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Brand USA Announces its Priority Markets for FY 2016

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Brand US MarketingWhile a more extensive discussion by, as well as a decision by, the full board of directors of Brand USA of its marketing program for Fiscal Year 2016 will come at next month’s board meeting on Sept. 18 in Washington, D.C., the board’s marketing committee† signed off at its recent meeting on the program, as committee members sought to put into place the steps that they hope will increase the number of international visitors by a little more than another million as it strives to reach an Obama Administration goal of 100 million international visitors by 2021.

(† Brand USA Marketing Committee: Barbara Richardson, chief of staff of the Washington Metropolitan Area Transit Authority, chair; Caroline Beteta, president and CEO, Visit California; John Edman, director, Explore Minnesota; George Fertitta, CEO, Bloomberg Associates; and Randy Garfield, retired, formerly executive vice president of worldwide sales and travel operations for Disney Destinations and president of Walt Disney Travel Company.)

As illustrated in the following table, the marketing committee has opted to identify the top 14 markets (on the left) as targets for direct-to-consumer activities, while the 14 opportunity markets (on the right) will be a focus for trade-related activities. Most of the latter, explained David Whitaker, chief marketing officer, “have traditional distribution channels and active Visit USA Committees.” All totaled, the two groups comprise 39 country markets

Established MarketsOpportunity Markets
Prioritization: Media mix may include broadcast, cinema, OOH, digital display, events, OTA media, paid search and paid social, sharing and ongoing trade emphasisMarket Prioritization: Trade Focus Visit USA programs, trade shows, road shows, missions, fam tours and/or training activities
CanadaSpain
MexicoHong Kong/Taiwan
ChinaItaly
United KingdomBenelux Countries
BrazilSouth America*
JapanNordic Countries*
AustraliaAustria
IndiaSwitzerland
GermanySoutheast Asia*
South KoreaCentral America*
FranceGulf Coast Countries
SwedenSouth Africa
ColombiaIsrael
ChileHungary

Note: In left column, the first five markets generate 65 percent of international traffic to USA; the first 10 markets= 77 percent; and all 14 generate 81 percent of international traffic to USA.

* Selected countries in each region

Turnover Time: Committee members will be busy this month and next either reviewing applications from, or interviewing, agencies and firms that responded to Brand USA RFPs for a new ad agency of record (NYC-headquartered global agency, JWT, is the current agency of record); a marketing services agency; a digital agency; and a firm that will help with Brand USA’s corporate website.

The marketing committee will be meeting again next month (Sept. 9), just prior to the Sept. 18 meeting of the full Brand USA board of directors. At that time, there will be a presentation that explains in depth the marketing programs for each of the top 14 markets. All of this takes place in time for the beginning of the new fiscal year on Oct. 1, 2015.

The Good News—the U.S. Dollar is Strong. The Bad News—the U.S. Dollar is Strong

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For U.S. consumers, the strong U.S. dollar vis-à-vis other major global currencies has meant less expensive imported goods and cheaper travel abroad. For those traveling to the U.S., the cost of doing so is up, in some instances, by more than 20 percent compared to what it was a year ago.

When asked 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 & analytics at Brand USA, told a March 12 meeting of the agency’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, adding, “We do expect to see some impact on arrivals for the next year,” said Rheem. “We are expecting lower arrivals.”

A little less than three months later, when ipw opened in Orlando, Rheem made another presentation in which she furnished new data that seemed to substantiate the projection. While we won’t know what the impact of the strong U.S. dollar (or weak Euro, Real, Peso, etc.) is going to be until the final arrivals numbers for this year are in—and this won’t happen until next spring—one table in particular shows its impact is already having a telling effect.

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Is Brand USA’s marketing program having an impact (1)? Prior to 2011, when Brand USA began to implement the first elements of an international destination marketing program for the USA, its share of the long-haul international travel market had declined. Now, U.S.  share is holding steady, and even increasing, in top markets. Coincidentally, each of the top ten markets listed In the table below is one that is a target of Brand USA’s ongoing marketing campaign.

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Is Brand USA’s marketing program having an impact (2)?

Overall, U.S. share of the long-haul international travel market has been increasing in each year of Brand USA’s existence. The agency was created in March 2010 through legislation that was signed into law by President Barack Obama.

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Beyond the Data: Three months prior to ipw, at ITB in Berlin, we heard from a number of operators—particularly those from Germany, the largest overseas source market in the Eurozone—that the weak Euro had already had an impact on sales for summer 2015 product and that they had adjusted to the situation by diversifying and reaching into other markets.

In the case of Brazil, it might be worse. There, the Real is off by a double-digit percentage decline vs. the dollar. In addition, at the end of the first quarter of 2015, the nation slipped into a technical recession. One successful receptive tour operator based in Florida who specializes in the MICE market told us that business was off by 30 percent compared to last year. And at Orlando’s upscale Mall at Millennia, Brenda Lounsberry, marketing director, told us that Brazilian travelers, the number one international market (ahead of the UK) for the mall, was off from 2014. (Following the substantial dropoff in traffic following the 2008-09 economic recession, mall tenants were able to hang on because they were able to refocus attention on the 60 percent of the customer base that is local.)

Marketing Tactics: Rheem also gave an explanation of what factors go into the which countries Brand USA selects for its marketing activities. (Note: PPP, or Purchasing power parity, is a component of some is a technique or measure used to determine the relative value of different currencies.)

 

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And finally, what Brand USA’s research tells us about the outlook for the next two years among top source markets.

 

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Ctrip—China’s 800 Pound Gorilla Speaks Out

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At nearly every NAJ RTO Summit and Active America China Summit for the past five years, every leading China market expert has spoken of the power and presence of Ctrip.com, the world’s third largest and China’s largest online travel agency (OTA). At NAJ’s recently convened Eighth Annual Active America China Summit held at the Bellagio hotel in Las Vegas, Ctrip itself made the point.

In a report that opened the conference, Rose Wu, manager, American Tour Department for Ctrip, went through a series of numbers—their size, in reference to a single overseas source market, had never been seen by the U.S. travel suppliers attending the summit as delegates—that were, at the very least, daunting.  INBOUND culled its way through Wu’s report and arranged the figures so as to give justice to their statistical dimension.  But first, a chart that best illustrates importance in the market to the USA.

 

Year on Year growth

 

Ctrip  by the Numbers: Here is a breakdown of some of the key data points as they refer to Ctrip.

  • 250 million: The number of Crtip members to whom Ctrip provides travel services in China—both online and through traditional travel service (this number would just about tie the agency’s client base with Indonesia for the fourth largest population in the world—behind that of China, India and the USA)
  • 60: Percentage of the quarter billion Ctrip members that are classified as middle and high-end consumers
  • More than 50: Ctrip’s percentage share of the online travel service market in China
  • 7: The only small number in the presentation, it represents the OTA percentage share of total online penetration in China is small—compared to 31 percent globally—which means that there is considerable room for growth.
  • 350 million: This is the number, so far, of downloads of Ctrip’s app, which has been used primarily for hotel bookings (45 percent) and flight tickets (35 percent)
  • 10,000 (almost): The number of customer services representatives available 24/7.
  • 1,026: Number of Ctrip packages to USA, including Group tours, FIT, cruises, day tour, transportation, ticket, etc
  • About 48,000: Number of USA packages booked by Ctrip in 2014 (in 2012 it was 20,000).

 Working with Brand USA: Wu made it a point to note the mega-agency’s partnership with Brand USA in promoting the U.S. both as a national destination and as a mega-brand backing up individual destinations, such as Chicago (below, right) within the U.S. She wanted to illustrate, particularly to DMO delegates to Active America, a channel open to them in order to promote their products through the Ctrip channel.

 

Brand USA-Ctrip Chicago-CTRIP

New CMO for Brand USA

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jhhculz2.jpg.size.xxlarge.letterbox After the position had been officially vacant for months, Brand USA has announced the appointment of David Whitaker as its new chief marketing officer. A veteran of nearly three decades in the travel and tourism industry, Whitaker comes to the position from Tourism Toronto, where he has served as president and CEO for almost eight years. Prior to his tenure in Toronto, Whitaker spent 17 years with the Greater Miami CVB, lastly as executive vice president and chief marketing officer.

The last person to hold the title, Yvonne La Penotiere, held it for less than a year after she was appointed to the post in June 2013, just in time to attend ipw 2013 in Las Vegas. La Penotiere, who had spent most of her professional career in the Minneapolis area, left Washington, D.C. to return to the area for family-related reasons, according to reports. Then, she officially left Brand USA last June. In the interim, Tom Garzilli, senior vice president, global partner marketing, has handled many of the public duties of the CMO.

Brand USA’s DMO DNA Shows … and More Info Bytes from Brand USA’s Board Meetings

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brand usaFrom the March 12 Meeting of the Brand USA Board of Directors …  

 

 

  • New Marketing Committee Has Three out of Five Members with DMO Connection: At its recent board meeting, the DMO signature of Brand USA was more and more apparent—something that ought not come as a surprise: it should be noted that the Travel Promotion Act that established Brand USA called for two of BUSA’s eleven board members to represent state tourism offices and one to have CVB expertise. At its meeting, Board Chairman Arne M. Sorenson, president and CEO of Marriott International, Inc., announced the makeup of BUSA’s standing committees. On the marketing committee, which elicits the most interest from U.S. travel suppliers and DMOs who are Brand USA partners, three out of the five members on the committee have a DMO background: Caroline Beteta, president and CEO of Visit California; John Edman, director of Explore Minnesota Tourism; and George Fertitta, formerly the president and CEO of New York City & Company, and now CEO of Bloomberg Associates, a global consultancy founded by former New York City Mayor Michael Bloomberg. Chairing the committee is Barbara Richardson, chief of staff of the Washington Metropolitan Area Transit Authority (Metro). The remaining member is Randy Garfield, who retired last year from his post executive vice president of worldwide sales & travel operations for Disney Destinations after serving more than 20 years with the Walt Disney Company. As well, Christopher Thompson, headed Visit Florida prior to becoming president and CEO of Brand USA.

Also, Tom Garzilli, senior vice president reported that, in a just-completed partner feedback study of nearly 70 partners, the largest segment comprised DMOs. The smaller partners, including DMOs, rely on Brand USA, explained Garzilli, for the bulk of their international marketing and see great value in it. Most, he added, indicate that they will continue to contribute to Brand USA and—a sure sign of smaller DMO involvement—are looking to BUSA for help in the results of their international marketing efforts and measuring ROI.

 

  • FY 2014 ROI Study Near Completion: Results of its second major Return on Investment (ROI) study will be released next month. The results are expected to be in line with the original, projected impact of Brand USA prior to enactment of the Travel Promotion Act, which was signed into law on March 4, 2010: i.e., a marketing ROI of 20:1 within five years of full deployment.

This should help to quell some of the skepticism that greeted BUSA’s first ROI study, completed and released in February 2014. In that study, Oxford Economics, in coordination with its Tourism Economics subsidiary company, conducted an analysis of Brand USA’s marketing in its 2013 fiscal year (October 1, 2012-September 30, 2013), basing it on an econometric model of how the eight markets in which Brand USA was fully active would have performed without its investments in marketing compared with actual performance. The markets included Canada, Mexico, Japan, South Korea, the United Kingdom, Germany, Brazil and Australia. Following is what the report revealed.

 ROI Estimates

Net Revenue Generated$3,401,951,199
Total Marketing Expenses$72,740,306
Total Budget, Including Start-up costs & Overhead$99,022.80
Estimated Marketing ROI47:01:00
Total Budget ROI34:01:00

Source: Oxford Economics, The Return on Investment of Brand USA Marketing: 2013 Fiscal Year Analysis

 

  • New to Brand USA: It was announced that several individuals have new positions on the organization’s staff, including Cassady Bailey as director of partner services, and Mark Lapidus as digital and social media director. Bailey, who joined BUSA in October 2012, was promoted from her post as manager, partner services. She takes over the position previously held by Patricia S. McNally, who left the agency last December. Prior to his appointment, Lapidus served for nearly seven years as vice president of Comcast SportsNet, Mid Atlantic (NBC Universal).

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Tom Berrigan, Managing Editor/Producer
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