veteran of the tour and travel industry, See has a CV that also includes several senior positions within the Disney organization, as well as a tenure as vice president of sales and marketing for Trafalgar Tours. He also had the same title while serving with Contiki Tours.
The Receptive Services Association of America (RSAA) has announced that longtime tour and travel industry veteran Jane Rossmango is coming out of a short retirement to serve as the new president and CEO of RSAA. The association has been managed by Lexington, Ky.-based Associations International (AI) since 2011, when the latter acquired the association management business of IMG, the global talent and event management company. RSAA had been with IMG since 2008. Rossmango will join the AI management team and, effective Oct. 1, and take over RSAA from Matt Grayson, who is also executive director of AI. Rossmango, who once served as executive vice president of AmericanTours International, had a twenty-year career with Allied Tours, which later merged with T Pro to become AlliedTPro (a Kuoni brand), lastly serving as chairman and senior vice president of AlliedTPro and Kuoni Destination Management (USA), leaving the company last year.
Ross Jefferson has been named president and CEO of Destination Halifax, joining the DMO from Discover Saint John, where he had served since joining the new agency in 2010 as executive director. Before that, he worked at J. D. Irving, Ltd. and as general manager of Saint John Waterfront Development Corp.
Rochester, N.Y.-based Woman Tours, Inc., a leading bicycle touring company for women, has announced the hiring of Annette Lein as social media director and bike fleet manager. Lein, who has 30 years of experience working in photojournalism and was recently employed with the Rochester Democrat & Chronicle newspaper. Lein will be responsible for producing multimedia content for the company’s website, printed catalog, and various social media outlets. Founded in 1985, Women Tours conducts inn-to-inn bike tours in the USA and internationally. The tours are from two days to two months long and are for women only.
Dana Jones has been named by the Sabre Corporation as senior vice president, new market development. She will report to Sabre President and CEO Tom Klein. Jones will continue to serve as chief marketing officer for the company, as well as senior vice president of solutions management for Sabre Airline Solutions.
Karen Chen, the director of Nevada Commission on Tourism’s office in Beijing, as well as two other employees of the operation, have lost their jobs as a result of a decision by Nevada officials to close the office in a restructuring move. Nevada had the first such state tourism facility in China. It opened in the summer of 2004. State Tourism Director Claudia Vecchio said a new firm will be hired by the end of the fiscal year, and will focus primarily on marketing, as is the case with the state’s other overseas tourism representation offices.
