The Inbound Report

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What U.S. City is Beginning to Emerge as a Favorite Destination of North American Travelers?

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downloadThe latest quarterly issue of Sojern’s Global Travel Insights contains few surprises for those who market and promote U.S. destinations (i.e., New York City remains a global favorite) but one city that is not a familiar one on lists of U.S. favorites makes an appearance at one point—Washington, DC, the host city for next year’s IPW—on the report’s Top 10 Destinations for North American Travelers in August and September 2016.

For its study, Sojern analyzed travel behavior worldwide in five regions: North America, Latin America, Europe, Middle East & Africa, and Asia-Pacific in order to understand travel intent for Q2 and looking forward into Q3 and beyond. Sojern used data based on search and booking behavior provided by major airlines, online travel agents (OTAs), meta-search and other travel service providers. Aside from “Top 5” and “Top 10” lists, the Sojern report contains tabular data on lead-times for booking, size of travel parties, length of vacation and other trends. We’ve digested some of the highlights of the report’s findings below.

Top 10 Countries Searched and Booked

Top 10 SearchedTop 10 Booked
1. France1. France
2. Germany2. German
3. Greece3. Italy
4. Italy4. Mexico
5. Portugal5. Netherlands
6. Russia6. Portugal
7. Spain7. Spain
8. Thailand8. US
9. US9. UK
10. UK10. Switzerland

From the quarterly outbound search trends for North America:

Top Five Destinations

  1. New York
  2. Miami
  3. Las Vegas
  4. Los Angeles
  5. Chicago

From the quarterly outbound search trends for Latin America:

Top 5 Destinations

  1. Miami
  2. New York City
  3. Madrid
  4. Orlando
  5. Los Angeles

From the quarterly outbound search trends for Europe:

Top 5 Destinations

  1. London
  2. Barcelona
  3. Palma de Mallorca, Spain
  4. Lisbon
  5. NYC/Paris (tied)

 

From the quarterly outbound search trends for the Middle East and Africa:

Top 5 Destinations

  1. London
  2. NYC
  3. Paris
  4. Istanbul
  5. Dubai

From the quarterly outbound search trends for Asia Pacific:

  1. Bangkok
  2. Tokyo
  3. Singapore
  4. Hong Kong
  5. London

Sojern Map

From the Q3 Search Trends for North America: Top 5 Destinations, Short-Haul and Long-Haul

Long-HaulShort-Haul
1. London1. Las Vegas
2. Cancun2. NYC
3. Paris3. Miami
4. San Juan4. Los Angeles
5. Dublin5. San Francisco

North America—Travel Changes throughout the Summer: How do vacations change over the course of the summer months? Sojern looked at the top 10 searched destinations for North American travelers throughout the Third Quarter (July, August, and September) in order to see changes in travel behavior:

Top Destinations for North America throughout the Summer

RankJulyAugustSeptember
1NYCNYCNYC
2ChicagoChicagoChicago
3Los AngelesLos AngelesLos Angeles
4MiamiMiamiMiami
5DallasSan FranciscoLondon
6Washington, D.C.DallasDallas
7San FranciscoBostonSan Francisco
8BostonWashington, D.C.Paris
9Las VegasTorontoWashington, D.C.
10AtlantaLondonBoston

From the Q3 Search Trends for Europe: Top 5 Destinations, Short-Haul and Long-Haul

Top 5 Destinations Short-HallTop 5 Destinations Long-Haul
1. Palma de Mallorca1. NYC
2. Barcelona2. Bangkok
3. London3. Los Angeles
4. Ibiza4. Bali
5. Madrid5. Miami

From the Q3 Search Trends for Asia: Top 5 Destinations, Short-Haul and Long-Haul

Top 5 Destinations Short-HallTop 5 Destinations Long-Haul
1. Singapore1. London
2. Tokyo2. Paris
3. Bangkok3. NYC
4. Taipei4. Los Angeles
5. Osaka5. Honolulu

A Note on Methodology: Sojern’s quarterly insights reports are based on the analysis of more than a billion traveler intent data points, obtained through Sojern’s unique partnerships with some of the world’s most renowned travel brands. Its analysis is based on airport level data which is then aggregated to countries and regions. All of the insights are based on very specific data sets as provided by Sojern’s data partners. Sojern’s data is rounded to the nearest whole number for readability and therefore not all charts and graphs will add up to 100 percent. The data provided are not a complete view of all global traveler information, as different data sources provide additional views of traveler behavior.

 

Surge in Optimism Registered by Japanese Trade

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JATA releaseNot since the Great Recession of 2008-09 registered a sharp downtown in travel to the USA by the Japanese—not to mention a decline in overall outbound international travel—have Japanese tour operators been as optimistic about their outlook for business as they are in the latest quarterly “Survey of Travel Market Trends “conducted by the Japanese Association of Travel Agents (JATA). Some highlights from the survey results include the following (Check out the “Note on Methodology” below):

—Overall demand for outbound travel is expected to increase by 11 points in the next three months, up to -29, and in six months’ time, to improve by 16 points, reaching -24.

—Travel companies selling overseas tours (-6) have seen a 12-point increase in demand

—During the July-September quarter, demand for America and Canada will head for a better position, expanding by 8 points.

 

Trends in Overseas Travel Demand

(by Destinations)†

Destination1 Year Ago9 Months6 Months3 MonthsCurrent 3 monthsNext 3 monthsNext 6 months Oct-Dec ‘16
Apr-June 2015Ago July-Sep '15Ago Oct-Dec 15Ago Jan-Apr '16Apr-June ‘16July-Sep ‘16
Hawaii-9-6-13-3-1-1
USA/Canada-31-30-29-22-24-16-19
Europe-41-40-43-72-64-56-53
Oceania-43-47-34-17-24-21-20
Micronesia-33-37-37-24-28-28-23
Asia-5-20-17-9-8-6-3
China-64-62-64-63-61-63-60
S. Korea-66-86-74-64-54-52-49
SOURCE: Japan Association of Travel Agents

In its latest survey by market segment, JATA added education travel and individual tours to the grid.  This is explains why there are no data entries for the four quarters prior to the current quarter. In FY 2016, online travel agencies (OTA) will be included in the market trends survey with information/outlooks for the following two quarters.

  

Trends in Overseas Travel Demand

(by Market Segment)†

Market Segment1 Year Ago9 Months Ago6 Months Ago3 Months AgoCurrent 3 monthsNext 3 monthsNext 6 months Oct-Dec ‘16
Apr-June 2015July-Sep ‘15Oct-Dec ‘15Jan-Apr ‘15Apr-June ‘16July-Sep ‘16
Honeymoon-41-38-46-42-37-44-8
Family-46-41-50-45-42-27-24
Female Office-47-50-48-48-47-39-37
Worker
Student-59-62-61-48-59-50-52
Senior*-25-21-26-26-24-18-13
Individual tours- -- -- -- --34-35-34
Incentive**-31-31-39-32-29-26-21
Business-Technical-14-15-27-21-14-14-11
Education Travel- -- -- -- --38-38-31
* Senior: Customers aged 60 or older
** Incentive: Travel offered as an incentive to business and organization employees
SOURCE: Japan Association of Travel Agents

†A Note on the Methodology and the DI (Diffusion Index): The JATA Survey of Travel Market Trends is designed to grasp trends in the travel market based on responses to questions on current conditions and those anticipated over the next three months. The survey asks participating companies to rate their sales results for each destination and customer segment by choosing from three categories: “good,” “average,” and “poor.” For items outside their business scope, respondents select “do not handle.” Each share of “good,” “average,” and “poor” is then divided respectively by the denominator, which is equal to the total number of responses minus the “do not handle” (including “no reply”) responses. Finally, each share is processed into the Diffusion Index (DI) by subtracting the percentage of “poor” from the percentage of “good.” The highest possible index figure is +100, and the lowest is -100. A total of 548 registered companies are surveyed.

REMINDER: With this issue, the Inbound Report will be published biweekly until after the USA’s Labor Day holiday (September 5, 2016), when we will resume publication on a weekly basis.

Brexit Backdraft—Is Time on Our Side?

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BrexitTaking place when it did, the timing of June 23rd vote by UK citizens to leave the European Union (EU) seems to have allowed the tour and travel industry that deals with the UK to buy some time. More time may very well help the UK-driven Visit USA inbound travel and tourism industry adapt to a marketplace in which the cost of travel increased by 10 percent on the day following the Brexit vote.

The nature of the news media’s analysis and coverage of Brexit, as well as the commentary posted on travel-related websites have changed from one that was calamitous, almost apocalyptic, in tone the day after the Brexit vote to one that is more tentative and less dire.

Were the vote to have taken place in the first quarter of 2016, the reaction and the concomitant decrease in the value of the pound sterling vs. the U.S. dollar would almost certainly have had a worse impact on a decision to travel to the USA this year. As it is, nearly all UK holiday travel to the United States this year had already been booked and paid for by June 23. For the most part, winter travel for Q4 2016 and the first quarter of 2017 won’t be affected that much, as the leisure market for that period is light and, to the extent that it depends on ski and snow travelers who have the resources to handle a weaker pound.

Holding on to what We’ve Got: There is only the slightest evidence—still it is evidence—that the withering of the pound against the dollar may have attenuated to the point that it might not slide that much further down the scale. Here are some late figures we put together:

 

 

Value of Pound to Dollar from

Day of Brexit Vote, June 23, 2016

DateValue of pound sterling vs. U.S. dollar
23-Jun$1.48
24-Jun$1.36
25-Jun$1.37
26-Jun$1.37
27-Jun$1.32
28-Jun$1.33
29-Jun$1.35
30-Jun$1.35
1-Jul$1.33
2-Jul$1.33
3-Jul$1.33
4-Jul$1.33
5-Jul$1.29
Source: Compiled by Inbound Report, from Xe.com; figure is rounded to nearest cent

The U.S. destination that will be the hardest hit by a decline in traffic from the UK is Florida—in particular, Central Florida, which is a favorite of the UK family market. Even so, placed in context, the damage might be offset by the fact that, it was only this past March that the UK’s Air Passenger Duty was eliminated for all passengers under the age of 16. Depending upon their ages, a two-child family had been paying up to $400 more for round-trip flights to international destination. Now … so much for that $400 savings.

Also, low-cost carriers have been driving a highly competitive price war in the UK over the long-haul flight marketplace, with Norwegian Air leading the charge. Over the weekend, the carrier was advertising round trips flights to Orlando from London’s Gatwick Airport as low as $179 per person. Even with the British pound devalued by 10-15 percent, such price points make travel to the USA doable for middle-class Brits on a tight budget. (Check out other fares at http://www.norwegian.com/uk/destinations/)

We at the Inbound Report are not striving to present a rosy outlook to the future of inbound tourism market from the UK: Damage has been done and more will be done if the pound slides further downward. In the next couple of months, before 2017 tariffs are in place, receptive tour operators who sell product to the UK trade will have to see if there is any room to renegotiate rates that we discussed during IPW two weeks ago in New Orleans.

Much can, and likely will, happen between now and four months from now when World Travel Market convenes Nov. 7-9 in London, at which time we’ll know for sure what steps the industry has taken and, by that time, put in place to staunch the expected downturn in Visit USA traffic from the UK.

 

REMINDER: With this issue, the Inbound Report will be published biweekly until after the USA’s Labor Day holiday (September 5, 2016), when we will resume publication on a weekly basis.

Just out! What the First Full-Year Figures for 2015 International Visits to USA Show

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commerce graph Confounding the wisdom of nearly everyone who follows the posting of international arrivals to the USA, overseas travel set a record, increasing by 10 percent last year, with our top overseas inbound source market, the UK, registered an 18 percent, year-on-year increase. This and other records that were set followed a stream of projections from industry sources, including the Inbound Report, that the year would show arrivals totals that were either flat vs. 2014, or at the very best, would increase marginally.

On the day the IPW 2016 in New Orleans concluded, after a year-long absence in the delivery of up-to-date arrivals data, the U.S. Department of Commerce’s U.S. National Travel and Tourism Office (NTTO) made available its preliminary full-year numbers for last year as part of a comprehensive, 24-page report that covers a wide range of information on the preferences and practices of international travelers to the USA.

The availability of such data has been delayed since the U.S. Department of Homeland Security (DHS) and its Customs and Borders (CBP) agency had difficulty beginning early last year in collecting and processing  arrivals data. We never suspected that the changes in gathering data that we implemented by DHS would result in record numbers. Our source told us that some of the increase is due to more records because of automation but that one cannot tell how much is market shifts or new records.

In future issues, the Inbound Report will be analyzing specific elements of the NTTO report. In the meantime, here are arrivals data regarding key source markets.

 

Inbound Report’s

Top 15 Overseas Source Markets

Arrivals: 2014-2015

Country/Market & Rank2014 Arrivals¹2015 Arrivals²% Change, ’15 vs. ‘14
1. UK4,149,1294,900,82318%
2. Japan3,629,2443,758,2974%
3. China (excl. HK)2,189,7812,591,33318%
4. Germany2,056,4922,271,82010%
5. Brazil2,263,9962,218,883-2%
6. South Korea1,459,9381,764,87121%
7. France1,658,3451,752,6116%
8. Australia1,304,1721,450,11311%
9. India962,1331,125,78317%
10. Italy963,5401,039,3978%
11. Colombia881,274853,624-3%
12. Argentina684.788791,90516%
13. Spain707,733752,8236%
14. Netherlands642,211726,01113%
15. Venezuela616,037590,733-4%
¹ Revised
² Preliminary
Note: 2015 projected changes reflect a combination of additional records counted in 2015 and market conditions.
Source: U.S. Department of Commerce, International Trade Administration, U.S. National Travel and Tourism Office

Inbound Report

Arrivals from North America*

2014-2015

Country/Market2014 Arrivals¹2015 Arrivals²% Change, ’15 vs. ‘14
Canada23,013,69120,704,701-10%
Canada by Air8,243,2867,966,040-3%
Mexico17,069,81818,4`3,6498%
Mexico by Air³2,486,3812,649,4816%
Total North America40,083,50939,118,360-2%
* North America comprises Mexico and Canada
¹ Revised
² Preliminary
³ “Mexico Air” data based on U.S. Department of Homeland Security I-94 arrival records.
Source: U.S. Department of Commerce, International Trade Administration, U.S. National Travel and Tourism Office

Inbound Report

Total Overseas and International Arrivals

2014-2015

Market Segment2014 Arrivals¹2015 Arrivals²% Change, ’15 vs. ‘14
Total Overseas34,938,20738,391,93210%
Total International75,021,71677,510,2823%
¹ Revised
² Preliminary
³ “Mexico Air” data based on U.S. Department of Homeland Security I-94 arrival records.
Source: U.S. Department of Commerce, International Trade Administration, U.S. National Travel and Tourism Office

Why Are the Numbers So Much Higher than Anticipated?

Some of the increase is due to more records because of automation.  Problem is we cannot tell how much is market shifts or new records.  Here is how NTTO explained the matter in the report’s appendix:

“The International Visitor Arrivals Program (I-94) is a core part of the U.S. travel and tourism statistical system. The I-94 Program provides official U.S. monthly and annual overseas visitor arrivals to the United States along with Mexico ‘Air’ visitor statistics. The National Travel and Tourism Office (NTTO) manages this program in cooperation with the Department of Homeland Security (DHS), Customs and Border Protection (CBP). Beginning in 2014, definitional changes were made to the I-94 Program to include one-night stay travelers. I-94 Program data now reflect better conformity with UNWTO’s one-plus night definition of a traveler. Prior to 2014, the Program’s definition of a traveler to the United States was a visitor that stayed two or more nights because of incomplete data on transiting air passengers with non-U.S. destinations and limited availability of departure date data on zero and one-night stays.

“With the inclusion of one-night stay travelers in 2014, year over year percent changes, 2014 vs. 2013, could overstate the percent change volume for any given overseas country. 2014 and 2013 U.S. arrivals data from overseas countries may not be comparable. But keep in mind that I-94 overseas arrival volumes in 2013 (and prior years) were understated. An accurate determination of how many nights were spent in the United States has not been possible until CBP’s I-94 Automation project.

“To account for the number of nights, the ‘departure’ record must be captured and matched to the arrival document. And in the past, the collection of the departure record was dependent on the rigor of airline gate agents and the ability of each departing visitor to tender their I-94 departure document. Evidence has indicated that a significant number of departure records were not turned in. But with the I-94 Automation project implemented at air and sea ports, it is possible to now be more inclusive of one night stays (travelers from overseas countries) given that the arrival-departure record match is now more complete and accurate. The I-94 is also benefitting from a substantial increase in departure data for visitors exiting the United States by land. Statistics Canada and Banco de Mexico visitors’ data are not affected-only travelers from overseas countries. 2014 and previous year’s U.S. arrivals data from both Canada and Mexico are comparable as one-night stay travelers are included.”

 

UK Trend Topics

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UK Travel TrendsTake This Job and Shove It … I Want to Travel: Just out from Inghams, the UK ski and winter holiday specialist, is a survey telling us that nearly half (48 percent) of the nation’s workers would rather trade their job for a holiday. Inghams ran a nationwide survey to 2,000 people via One Poll to find out the most popular items on Brits’ Bucket Lists, which revealed travel overall was the most desired thing to do. But 22 percent said they don’t have enough holiday allowance to travel.

Naturally, the latter finding caused Louise Newton, group head of marketing at Inghams to lament, “It’s disappointing to hear that a fourth of the UK don’t have a suitable holiday allowance to take a holiday. Should people want to travel this may lead to taking days unpaid which ultimately has an effect on the overall cost of the holiday. However short excursions could be the answer, this allows you to take a short break to travel and hopefully leaves you with a couple of days spare for something else.”

The survey also revealed the following:

—Nearly a quarter of people aged 55 over said they have actually quit their job to take early retirement to travel (19 percent) compared to 6 percent of 18 to 24 year olds who have gone travelling for a year.

—Asked what has been the best thing they have ticked off their bucket- list so far, losing weight was ranked higher than scaling the career ladder.

—Just over a third of men said they have scaled the career ladder compared to 28 percent of women

 

“Massive” Shift to Long-Haul Now Taking Place in UK Benefits USA: While it might not be indicative of the overall UK traveling population, Club Med says that its booking data indicate that one third of British holidaymakers are making a switch to long-haul travel abroad. The company said that 31 percent of travelers are making the switch from short-haul vacations because of cheaper foreign exchange rates (the British pound has held up well against the euro for the past two years) and European safety concerns. Estelle Giraudeau, Club Med’s managing director, told the UK trade publication TTG that the rate at which travelers were moving to long-haul was “massive.”

Some numbers cited by Club Med include the following:

—At the same point last year, Club Med’s bookings were 20 percent for long-haul and; this year it’s at 30 percent.
—Out of the bookings studied, 47 percent of clients gave recent European events, such as the Brussels bombings in March and the Paris attacks last year, as their strongest driver for staying away from the continent this summer, with

—The strength of sterling against other international currencies was also a major reason for avoiding the Eurozone, with 34 percent citing the value for money that long-haul destinations such as the US, Mauritius and the Dominican Republic could be a key influence.
—Said Giraudeau: “The currency exchange has been so strong for British travelers over the last 12 to 18 months and going long-haul is giving people so much more for their money. Take a destination like the US, a lifestyle there is costing 20% to 30% less than it would in the UK, which is a big draw.”

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