ITB Report: Are German operators suffering from PTSD—President Trump Stress Disorder?
On the first day of ITB, the trade publication FvW Daily show contained news that demand from the German market to the USA had dropped dramatically as the Nuremburg-based research company GfK reported that bookings to the USA in 2018 has plummeted by 20 percent! Basically, the market seemed to be suffering from a form of PTSD—President Trump Stress Disorder—that, according to conversations we had with over 30 DMOs, German tour operators, receptive operators and suppliers, has resulted in an ITB that, as one hotelier told me, “the elephant in the room is really an ass.” Everyone knew what he meant. From last week’s INBOUND, here is the word cloud from a question that San Francisco-based Destination Analysts asked German consumers to describe one word that came to mind about Donald Trump.
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Surprised that there was so much animosity toward the USA, we asked one operator “Why?” He told us that, although they did not live through the period, they feel that this is what could have been like in 1930. “We have a sensitivity in that regard,” he said
Regardless of what you hear, read or see about American politics, “We Welcome You.” Everyone from Brand USA, US Travel and DMOs and tripped over themselves in often redundant ways to let operators and media know that they were welcome to the USA. Only AmericaTours International CEO Noel Irwin Hentschel, roaming the floor with what appeared to be a red yoga mat, but was actually a piece of carpeting, used a novel approach. Every time a client entered her booth, she would unfurl it and say, “We are rolling out the red carpet for you…” welcoming them to America.
Basically, USA sellers at ITB were in damage control mode—reiterating to anyone who would listen that they are welcome to the USA and were using personal relationships to maintain existing business. Germany’s chancellor, Angela Merkel, opened ITB with a charm offensive as she implored the travel industry to adopt more sustainable tourism products in the future and how travel had the opportunity to eliminate prejudices. Leveraging the strength of the country’s techno-music roots, she suggested that one way to attract more millennials to the country would be increasing the number of electronic music festivals.
2017 was a challenging year for German travel to the USA. As Tilo Krause, owner of Canusa, told INBOUND, Germany is an early booking country and during the fall of 2017, when travelers begin to book their US trips, the strong dollar; hurricanes in Florida and Texas; wildfires in California; and our administration’s anti-immigration policies were all dominating media coverage during a period that was usually a harbinger for 2018 later bookings. By the end of the show some distinct trends seemed to emerge.
- The U.S. has fallen out of favor. Short-haul beach destinations such as Turkey and Egypt, which had experienced drastic declines in German travel last year after terrorist attacks spooked tourists, have rebounded strongly with tour operators.
- Large operators bet against the drop in the U.S. dollar. The large operators such as TUI and DER, both of which hedge their downside by purchasing currency futures up were caught with higher pricing than the OTA’s and smaller agencies—once the U.S. dollar began to soften in late 2017. This affects mostly New York and Miami, where major operators now have direct contracts with hotels. Small niche operators and American specialists were less affected than others as they usually had both wholesale and direct sell options to consumers. The specialists that we met with such as Canusa and America Unlimited told us that their USA business was slightly down but Canadian bookings were increase to the point where they are nearly even with the previous year overall.
- Receptive operators stress service and trust as competitive advantages. Many of the receptive tour operators were unsure as to how the merger last year of Tourico and GTA with Hotelbeds was going to affect them in the future—especially since static FIT rate structures have been discouraged by chain hotels who are compelling them to directly connect to their own booking systems, leaving them with trusted relationships with groups and a growing importance of service. Hotel aggregators such as the newly constituted Hotelbeds, JAC Travel, Miki Travel and others now have a formidable competitor as Expedia expands their wholesale division in Europe.
- The U.S. is definitely losing market share, particularly with special groups. We spoke with several small, niche receptive group operators whose bookings are off by as much as 30 percent. “Basically, our German clients have many other destination options and it’s their way of expressing their feelings about the USA…they’re boycotting us,” one operator complained.
Other news from the Show:
- Brand USA consolidates European Representation with one company, Hills Balfour. While several American partners failed to understand how one representation company can cover all of Europe, others understood that was a way for Brand USA to consolidate representation in a mature market so they have to manage one entity and concentrate their development efforts to emerging markets such as India and China that may have greater ROI capabilities. Hills Balfour, meanwhile, will probably sub-contract with other representation entities to cover the market. Also announced at ITB, MMGY Global, acquired Hills Balfour and will now be able to offer European clients representation, research and marketing services.
- Buyer traffic at the show was strong the first day when the most important operators were present, continued to taper off the next two days. By the afternoon of the third day, half the booths and counters seemed to be empty as more and more buyers deserted the show.
(It’s hard to understand why any companies or destinations that do not have long-standing relationship in place, continue to invest in these shows without someone on the ground assisting with appointments. Even those that occupy counters within states were generally idle more than they were busy. )
• We caught up with Brian Said, vice president, global development, for Choose Chicago, who told us about a couple of recent developments in Chicago:
—Entertainment Cruises will be adding a glass enclosed dinner cruise along the Chicago river that will launch nightly…rain or shine.
—Hilton is developing its first “triplex” hotel near McCormick Place convention center in Chicago. It will be the first hotel that contains three corporate brands within the same structure: Hilton Garden Inn, Hampton Inn and home2suites. With so much hotel development going up near the convention center, it’s siphoning off convention business from downtown leaving downtown developing new hotels with a leisure focus.
- Alfred Gonzalez, formerly with Brand USA, Visit Florida and the Ft. Lauderdale CVB, has struck out on his own as AG Hospitality. One of his first efforts is partnering with Terry Selk, executive director of the Yosemite/Mariposa County CVB, on a “Mexico Cup” golf outing and schmooze fest where tour operators and media and suppliers network and bond over five days of golf.
Latest NTTO Arrivals Data Awash in Red
We Said Last Month that it couldn’t go on like this; it didn’t. It got worse.
The U.S. Department of Commerce’s National Travel and Tourism Office (NTT0) last week released preliminary data on international arrivals through the first three quarters of 2017 which suggest that, if the global market performance of the U.S. as a destination continues as it did through September, it will fall short of the number of international visitors who came to the U.S. in 2016—meaning two straight years of decline.
Just about every measure in the monthly arrivals report (for September 2017) just released by the U.S. Department of Commerce’s National Travel and Tourism Office (NTTO) was the same as, if not worse than, it was for the previous month.
In terms of overall international visitor arrivals, the trend line established in the first three quarters of 2017 suggest that it will continue through the end of the year. In addition, the fourth quarter of the year usually produces the second-lowest quarter for the number of international visitors the United States. It is very unlikely, then, that the fourth quarter of 2017 will produce a turnaround sufficient to make the year a better one than 2016.
Europe Bouncing Back? Midst the falling numbers in most world regions, the oldest overseas source market, Europe, is doing fairly well. Of the five core markets in the Eurozone—Germany, France, Italy, Spain and the Netherlands—all but Germany showed small, single-digit percentage increases through September 2017. And Germany was almost at the same level as it was the year before. Perhaps this is because of a slow, but steady increase in the value of the euro vs. the U.S. dollar, which was trading at $1.04 in December 2016, but lately has been at or near $1.24—a 19 percent increase.
IPW 50—What’s Your Most Memorable IPW Moment?
Editor’s Note: Beginning with this issue, the INBOUND Report shares recollections of and about the event from those who were a part of IPW—formerly Pow Wow—
over the years. This week’s memory comes from Jorge Herrera, former vice president of tourism for the Dallas Convention and Visitors Bureau, (now Visit Dallas,) who attended the very first IPW in 1969 at the Commodore Hotel in New York City. There were 69 travel suppliers who met with 67 buyers from 10 European countries at the event. At the time, he was director of agency and tour sales for Hilton Hotels. He later worked for Fairmont Hotels before joining the Dallas bureau in 1987. While with Dallas, he was a key part of the team that brought IPW to Dallas in 1988 and again in 2000. He left the CVB several years later, having attended IPW more than 30 times.
“I think that the first Pow Wow was in New York City at the Commodore Hotel in 1969. I can’t tell for sure. At that first Pow Wow we had no idea of what we needed to bring to the meeting … I don´t remember having any group rates or FIT rates. We were just pushing brochures of our hotels. While working at the Fairmont Hotels in Dallas, I pushed and was successful in securing the Pow Wow for Dallas in 1988 and later on while at the bureau we secured the Pow Wow for the year 2000.
“I moved to Cartagena in 2012 and I am now living in Bogota as of a year ago. I am close to my family and am enjoying this stage in my life but I do miss my Dallas and all my friends … I always believed that tourism may be the ultimate opportunity for understanding and World Peace and that the concept of Travel was the Ultimate Freedom.”
Brazil’s Senate Approves Open Skies Air Deal with US—30% Bump in USA-Brazil Traffic Expected
Measure would Strengthen Dominant Position of LATAM airlines and American Airlines.
Flights between Brazil and the United States are expected to increase by 30 percent as a result of Open Skies, says Embratur (The Brazilian Tourism Board—Brazil’s equivalent of Brand USA). This was one of the first responses to the March 7 approval by Brazil’s Senate of an Open Skies agreement between Brazil and the United States. The legislation was sent on to President Michel Temer, who was expected to sign it into law. (The Open Skies treaty was signed in 2011 but had faced opposition for the next six years from lawmakers lobbied by local airline interests in Brazil who feared competition from U.S. carriers. Those who stressed its national economic benefits eventually prevailed.)
The agreement between Brazil and the United States opens up airline slots between the two nations, allowing an unlimited number of flights between the two nations; one effect of the deal is that it cleared the way for a partnership between American Airlines Group Inc. and the LATAM Airlines Group. In January 2016, the two carriers had applied for permission to form a Joint Business operation. Such an agreement was a requirement for the U.S. Department of Transportation to approve the business deal between American Airlines and LATAM, the two largest carriers in the region, which would see them coordinating schedules and offering more connections.
In a related move, Brazil’s government last September approved a plan by American Airlines to build a maintenance center at Sao Paulo’s Guarulhos Airport, a $100 million investment that will help the carrier consolidate its South American operations.
Although headquartered in Santiago, Chile, LATAM—it is the result of a 2012 merger between Chile’s national carrier, LAN Chile airlines, and Brazil’s TAM airlines—is the dominant carrier in Brazil, where it has offices in São Paulo. In fact, according to consumer surveys conducted the past two years in Brazil, the name “TAM” remains the most popular airline brand. LATAM also has as subsidiaries LATAM Colombia, LATAM Ecuador, LATAM Paraguay, LATAM Argentina and LATAM Perú.
For Brazil, the Open Skies agreement is expected to lead to increased interest in Brazil as a destination by the U.S. airline industry in the potentially huge Brazilian market. The number of Americans traveling to Brazil has also increased 70 percent since Brazil introduced an electronic visa system in January, according to preliminary data gathered by the Brazilian government.
From the perspective of the U.S. inbound tourism industry, the Open Skies agreement can only help improve a dismal situation in which arrivals from Brazil to the United States have fallen 30 percent from 2014 to 2017, according to the latest figures supplied by the U.S. Department of Commerce’s National Travel and Tourism Office.
MMGY Global Grows even more Global
Kansas City-headquartered MMGY Global, which positions itself as the world’s largest integrated marketing company specializing in travel and hospitality, announced that it has acquired the high-profile British travel and travel and tourism public relations firm of Hills Balfour. Terms were not disclosed.
MMGY, which is headed by Clayton Reid, was founded in 1981. It grew steadily over the years, with Reid continuing to take part in the travel and tourism community in Kansas City along the way. (He is an emeritus member of Visit KC’s board of directors.)
In 2011, MMG, as it was then known became a national powerhouse with global reach when it merged with the Y Partnership, the brand used by what used to be Yesawich, Pepperdine, Brown & Russell (YPB&R), the Orlando-based firm that was led by Peter Yesawich, a well known tour and travel industry figure who is a much sought-after speaker and authority cited by the news media. YesawIch is listed as a partner in MMGY Global, which counts among its clients such familiar destinations as Cleveland, Bermuda, Visit KC, Beaches of Fort Myers & Sanibel and Destination DC.
In February 2016, Peninsula Capital Partners and Fine Equity Partners made an equity investment in MMGY, and a series of mergers and acquisitions have taken place since then, including MMGY Global’s acquisitions of DK Shifflet & Associates, Nancy J. Friedman Public Relations, Myriad Marketing and Spring O’Brien, as well as that of Hills Balfour.
Amanda Hills, Hills Balfour founder and chief executive, will remain with the business, overseeing the London and Dubai firms’ overall operations. She will assume the new role of president, HB and MMGY London and Dubai, partnering with the MMGY Global senior management team to increase the agency’s European presence.
Commenting on the acquisition, Reid said: “Expanding our presence beyond Madrid, Hills Balfour is the right step into Europe for us, and we see our foothold in the UK market as an excellent base to expand across the key European and Middle East tourism markets.
“Their (Hills Balfour’s) reputation in-market, along with an exceptional senior management team and a loyal and long-standing client base, made our merger of operations an easy one.”
German Trade Sees “At Least a Stable Year for the USA”
If one looks at the volume of German arrivals to the USA with a longer perspective than that of two or three years, one will see that the market, with zig-zag annual totals going up and down, back to 1996—this is when Germany sent almost 2 million visitors to the United States—it shows that the market is basically the same as it was for 20 years. Last year, 20 years after 1996, the number of German travelers who came to the U.S. totaled 2,037,000—a 1.9 percent increase after two decades. To help put this increase in perspective, we’ve prepared the following table.
At ITB last week in Berlin, the German travel trade publication FVW released its Destination Ranking 2018, which gives a region-by-region and major country destination analysis that covers the world. Here are some highlights from its section on North America:
- (There is a) slowdown in the slump of German visitor numbers to the USA. The German market appears relatively stable. Based on the (NTTO) figures up to August, a slight drop to about two million guests appears likely for 2017.This would still be the fourth-best result ever, though.
- Recall that, after the attacks of September 11, 2001, and the economic and financial crises, it took more than a decade to beat the former records from the end of 1990s. In 2014, the two million visitor barrier was broken for the first time; and in 2015 anew record was set with nearly 2.3million German visitors. Under the effects of the weak euro, which made travel spending in the USA significantly more expensive, there was even a double-digit (-10.4 per cent) fall in2016.
- With only a slight decline in 2017, an end of the downturn therefore looks in sight. In addition, the exchange rate situation has calmed down. In the first quarter, the euro has risen significantly to over$1.20.³ This will also have an effect on tour operator package prices in the medium-term. They are relatively relaxed about the situation and expect for 2018 at least a stable year for the USA.
- In comparison with other source markets, Germany–which, by the way, has the highest proportion of business travelers among visitor numbers at 24per cent –has performed relatively well. Among the top ten source markets for the USA, only Canada, South Korea and France have reported growth; all others are showing declines, and quite substantial in some cases. Echoing what the INBOUND Report has suggested, Overall, the USA is therefore likely to close 2017 with another decline, after the slight fall in the previous year, and drop significantly below the level of 75 million visitors.
- The consequences of the downturn are serious. In the USA as a whole, tourism industry revenues declined by as much as 3.3 percent to $4.6 billion up to the end of November.
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³ INBOUND checked and found that from the first day of ITB 2017 to the first day of ITB 2018, the Euro went from a value of $1.05 to $1.24, an increase of 18 percent.
WeChat Pay – the Mobile Wallet that’s Coming Your Way
WeChat pay is the social media platform that has taken Asia by storm and is slowly becoming a popular tool around the rest of the world as well. WeChat began as a messaging service and was originally compared to Facebook and Twitter, both of which are not accessible in China. But WeChat has quickly evolved to an entire platform that can also conduct business transactions easily and quickly. If you are in the tourism industry, becoming familiar with WeChat, and WeChat pay will give you an advantage in securing more business from the Chinese visitor market.
WeChat basics
As regular readers of my blog know, I love teaching others how to use WeChat. Like any tool, it feels a bit daunting at first but can become second nature pretty easily. And Chinese tour operators are still impressed when they realize you know how to exchange business information through the app. Check out my WeChat basics tutorial and WeChat tips and tricks video to learn how to get comfortable using this in your professional life.
How the Wallet Works
Every WeChat account comes with a wallet. ( At this point U.S. based accounts can’t set up a wallet, but I am sure that will be changing). Individuals can attach bank accounts to their wallet, or a credit card. Credit cards are still a relatively new product in China, so WeChat basically eliminated the need for them by tying a bank account to a form of payment. Why should U.S. vendors consider accepting WeChat pay?
This article says: Silicon Valley-based Citcon provides hardware, a free API, and customer service to U.S. vendors who are willing to take WeChat or Alipay payments from Chinese customers. Chinese tourists simply have to take out their mobile phone and scan their QR code to pay merchants from their WeChat accounts. WeChat Pay’s U.S. expansion makes perfect sense. Tencent can keep traveling users on their platform while tapping into a very lucrative market. Chinese outbound tourism spending reached over $260 billion last year, according to the World Tourism Organization, and there were hundreds of thousands of Chinese students in the United States. Citcon says that it is already working with around 300 merchants including hotels, airports, museums, restaurants, and amusement parks.
The QR code is back?
One of the basic tools in WeChat is the QR code. It wasn’t that long ago that tourism marketers declared the QR code a failed tool and stopped using it in advertising. Well, it’s back with a vengeance on the WeChat platform. There is a QR code reader embedded in the app, and sharing contact information with others is as easy as scanning a QR code. WeChat pay takes it a step further and gives each users wallet a QR code for transactions. The QR code tied to the wallet changes constantly so there is little chance of accessing someone’s wallet.
How common is it in China? Last year I traveled to a historic tourism site outside Shanghai. This gentleman was selling a traditional frozen dessert out of his insulated box. But he took payment only with WeChat pay! So if this very small business accepts mobile payments, you can believe that street vendors, stores, and everyone else does as well!
WeChat pay – an entire e-commerce platform in your pocket
These recent videos will show how ubiquitous this app is:
CBS Video on WeChat pay
China’s Great Leap to Wallet free living
Final Thoughts: Mobile payment options through Apple Pay and Samsung Pay and Android pay do exist in the U.S. So I started adding credit cards to my Apple pay wallet and have started using it when I buy groceries. Not only do I feel cool, but it is helping me get comfortable with using my phone for payments. Add a payment method to your phone and test it out. Then when it’s time for your destination or attraction to start taking WeChat pay, you will already know what mobile payments are about.
Interested in having your destination become WeChat ready? I do trainings that will help your attractions understand the importance of the Chinese market and learn how to use WeChat to build business. Contact me at sally@theattractionscoach.com for more information.
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NEW AIR SERVICE
- Latvian budget airline Primera Air has announced it will launch flights from London Stansted to Washington Dulles airport just days after revealing that it is ditching plans for a Birmingham to Boston service, which was due to start in June. The airline is also cutting back frequency on its new Birmingham to New York Newark service, which will launch on May 18. Instead, it will fly five times a week from Stansted to Washington, starting on August 22. Fares will start at £199 one way.• Beginning April 26, Norwegian is starting additional twice-daily service using new 189-seat Boeing 737MAX aircraft between Dublin International Airport and Stewart International Airport, which is 70 miles north of Times Square in New York City. A new early morning departure at 8.10 am will be the earliest flight from Dublin to New York, which lands at 10:30 am local time. The flight schedule will give passengers several hours to shop at Woodbury Common Premium Outlets in New York State and depart for Dublin at 8:30pm the same evening.
Travelers from Dublin arriving at Stewart International have the option of direct shuttle bus services into New York City timed to meet Norwegian’s flight arrivals. A new shuttle service will be offered to Woodbury Common for passengers arriving on the new morning flight from Dublin. Shuttle buses departing Woodbury Common will be timed for passengers to arrive at the airport three hours before Norwegian’s evening flight departures from March 24.
Stewart International will be renamed New York Stewart International airport as part of a $37 million upgrade to better handle increased international passenger numbers.
- WOW air, Iceland’s low-fare transatlantic airline, will officially begin service out of New York JFK on April 27. Travelers still have the option to fly out of Newark (EWR) as well, with a total of 20 weekly flights from both JFK and EWR. As of spring 2018, the airline will service 38 destinations across Europe and North America, including Dublin, London, Paris, Berlin, Copenhagen and Tel Aviv.
- On Feb. 28, Norwegianopened its second route between Paris and New York, starting a six times weekly service from Paris Orly to Newark (EWR). The route complements the carrier’s six times weekly operation between Paris Charles De Gaulle airport.
- Also from Norwegian: In the United States, Detroit, Philadelphia, and Minneapolis are among East Coast and Midwest destinations under consideration for eight new A321neo LR aircraft, due for delivery in 2019 for service from 2020. The aircraft may also be used on Middle East routes.
At a Glance: Sonoma County, CA
For full information CLICK HERE
HODGE PODGE: Shifts, Shakeups and Occasional Shaftings in the Tour and Travel Industry
G2 Travel has opened its second office in the United States in El Segundo California. Katja Jahn (left) has been appointed head of destination management Western US/Canada and will be leading the growing team out of this office. Jahn was previously with ATI and YMT, responsible for product development. G2 Travel’s U.S. division headquarters is located in New York City where Gary Vetri has been appointed head of destination management Eastern US/Canada, expanding his role within the company. Also, Leann Visser, formerly operations manager for Kuoni USA was recently appointed general manager. The company was founded by David Babai and seven former managers from GTA in 2012 and will be expanding their custom group receptive operation in the U.S. and Canada significantly.
Marcelo Barone is the new commercial manager of Stella Barros Turismo. A 13-year veteran of the Brazilian tour and travel industry, Barone’s resume also includes a tenure at CVC, where he was manager of products for the United States and Canada. He takes on his new position at Stella Barros with the mission of expanding the brand in Brazil and expanding the number of 
licensed stores.
Paula Vlamings has been named the new CEO of Tourism Cares. She succeeds Mike Rea, who will serve as an integral partner during the transition process to support Vlamings and the goals of Tourism Cares as senior program advisor. Vlamings, who has broad experience in the tour and travel-related business, is the former executive director of the Planeterra Foundation with G Adventures and provided senior sustainability leadership to the Golden Gate National Parks Conservancy’s Institute at the Golden Gate.Vlamings will relocate to the Boston area to lead the staff from the organization’s 
headquarters in Norwood, Massachusetts.
In Germany, Frank Straka has been named the new managing director of Kurz Mal Weg (Short Time Away). In November 2016, Fit Reisen took over the travel portal Kurz Mal Weg from the insolvency estate of Unister. After completion of the reorganization, the company decided to start with the new managing director. Straka is currently working for the package travel specialist Kästl Ost-Touristik and will start his new job at Kurz Mal Weg on April 1st.
Trend Group‘s sales management in São Paulo now has a new executive: Noah Britto, who previously served as manager of Abracorp, which is now a part of CVC. Britto now leads a team of more than 20 people, including Sales executives and employees.
Lisa Messina has been named vice president of sales at Caesar’s Entertainment. In her new position, Messina will oversee Caesars’ sales strategy for meetings and events worldwide. She joins the company from Hilton Hotels, where she was executive director of intermediary group sales. Before her tenure at Hilton, Messina served as chief marketing officer at ConferenceDirect.
As part of the reorganization of its planning, purchasing and control divisions, DER Touristik has appointed Sven Schikarsky as the new head of capacity and revenue management for all tour operator brands. He takes his place on April 1st. Schikatsky was most recently managing director, touring packages, at FTI Touristik until the end of 2017.
Mary Twomey is the new vice president, global trade and consumer development for the Illinois office of Tourism. Twomey, well-known in the industry for the 25 years she spent with Chicago’s Essex Inn, was most recently with TimeZoneOne, a Chicago-based advertising and design company, for just over a year.
