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.

 

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.

1. 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.
2. 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.
3. 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.
4.  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.

 

 

 

 

 

The Inbound Report’s international editor, Betsy Cooper, joined hundreds of colleagues from the USA in taking part in the world’s largest travel trade gathering—ITB—held recently in Berlin. Here, we share some of her photos from ITB with you.