“A Brief Snapshot of Major Source Market Trends & Updates” was the official title of Stefan Merkl’s presentation at the NAJ Group’s recent RTO Summit West in Los Angeles. Judging by the enthusiastic response received by those in attendance, for those not familiar with his deep knowledge of, and experience in, the tour and travel industry, it very well might have been called something like “All you need to know about the state of the inbound tour and travel industry in the USA in 40 minutes.”
The Florida-based Merkl, a German expatriate and founder of Explore Marketing who has considerable experience in the industry, spoke from authority. His analysis was gleaned, in part, from meetings with 496 companies—including international tour operators and U.S.-based receptive tour operators he met over the course of the past year during a dozen roadshows, trade shows and sales missions in 13 countries. This provided the basis for a report that covered seven out of the Top Ten overseas source markets for tourism to the United States—seven markets that account for more than 40 percent of all overseas travel to the USA.
With a delivery that had the rapt attention of RTO Summit delegates, Merkl discussed overall trends, followed by a market-by-market assessment that touched up key developments in seven of them. INBOUND’s synopsis of his remarks follows.
Overall Trends. Across the inbound marketplace, Merkl said, there has been growth in:
—Fly-drive travel, especially in RV and rental car use;
—A higher-end market that is characterized by small group sizes (up to a maximum of 16 travelers);
—The inclusion of personalized local experiences into leisure group itineraries;
—A generational move from leisure group travel to FIT travel;
—More “off-the-beaten-path” experiences and food tours, such as those that feature home cooking classes;
—Wellness and medical tourism; and
—Education-related and educational travel.
Overall Trends. Destination Interests of Overseas Travelers
—The 2018 top destinations in the USA: Hawaii, California, Alaska, Nevada and New York.
—The USA’s current main competitors in 2018: Canada, Australia and South Africa.
Overall Trends. Growth of Technology and OTAs
—“Info & Bookings on the Go.” Part of a mobile society, travel consumers are accessing information via apps instead of web browsers, and are shifting from booking through travel agencies to booking direct.
—Sourcing from OTAs. Tour operators are buying accommodations and auxiliary services from OTAs for real time data and dynamic pricing
—Acquisitions. We’ve witnessed the TUI Group’s purchasing of Musement; Booking.com’s acquisition of Fareharbor; and the merger of GTA and Tourico into Hotelbds, which created an opening for European bedbanks in the USA (WORLD2MEET, OTS Globe); and Webjet’s takeover of Destinations of the World
—Tools for Tailor-Made Travel. Technology is guiding travel agents, and CRMs for tour guides to identify traveler/customer needs and wants.
—There is a need for real-time data, and tour and travel entities are using XML and API connectivity for latest pricing and product availability.
—Promotion. OTAs have more budget for marketing and promotion than others and competitive pricing is evident across the tour and travel industry.
Country Market Updates—Part One: Australia/New Zealand, India, China, South Korea and the UK
Australia/ New Zealand
—These two countries comprise a highly consolidated market with two key players (Flight Centre and Helloworld) dominating around two-thirds of the market.
—The way of doing business is characterized by continued use of traditional booking channels with travel agents.
—Here, there is an increased importance for the role played by independent travel agent networks. and distribution tools (i.e., Excite Holidays, Travel Counsellors, Expedia Agent Network).
—There is Increased use of online platforms, such as Webjet, among younger travelers.
—Corporate growth has been realized through brand acquisitions.
Traveler Characteristics
—Aussies and Kiwis are very independent travelers who take long long holidays in the USA.
—There is no language barrier. .
—They are willing to explore 2nd and 3rd-tier destinations
—Receptive tour operators are used for U.S. group business include: New World Travel, Destination America, Go West Tours and ATI.
—Wholesale Channels used for FIT business include: Flight Centre, Helloworld, Webjet, Expedia, Viator, America 4 You are used for FIT business.
India
—It is the world’s 2nd most populous country whose people have growing disposable income.
—Growth rates in arrivals from India have ranged between 5 and 19 percent over the last 5 years.
—In 20107, there were 1.285 million visitors from India to the U.S.
—English is India’s unifying language.
Opportunities and Trends
—Trips to the USA often come in form of “Bleisure,” which combines a business/work trip with leisure.
—Visiting friends and family is a key element also for trips to the U.S., so one may take a group tour and then stay with family afterwards.
—Opulence is a theme in group travel.
—Younger travelers are moving towards FIT, opening up doors to “off-the-beaten path” destinations.
—Educational travel for young audiences is key, and official certificates of completion popular.
—Noticeable easing in dietary restrictions for Indian travelers (i.e., while many Indians require vegetarian dining options, many do not.)
India’s Travel Industry
—It is a highly diverse industry with thousands of independent travel agents who either buy from India-based tour operators or international wholesalers such as Hotelbeds.
—There has been a major adjustment to the market with the two main traditional adversaries—SOTC Kuoni and Thomas Cook India—is owned by the Toronto-based Fairfax Group. The U.S.-based receptive tour operator, AlliedTPro, is owned by the same company, so the purchasing channel of Thomas Cook India for U.S. product may change this year.
New Source Regions
—Initially, travelers came to the U.S. primarily from Tier 1 cities, namely Mumbai and Delhi.
—An increasing number of travelers now come from Tier 2 regions that have become very wealthy, such as Gujarat.
—Traditional Tour Operators: Thomas Cook India, SOTC, Cox and Kings, Vacations Exotica.
—Indian Wholesalers: Yatra, Otilla, TBO India, Rezlive.
—Online Travel Companies: Ezeego One, Go MMT, plus other international OTAs such as Expedia, Booking, Klook, and Viator.
—RTOs for Indian Group Tour Market: Tours Limited, AlliedTPro, Maxim Tours, Worldwide DMC, Red Carpet Travel.
—Major Wholesalers for FIT business: Hotelbeds, Viator, Klook, ATI, Pegasus.
China
—It is world’s largest (traveling) population.
—Traditionally, it has been heavily group-tour focused.
—Travelers from Tier 2 and 3 cities are still fairly new to travel and focus on group tours.
—Group travel will remain the dominant form of travel for some time.
—However, younger travelers and those from Tier 1 cities are moving towards FIT travel, and due to the large population, these numbers are massive too.
Mobile Bookings & FITs
—China is a mobile society which is digitally connected and increasingly books via apps.
—Peer-to-peer feedback is a significant factor in making travel decisions.
—Over the past years, social media apps such as WeChat and Weibo have become at the center of activity.
—New travel planning tools such as Mafengwo combine peer feedback with curated content and marketplace features.
—Zuzuche allows FITs to plan, book and execute self-drive vacations.
Challenges:
—Higher decline rates for Visa approval.
—The 10-year visa for the USA—it encourages repeat visits, but has also caused some visa holders to postpone trips and go elsewhere.
—Political and economic conflicts.
—Price; the cost of Southeast Asia trips are less expensive.
—Online discounting, price wars.
Opportunities
—Repeat travelers to the USA want to explore 2nd and 3rd-tier destinations versus simply the big gateways.
—The market continues to grow.
—Newer destinations may still experience double-digit growth as these travelers explore newer places, seek new experiences, etc.
—Solid spending figures, even if the focus of the spending may shift away from shopping towards experiences.
Group Tour Operators
—There is a vast range of operators, often with extremely similar and confusing names. They include: Utour, Shanghai Spring Travel, Galaxy Tour, AITS, CYTS, CTS, Sparkle Tour, Great Wall.
RTOs and Wholesalers
—There is a vertical integration of distribution channels
—There is also a well-diversified range of RTOs and local operators, such as Jupiter Legend, Ctour Holidays, America Asia.
South Korea
—It delivered 2.335 million travelers to the USA in 2017
—Traditionally the country was heavily focused on leisure group travel.
—There has been a rapid switch from leisure group towards FIT travel.
—South Korea often gets called the most “mobile-ready country in the world.”
—As such, it’s no surprise that all travel companies are focused on building mobile sites and apps, and traditional companies are trying to catch up. For example, Hana Tour created a new company called Mohaji, which will cater to FIT travelers.
—It is a price sensitive market, very competitive.
Online Travel & Blogs
—Young Koreans are buying travel increasingly online.
—Key Opinion Leaders, Kpop stars, bloggers, etc. are essential in influencing travel decisions.
—Top online sites include: Online Tour, Socuri Pass, Interpark, WAUG (new), Tourtira, Saturn Ai.
Receptive Tour Operators
—For Leisure Groups: Hana Tour, Samho Tour, Aju Tour, Joun Tour, Dongbu Tours.
—For MICE Groups: Club MK, ACE America, JJ Tours, Enterplan.
United Kingdom
—Operators reported a successful 2018.
—Business had a slow start; bookings came in later than normal.
—Brits took 24 million trips abroad during peak travel months (July – Sept 2018)– up 1 percent YoY.
—There were strong January summer holiday sales for 2019 • Brexit negotiations continue to cloud the market.
Market Characteristics
-It is the largest inbound market to USA from Europe.
-It is heavily FIT focused, yet leisure group travel continues to be popular with older travelers.
Opportunities
—Contracting of Virgin Holidays has shifted to UK.
—Expat Explore has expanded its low-cost group series into the USA.
—Southhall Travel–it is focused on Asian British community—has expanded into the USA.
—Attraction contracting by Thomas Cook’s Orlando Office.
-The Leisure Pass Group has introduced the LPOS destination management system to the United States.
RTOs and Wholesalers
—They include Hotelbeds, Bonotel Exclusive Travel, ATD, Destination America.
In the Next INBOUND: France, Germany/Switzerland/Austria, Belgium and The Netherlands
Want to know more? Contact Stefan Merkl at stefan@explore-marketing.com
