The Inbound Report

Covering the Inbound Tourism Industry Since 1996

US Trade’s Luxury Sector Bullish Over Prospects for 2020

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Results of the 2020 Pulse of the Industry Survey are in, and they tell us that the luxury travel segment of the travel and tourism industry is nothing less than buoyant when it discusses the outlook for this year. Conducted by Strategic Vision, a consulting firm based in Tarrytown, N.Y.—about 25 miles north of mid-town Manhattan in New York City—the survey talked to CEOs, presidents and senior executives at leading luxury travel management companies, providing us with a fairly reliable assessment of the industry. (While the survey’s respondents are primarily concerned with outbound travel, their answers seem to sync what the travel trade is reporting globally about the luxury travel sector.)

As the trade publication Travel Agent put it: “This year’s survey finds an overwhelmingly positive outlook with a strong economy that is prevailing over concerns about global instability … The insatiable drive to travel is one of the reasons luxury travel executives believe that 2020 will be another banner year for the segment.” Some highlights from the Pulse of the Industry Survey follow.

The forecast for growth in 2020 is mostly about leisure travel.

* Noted the travelmarket report: “Last year’s survey found similar results, signaling that the experiential travel megatrend is still on the rise.”

More than two out of every five (42 percent) respondents indicated that concerns about overtourism had a negative impact on travel decisions. Sustainability issues also registered with travel trade leaders.

Also: Nine out of ten of the travel management executives surveyed said they face competition from suppliers and other partners who are marketing directly to their clients, while 86 percent said their advisors need to search more sources than in the past for rates and/or information.

2020 Industry Outlook for Germany is Stable

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As the German travel and tourism industry machinery—the long-haul market included—launches into 2020, all the instruments seem to agree that it is going to be a strong and stable year. Just after the last issue of INBOUND was published, ReiseAnalyse came out with its much-awaited annual report, “Vacation Travel Trends, 2020.”

And though it looks like the overall industry, both domestic, inbound and outbound will be “stable and strong,” it will still be about the same as it was as far as visitor traffic to the U.S. is concerned. This concurs with the most recent edition of the U.S. National Travel & Tourism Office’s (NTTO) long-term forecast indicating that total outbound travel should total about 2,080 German visits, which is almost identical to what the number was in 2018 and 2019.

But, as one mines the information in the ReiseAnalyse report, one will come across nuanced data supporting such findings as one that that says many Germans (more than 40 percent, in fact) are itching to try a new destination in their travels this year. Could this mean that some travelers will opt for a different long-haul destination besides the USA?

The Mindset of the German Travelers: Although Dr. Martin Lohmann, the long-time scientific advisor to ReiseAnalyse, did not use the term “mindset,” he alluded to the point that it is important to take into account how German consumers assess their own economic condition is when considering and analyzing travel-driven data. (The numbers cited below come from ReiseAnalyse research and surveys.)

Lohmann noted that “the indicators for tourism demand in 2020 show (again) a positive starting position. As for German consumers, he said, “With regard to their own situation, they are in a positive mood, albeit somewhat more subdued than last year.” For instance, nearly 80 percent of Germans expect their personal economic situation to state the same or improve (57 percent and 22 percent, respectively), while the other 22 percent—the figures are rounded, so do not add up to 100—fear deterioration.

Conclusion? “The overall individual economic situation is perceived as stable (which) is an important prerequisite for holiday tourism 2020.”

They’re planning early: Four out of five Germans (78 percent) have already thought about vacation trips in 2020. Whether someone actually starts a trip is then a question of ability (time and money?)

The desire for vacation is evident, with 57 percent indicating a slightly increased desire, with important factors time (66 percent) and money (62 percent).

Overall, these results express a positive holiday mood and signal good starting conditions for 2020 on the demand side.

What Will This Year’s Vacations Look Like? The overall picture of vacation trips will hardly differ from 2020, both at the travel destinations as well as the types of travel. The preferences expressed in surveys speak to this. That is why 2020 holiday trips in Germany will be in first place with around 30 percent with Spain, Italy, Turkey and Austria following.

The constant overall picture must not hide the individual flexibility and the tendency of holidaymakers to take turns: 42 percent plan to visit a destination this year, in which they have not yet been.

But it also becomes clear that holidaymakers are attracted to many of the numerous tourist offerings. They are multi-optional, and have more desires and interests than they are in one year into a trip. This basically secures demand, but increases competition in the industry and makes developments in detail difficult to predict.

Trends to Watch: Sustainability, “flight shame” and vacation travel sustainability has become an important topic in Germany and around the world, which always receives more attention, not least against the background of climate change. The tourism does not automatically look good here. On the one hand, certain offers are questionable because of their emissions or the resulting social burdens; on the other hand, the vacation area seems to be implicitly classified as something that is somehow unnecessary and that you could just leave it.

In Trend Reversal, Brits Booking Sooner Rather than Later

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For several years now, the travel and tourism trade has heard and read of survey after survey indicating that British travelers were shifting to last-minute. No more, it seems, as bargain booking site Travelzoo reported last week that nearly three out of every four (72 percent) of its members are planning to book over three months before the travel date. This, said James Clarke—he’s the UK-based general manager for Travelzoo—shows that its members appear to be optimistic about 2020.

Clarke described the above finding as a “dramatic increase” and he ascribed it to the possibility that people are feeling more financially secure and wanting to secure their holiday. He added, however, that it remained to be seen whether a lastminute trend reappears in May and June, particularly for operators with committed stock.

The 72 percent number is just one of the upbeat notes resulting from recent consumers research conducted by Travelzoo. Some other signs that Clarke pointed to in his report on the survey during a presentation at a Travelzoo travel trends event in London included the following:

—Well over half (57 percent) of the portion of Travelzoo’s five million UK members who were polled, expected to be better off in 2020, and 30 percent had greater confidence in the economy.

—In terms of members looking to book their holidays further in advance, Travelzoo found 72% are planning to book over three months before the travel date.

—Survey respondents were asked about what destinations they are looking to travel to in 2020 with 94 percent saying they were keen to try somewhere new.

—Of destinations mentioned, Japan figured highly, as did Canada, possibly due, Clarke said, to the recent royal connection with the Duke and Duchess of Sussex, and Norway also figured highly.

—More adventurous destinations like Uzbekistan and the Galapagos also featured highly, indicating an increasing desire for experiential trips among Travelzoo members.

—Travelzoo members were also found to be seeking greater value, but want to holiday in luxury, looking for five-star hotels at three-star prices.

—This year the survey also asked about attitudes towards sustainability to assess whether the rising profile of climate and global warming is having an impact on buying behavior. It found just 18% are actually considering their carbon footprint when they are choosing and planning their holidays.

Overall, Clarke summed up survey results thus: “This is hopefully the first signs we are seeing of certainty in the marketplace and improved confidence in the travel market,” Clarke said.

The World’s 25 Best Cities—2020

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More than a third of the Top 25 are U.S. Cities: What are the key factors that determine where one chooses a city to live in and a city to visit? Following a major research and analytical work in 2018 that focused on the United States and its best cities, the Resonance Consultancy hopes it has answered these questions through a just released a work that ranks the world’s top cities.

Of particular not to travel and tourism leaders is the report’s assertion that, today, “the experiential quality of a place is increasingly determining where talent, capital and tourism flow.” But how does one go about measuring the quality of one place versus another?

In 2018, the New York City-based Resonance Consultancy partnered with global research firm Ipsos to conduct a survey of the U.S. population to determine the factors people consider most important in choosing a city to live in and choosing a city to visit. The group also conducted a survey of business decision makers to determine the factors they considered important in choosing a city in which to do business or invest. In addition, it conducted an analysis to determine which of these perception-shaping factors survey respondents told us were important showed a positive correlation with factors such as GDP, employment, company formation and visitor arrivals.

The 2020 World’s Best Cities ranks the world’s cities (principal cities of metropolitan areas with populations of more than one million) by using a combination of statistical performance and qualitative evaluations by locals and visitors in 22 areas grouped into six core categories. Principal cities are defined as the largest city in each metropolitan statistical area.

The Six Core Categories:

Place—The most layered category quantifies a city’s physical sense of place. To score a city within our Place category, we evaluate the perceived quality of its natural and built environments. From how often the sun shines to the safety of the streets, several readily measurable, oft-cited factors influence our perceptions.

Weather: Average number of sunny days (National Climatic Data Center, Weatherbase)

Safety: Homicide rate (Office for National Statistics, Office for Regional Statistics, Office on Drugs and Crime, Eurostat)

Neighborhoods & Landmarks: Number of quality neighborhoods and landmarks recommended by locals and visitors (TripAdvisor.com)

Outdoors Number of quality parks and outdoor activities recommended by locals and visitors (TripAdvisor.com)

Product—This is a ranking of the “hardware” of a city—often the most difficult metric for cities to get right. Our product category studies a city’s key institutions, attractions and infrastructure. A city’s infrastructure and institutions shape its identity via the quantity, quality and reputation of these “products.” Expensive and difficult to develop and maintain, exceptional, recognizable products are often found only in large, cosmopolitan cities.

Airport Connectivity: Number of direct destinations served by the city’s airports (Google Flights)

Attractions: Number of quality attractions recommended by locals and visitors (TripAdvisor.com)

Museums: Number of quality museums and arts institutions recommended by locals and visitors (TripAdvisor.com)

University: Ranking of the top local university (U.S. News & World Report, Best Global Universities)

Convention Center: Size of the largest convention center (Official Convention Center Website).

People—The more diverse a city’s population, the more it produces global ideas… on a local scale. Human capital is often a city’s most valuable resource. To evaluate the relative strength of human capital from one city to the next, one considers the diversity of the city’s population—something of proven importance when it comes to attracting talent.

Diversity: Percentage of foreign-born residents (UK Office for National Statistics, Office for Regional Statistics, Eurostat, The World Bank–United Nations Population Division)

Educational Attainment Percentage of the population with a bachelor’s degree or higher (Office for National Statistics, Office for Regional Statistics, Eurostat, The World Bank – UNESCO Institute for Statistics).

Prosperity—A well-paid, economically secure citizenry facilitates stewardship and innovation. In general, beliefs about the wealth and prosperity of a city are shaped by statistics such as the income of citizens, the standard of living and by the presence or absence of large, recognizable corporations—despite the fact that start-ups and innovation increasingly drive a city’s development and economic growth.

Global 500: Number of Global 500 corporate headquarters (Fortune.com)

GDP per capita: GDP per capita (in U.S. dollars), (McKinsey Urban World)

Programming—This category measures the experiential pillars of a great visit: food, shows, shopping and nightlife. If our Product category is the “hardware” of cities and destinations, the mosaic of cultural programming and lifestyle experiences they offer is the “software” that makes them run—including the subcategories of Shopping, Culture, Dining and Nightlife. While such programming initiatives are individually insignificant, their sum fosters a community’s connection to place.

Culture: Number of quality performing arts and cultural experiences recommended by locals and visitors (TripAdvisor.com)

Nightlife: Number of quality nightlife experiences recommended by locals and visitors (TripAdvisor.com)

Dining: Number of quality restaurants and culinary experiences recommended by locals and visitors (TripAdvisor.com)

Shopping: Number of quality shopping experiences recommended by locals and visitors (TripAdvisor.com)

Promotion— A city’s ability to tell its story (and help others do the same) depends on how it incentivizes and rewards sharing of experiences by locals and visitors. The number and frequency of media coverage, online articles, references and place-based recommendations influence our perception of cities, whether the news is good or bad. Today, residents, businesses and visitors promote a city to the world more than city marketers or chambers of commerce. Resonance ranks a city’s Promotion performance based on the number of stories, references and recommendations shared online about that city.

Facebook Check-ins: Number of Facebook check-ins (Facebook.com)

Google Searches: Number of Google search results (Google.com)

TripAdvisor Reviews: Number of TripAdvisor reviews (TripAdvisor.com)

Instagram Hashtags: Most Instagrammed city (Instagram.com)

Google Trends: Popularity on Google Trends in the past 12 months (Google.com)

The New Top 25 UK Tour Operators

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UK Operators in the Post-Thomas Cook Era: In its latest report on the matter, the UK Civil Aviation Authority (CAA) had settled more than 95 percent of all the claims it had received to date following the Sept. 23, 2019 collapse of Thomas Cook, once the oldest tour operator in the UK. This equates to 320,000 claims settled at a value of over £310 million ($404 million) in ATOL* (Air Travel Organizers License) payments. This is the largest amount ever paid out by the program since its creation in 1973.

In addition to the 320,000 claims already settled, there were approximately 10,000 claims remaining and these were being processed as a matter of urgency. In most cases, these claims had taken longer to process because the details entered online did not exactly match Thomas Cook’s booking records, in some cases due to Thomas Cook’s incomplete or inaccurate data, making it more difficult for the claims team to identify bookings as quickly as CAA would like. 

One factor that apparently threw a wrench into the mix was that the failure of Thomas Cook came just before the end of the period in which tour operators seek (and, for the most part, receive) renewal of their ATOL, along with the number of passengers it anticipates carrying in a rolling 12-month period. CAA usually stops accepting renewal requests at the beginning of April and at the beginning of October. But with the Cook collapse coming just a week before the close of renewal requests, the deadline was moved back to late October.

What INBOUND has done below is compare the Top 25 operators based on the number of passengers they are authorized to carry. One finds that, among the top ten operators, some larger players (British Airways, easyJet, Jet2holidays, Travel Bravo and Travel Republic) increased their allotment from last April, while TUI and Expedia decreased theirs.

As of a couple of weeks ago, the Civil Aviation Authority said 1,182 of the 1,283 ATOLs that expired on September 30 had been granted. Of the remaining 101, 51 did not reapply and 50 had not yet been renewed.

In the tables below, you will see how the rank of tour operators has changed—the largest change, of course, being the disappearance from the list of Thomas Cook.

*A Note: ATOL was first introduced in 1973, as the popularity of overseas holidays grew, and after number of high-profile travel business failures left people stranded overseas while vacationing. The UK Government realized that consumers required protection when their travel providers fell into difficulties. ATOL currently protects around 20 million holidaymakers and travelers each year. ATOL is run by the UK Civil Aviation Authority (CAA). It is able to provide assistance by requiring ATOL holders to pay a fee of £2.50 ($3.25) for each traveler, which is held in a fund managed by the Air Travel Trust.

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Tom Berrigan, Managing Editor/Producer
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