NAJ took the opportunity this month to conduct our annual listening tour, during which we visited personally with, or had extensive telephone conversations with, executives of ten receptive tour operator (RTO) offices for our annual exchange of ideas and briefings about bookings. During the tour, which took us from New York City, down the East Coast through Philadelphia and Washington D.C. and on to Orlando, Florida, we also met with officials from the DMO community, travel industry associations, key suppliers and the U.S. Department of Commerce’s National Travel and Tourism Office. All totaled, the Annual Listening Tour involved visits with 16 different organizations as we sought to see how booking levels were being affected by the appreciation of the U.S. dollar vs. other U.S. currencies as the new normal, well as how they were adapting to a variety of new competition.
The East Coast Listening Tour visited the following: AlliedTPro; Tourico Holidays; Hotelbeds; Meeting Point International; New World Travel; TeamAmerica; Merlin Entertainments (its brands include the Lego Group and Madame Tussauds); NYC and Company; Philadelphia CVB; Philadelphia Tourism Marketing Corporation (Visit Philly); U.S. Travel Association; National Travel and Tourism Office; American Bus Association; Visit Fairfax (Va.); Visit Orlando and Experience Kissimmee. In common: All have had to find ways to respond and adapt to the changes that are reflective of an industry that has survived 9/11, the Internet disintermediation of their client’s clients and the 2008-09 financial crisis that shook markets and economies worldwide.
IN A NUTSHELL:
Exchange Rate: Receptives have accepted the fact that a 20-40 percent more expensive U.S. dollar is now the new normal. RTOs were bracing themselves for weaker bookings from Europe last October when it became clear that the $1.10-$1.13 Euro to the dollar level was going to stay. The initial effects were mixed with slightly weaker bookings and cancellations in the beginning of 2015, but they still held out hope that the exchange rate could rebound back to the $1.20 level or above. Now, they seem to be resigned to the fact that the industry is entering a different era where they will need to work with the current level of exchange
In the 28 countries that comprise the Eurozone as well Brazil and Australia there is the hope that some external development will eventually weaken the dollar which may deliver an unexpected windfall. As a whole, operators are a crafty lot—they have, after all, survived 9/11 and the financial crisis of 2008.
Generally, they are adapting in the following ways:
▪ Maintaining last year’s price points by reducing the number of days, lowering the quality of hotel offered in their brochure—or lowering their profit margins.
▪ Continuing to lower their own cost structure, either through reductions in staff or investing in IT that will make staff more efficient;
▪ Hoping that political unrest and turmoil in the Middle East and part of Asia may result in a flurry of new bookings to North America, which is perceived as a safe destination;
▪ Placing faith in their hotel relationships to preserve MICE groups, which seem to be shifting to other less expensive destinations such as Mexico and the Caribbean.
▪ Diversifying into emerging international markets or expanding sales and marketing staff in overseas markets
▪ Many are now offering attractions free automation so they can begin bundle hotels together with attractions as a dynamic package.