Travel Industry Speaks Out about the Election of Trump
A fair number of readers of the Inbound Report responded to our request, e-mailed the day of publication of our last issue, in which we asked you to describe briefly what you believe will be the impact of the election of Donald Trump as U.S. President on the United States as a destination—and on the global tour and travel industry as a whole. Following is a sampler of the responses we received, some of which were edited for brevity, as many respondents had much, much more to say.
Arjan Helle, president/owner, Target Travel, The Netherlands: “The expectation is that the desire to travel to the U.S. next year will slightly decline as it is ‘not done’ in the eyes of higher educated people in The Netherlands and Belgium to travel to a country where a racist is president. At least those were the first reactions under potential travelers. In my opinion and depending on how Trump will dictate new rules Europeans might reconsider and keep traveling to the U.S. It for sure doesn’t help!”
Fabio Negro, group head of North America, FTI Touristik, Germany: “As one of the largest tour operators for travel to the U.S. out of continental Europe, we are concerned about the USD exchange rate and immigration process/limitations. We have dedicated U.S. programs for the GAS and FR markets. Currently, we don’t see any negative changes but the market was very hesitant and below last year’s demand for the past couple of months. In the end we are positive and continue to communicate the beauty of the country!”
Ray Heckmann, president, general manager, Festival Tours, Orlando: “I expect all of the United States is glad it is over and we can get back to business. However, the past three days of violent demonstrations does not bode well for the future. We can be assured that more of this will take place in and around January 20, 2017. In terms of a Donald Trump presidency, I don’t expect much of a change in international visitor-ship. The man, once in office, has a huge responsibility to provide calm, focused leadership, and I believe he will do so.”
Natasha Melesse, senior sales leisure manage, Novotel New York Times Square: “The dust will settle. However, it is the timing of these elections that plays a critical role … the bulk of the business is booked within the next few months so, the results of this election, will still be “very fresh” in everyone’s mind with a second jolt of reality to be delivered when the inauguration takes place in January – all in the midst of our source markets planning their next trip. As for the future of USA tourism, we will have a better picture of what this will look like once we know more about our new President’s policies.”
Bob Gilbert, executive vice president, China Ready Partners, Las Vegas: “I was actually in China at Ctrip headquarters and then with Ali Trip and with CTS leadership as the election news was breaking. These three Chinese volume travel producers didn’t see a Trump presidency as a negative to their plans in place for USA business. I asked them the question, and they all predict record numbers to the USA with no slow down forecast.”
Mike Gallagher, co-founder and co-chairman, CityPASS: “We need to embrace and support President Donald Trump. How can we help him be successful? In his acceptance speech he mentioned that we must rebuild America’s Infrastructure. This includes the Airports, Roads and Bridges. We are the Tourism Party and this should be our top priority. It’s time for us to move forward and help lead this effort.”
Mark White, director, The Greg Evans Consultancy Limited, UK: “There is no doubt that the rhetoric surrounding this campaign has been extremely negative from both the political establishment and the wider US community. From a UK perspective whilst this will be unnerving for some the US is still a very mature destination from the UK and we would expect to see it remain as a key component of the long haul travel market over the coming twelve months especially once the media furor and analysis dies down.”
Name Withheld, receptive tour operator based in USA: “Devastated. I believe America went 1,000 steps back in all aspects.”
David Becker, CEO, Attract China, New York, Beijing: “Chinese media has been supportive of the Trump campaign throughout the election cycle. With the introduction of the 10-year visa two years ago, travel to the US will continue to be encouraged. As a U.S.-based company with an office and staff in China, we view travel as an important tool to break down barriers and unify the world. That said, U.S. hospitality businesses still have a great deal to learn on how best to cater to Chinese travelers, which goes well beyond putting a pair of slippers in a hotel room.”
Eric Hoogstins, president, Fly2America LLC, Pompano Beach, Florida: “I believe the Trump administration will have a positive influence on both inbound USA and global travel. Financial markets will stabilize over a short period and although the US dollar will get stronger, the inbound markets will adjust and get over the “sticker shock” within one year. The USA will also become a safer destination and while our economy rebounds and infrastructure improves, we will not only maintain but grow our position as a world class destination.”
Jimmy Thomas, FIT Consulting, Atlanta: I’m thinking that having a pro-business person and a global hotelier as president can’t be bad for our industry. The two impediments to global travel are “declining economies and security/terrorism. I have to believe a DJT administration would be strong in both areas compared to current POTUS who didn’t have a lot of strength in these areas.”
Gary Schluter, general manager, Rocky Mountain Holiday Tours, Colorado: “I feel that this election could have a major effect on tourism to the USA—and it all depends on the decisions and appointments of our new President-Elect. If Mr. Trump continues forward with remarks and appointments that are viewed as negative to the rest of the world, we can expect some very negative reactions … I have already heard from some German partners that getting any positive press for USA destinations is going to be more and more difficult. So yes—I feel that Mr. Trump, his policies and statements can and WILL be reflected in visitation to the USA—and, I am afraid—not in a positive way!”
Name Withheld, receptive tour operator based in USA: “The bulk of our international business comes from the UK. My first worry was the strong dollar, and now my biggest worry is a President that terrifies me, when he comes face to face, with the rest of the world. He is in the hotel biz … but … my sympathies go out to the sales office. At this point the international advance bookings for 2017 look good, but for how long? I pray that, when the time comes, for Trump to meet the Queen I suggest that someone washes his mouth out with soap before they chat.”
The Final Word …
Jake Steinman, founder and CEO, NAJ Group: “The situation depends so much on the new president’s tone and a softening of his public persona. We Americans also need to educate the world about our political system of governing and the fact that it has checks and balances brought about the executive, legislative and judicial branches. Add to that another check—the viability of Trump’s brand and the supposition that any strident pronouncements may result in a further deterioration of his licensing sales—as his base of ardent followers are not the ones who can afford his hotels, condos and steaks.”
Will Tour Operators Survive the Near-Term Future?
“You’re not going to be around in another five years” said the person sitting across the board room table from a receptive tour operator during NAJ’s Salon discussion group two months ago in New York City as a group of a dozen travel suppliers and receptive tour operators gathered to discuss near- and long-term issues confronting the inbound tour and travel industry in the USA.
No one seemed to blink or make a serious effort to counter the statement. It came, after all, in the midst of a colloquy over challenges confronting U.S.-based receptive tour operators (RTOs)—especially small and mid-size companies—which are many: mergers with, and acquisitions by, larger companies; the growing tendency of some international tour operators to buy product directly from supplier websites and online travel agencies (OTAs), thus eliminating the need for signing cumbersome paper contracts with RTOs; technological developments driving the growth of ticketless admissions that compel RTOs to equip themselves with expensive programs in order to accommodate large groups visiting attractions or taking ground tours; and the growth in the number of overseas travelers who are bypassing agents and operators in their home countries and putting together their own travel packages and itineraries from U.S. supplier websites.
The challenges notwithstanding, Jake Steinman, CEO of the NAJ Group, which organized the Salon—there was another Salon just days prior in Orlando—offered the opinion that “receptive operators are crafty and resourceful … they’ll find ways to survive and be relevant.”
How they will survive and be relevant is what the Inbound Report’s editor talked about with Steinman, who offered examples of what he meant—examples based on his visits and discussions with receptive tour operators during his annual autumn Listening Tour, during which he calls on RTOs in New York City, Orlando and Los Angeles, where the overwhelming majority of U.S.-based receptive tour operators are headquartered.
In sum, RTOs today are surviving by adapting as they:
- Redirect resources and personnel, working for new business outside of their traditional client bases;
- Offer new services to their existing clients; and
- Expand the definition of what a receptive is by selling outbound travel as well.
—For instance, GTA, the bedbank component of the Kuoni brand—Kuoni’s remaining assets were acquired earlier this year by the EQT Partners, the Swedish private equity group—has dropped participating in some major international trade shows, including the World Travel Market and ITB, where a two-story stand—including staffing expenses—can run over $400,000. The rationale is that they already know 90% of the customers attending those shows as they have sales staff in scores of countries who call on them regularly.
—Another Kuoni operated company, AlliedTPro—established in the early 1960s its lineage makes it the oldest receptive tour operator in the U.S.—is also effecting such economies and targeting by reducing their presence at trade shows in favor of networking and social “schmoozing” events. Both AlliedTPro and GTA have space in the same Manhattan office building.
—In the past three years, with the burgeoning growth of air traffic from India through gulf carriers as well as substantial increases in the number of visitors from Arab countries, many receptives have begun participating in the Arabian Travel Market in Dubai. Three years ago Emirates, Qatar and Etihad airlines, recognizing a woefully underserved market, began aggressively courting India passengers headed to the US to connect through their hubs by offering shorter connecting times and better service. Combined, the three carriers offer 26 flights a day serving 12 U.S. cities.
—At Manhattan-based TeamAmerica, known for its upscale product, Enzo Perretta, the company’s founder (in 1997), CEO and managing director continues be an acknowledged “ahead-of-the-curve” thinker and practitioner of new sales and marketing tactics. He now has a mini-theatre in the basement of the company’s Manhattan offices where travel agents and other travel trade professionals are invited in groups to view presentations of the company’s product line. The company has also expanded the number of trade shows it attends and are the official ground operators in the Easter US for TUI.
—Established in 1994, Orlando-based Tourico Holidays has grown to be a billion-dollar-plus per year business by constantly looking for business where no one has sought to look for it before. Lately, several years after it established a presence with offices in China, it has approached Jaiyuan, the Chinese equivalent of Match.com in booking travel for singles getting together. Such a niche was not a wild guess. Rather, research had shown that millions of Chinese who grew up as a sole child under China’s “one child” policy found there was an extreme imbalance in the male/female populations in the cities in which they lived, causing 60 to 70 percent of them to find matching results in other cities distant enough to require an overnight stay. Tourico is working to power the dating site with their inventory.
—Also, another out-of-the box distribution idea that was generated from one of the graduates of the Tourico Travel Academy, was to explore working with automobile dealer groups—several of which own more than 240 dealerships nationwide—to provide vacation packages (rather than rebates or similar premiums) as incentives for purchasing a new automobile.
—Tourico has an advantage that no other receptive tour operator has in seeking out such new business channels. It lies in the constant succession of the groups of 30 or millennials who comprise the student body at the Tourico Travel Academy. Created three years ago to educate and train potential employees (the overwhelming number of college graduates who complete the Academy’s 10-week curriculum are offered jobs at Tourico) for the company, the students provide an ever-present caucus of brainstormers who come up with new or uncharted ideas.
—While there is no hard and fast number of those who are doing so, an increasing number of RTOs that are subsidiaries of overseas operator companies or have a customer base in one country, are selling outbound travel—a trend that traces its beginnings to West Coast-based offices of the U.S. receptive tour operations of Japan-based tour operators.
Boozy Brits, Brochures, Terrorism and more …
The UK traveler’s likes, dislikes, concerns, use of brochures—and more—are summed up nicely in the WTM Global Trends Report 2016 that was released during last week’s 2016 WTM in London. While the summary findings of the report are generally published on online news channels and trade publications at the time of their release, much of the material is overlooked—usually until weeks or months later, when a travel supplier or DMO marketer is researching data on the UK traveler. We’ve reviewed the 64-page report and culled from it what we believe are the most useful findings, which follow.
Of Immediate or Overall Concern:
—When asked about Brexit, (the name given to the June 23, 2016 vote by Britons to leave the European Union) the top worry–cited by 44 percent of holidaymakers surveyed—was the pound sterling-euro exchange rate and how that will make holidays in EU destinations more expensive.
—The second concern, cited by 43 percent, was a more general worry about overall holiday costs rising.
—One third of those surveyed mentioned the potential loss of European Health Insurance Cards, and a quarter said they were concerned about longer passport queues at airports.
—However, just over a third (35 percent) had no concerns surrounding Brexit, while
—Almost half (43 percent) said they would like to see a return to the traditional blue UK passport when Britain does leave the EU.
—42 percent believe the June 23, 2016 Brexit referendum vote has had a negative impact on the UK’s reputation as a holiday destination.
—Almost half (47 percent) predict Brexit will have a negative impact on their organization and 30 percent will seek to increase prices
WTM GLOBAL TRENDS REPORT: Mega Travel Trends from the World’s Largest Trade Show Producer
Supersonic Flights Returning in 2018?
Almost two-thirds (63 percent) of senior industry executives, according to a WTM Global Trends Report, believe supersonic flying is likely to become a mainstream form of transport for travelers. Concorde, the first supersonic passenger jet, retired from service in 2003, following the tragedies of a Paris crash in 2000 and the September 11 terrorist attacks in 2001. Now, several aeronautics firms are working on supersonic technology which could halve flight times and open up new long-haul destinations. NASA and the U.S. Defense Advanced Research Projects Agency (DARPA) are developing aircraft under the joint “Quiet Supersonic Technology” or QueSST project. They plan to build jets that fly more quietly than Concorde, which was famed for its loud sonic “boom” as it broke the sound barrier. The new planes could take to the skies as early as 2020 if the project receives funding as planned.
Banning Sale of Booze on Flights?
The issue of alcohol on flights and air rage is becoming increasingly concerning, with the number of “dangerous” in-flight incidents on UK airlines rising fourfold in three years, according to the UK’s Civil Aviation Authority. The CAA says UK airlines reported 85 air rage incidents in 2013, but the figure soared to 386 last year. Also:
—Figures from the International Air Transport Association (IATA) also show air rage is a global problem. Last year there were more than 10,854 incidents worldwide, equating to one incident for every 1,205 flights. The previous year, there were 9,316 incidents.
—More than a quarter of holidaymakers (27 percent) have experienced a disruptive passenger on a flight.
—Almost three quarters (73 percent) agreed with the recent decision by airline Jet2.com to ban the sale of alcohol on board in the mornings.
—A significant proportion (11 percent) involved physical aggression towards passengers or crew or damage to the aircraft.
—Alcohol or drug intoxication was identified as a factor in 23 percent of cases, though in the vast majority of instances these were consumed prior to boarding or from personal supply without knowledge of the crew, said IATA.
—As part of the budget carrier Jet2.com’s clampdown on bad behavior, over 500 passengers have been refused travel since 2015, with over 50 of these given lifetime bans.
Will a Cap on Tourism Solve Overcrowding?
In the matter of developing sustainable tourism product, three-quarters of the senior industry professionals surveyed for this year’s Global Trends Report agreed with the statement that “tourism caps are a practical solution to the problems of overcrowding.” Last year, when the same statement was put to respondents in the survey, 65 percent agreed. The increase highlights a growing problem faced by destinations and attractions that are becoming a victim of their own success and are finding themselves having to cope with overcrowding. Also:
—Of the 75 percent of respondents who agree with the measures, 30 percent said tourism caps are “somewhat useful.”
—27 percent think they are “quite useful.”
—8 percent find caps to be “extremely useful’ in dealing with the problem.
—Only 5 percent said tourism caps are ‘not at all’ a practical solution to overcrowding and 11 percent said caps are “not very” useful.
The 2015 report highlighted a marked difference between the number of industry professionals that thought tourism caps were a good idea in theory, and those who approved the measure in practice. However, this year’s results show this gap is narrowing.
—When asked whether caps would be a good thing for their own city, company or destination,
—61 percent of those who took part in the 2016 research agreed.
Only 8 percent said caps had no benefit to their own city/company/ destination.
—5 percent said a cap was “not very” useful.
—Last year only 36 percent agreed that a cap would be a good thing for their own city, company or destination, with 34 percent disagreeing.
Fear of Terrorism
Terrorism is the number-one concern for British holidaymakers, and travel industry officials say terror attacks have had the greatest impact on their business in the past year.
—Of the British holidaymakers who went abroad this year, 38 percent said the threat of terrorism was a concern, with 9 percent admitting to being ‘extremely concerned’.
—On the plus side, 40 percent said they were not concerned at all–despite several high-profile terror attacks in the past year.
There is clear evidence global terror incidents, such as the Nice Bastille Day massacre, the Istanbul Ataturk Airport attack and terror campaigns in Tunisia, have affected tourism.
—More than three quarters (76 percent) of key industry executives said terrorism has impacted their business in the past year.
—Of the 76 percent, one in three said terrorism had a “significant” impact, while 43 percent said it had ”some” impact.
—Only 24 percent said terrorism had no impact at all.
The Print Brochure May be on the Way Back
The use of the traditional holiday brochure as part of the booking process appears to be making a comeback, with a third of holidaymakers saying they relied on brochures this year. More than one third (34 percent) of those who booked a holiday in the past year used a brochure as part of the process and comparative figures from 2015 and 2014 show that – far from dying out – the holiday brochure is enjoying resurgence.
Source: UK holidaymakers survey cited by WTM Global Trends Report 2016, in conjunction with Euromonitor International
The results suggests that those operators that are looking to ditch the brochure for good could be missing out on potential business. Thomson and First Choice plan to ditch brochures entirely by 2020, with managing director Nick Longman saying things have moved on since the days when people used to “spend hours flicking through the brochure and decide where they wanted to go.”
To see more, you can access the full WTM report here: file:
CVC Sales, Other Indicators, Point to Start of Recovery for Brazil
It very well could be that the stars are aligning correctly and Brazil is on the road to recovery from its worst economic recession in a century. During the past two years, the number of bankruptcies across all sectors of the Brazilian economy, including the tour and travel industry, reached record levels, tourism spending abroad dropped and so did the numbers of visitors to U.S. destinations, especially for Florida. But here’s part of what we’ve experienced in the past two months:
–-At the NAJ Salon discussion of more than a dozen industry professionals from the Orlando area held two months ago in Orlando, the consensus—in an opinion that had not yet hit the business news media—was that Brazil was seeing the early symptoms of a recovery. One participant noted that Orlando tourism industry was realizing more sales and bookings, and there were also the announcements that Tam and Azul—two of the three largest Brazilian—carriers were initiating direct service to Orlando. Such competition would likely result in lower airfares.
—Also in the last week, the respected travel trade publication, PANROTAS, reported it was picking up from airlines, hotel chains and tour operators “confirmation that there is a strong recovery movement in Brazil. Growth still on a very small base (called the ‘bottom of the pit’), but that raises industry optimism and shows results.”
Signs of Recovery: Quarter-on-quarter changes
of seasonally adjusted GDP and year-on-year variation in %
Source: Brazilian Institute of Statistics and Geography (IBGE) and FocusEconomics Consensus Forecast
—CVC, the largest tour operator/travel agency in Brazil (see next article); it also is also the most popular travel agency brand in the country) has announced that its sales for October established a monthly record for the month in the company’s 44 years of operation—more than 500 million Brazilian reais ($146.5 million). The last time the operator had broken the monthly was in January 2015, when it presented $ 491 million reais ($143.8 million) in sales in a single month.
—Inflation, which has steadily declined throughout 2016, fell in October to a 20-month low of 7.9 percent from September’s 8.5 percent. Even so, inflation still remains above the Brazilian Central Bank’s tolerance margin of plus/minus 2.0 percentage points around 4.5%. A steadier rate will stabilize prices for long-haul travel.
CVC Stays Top Travel Agency Brand in Brazil
CVC Stays Top Travel Agency Brand in Brazil: Already the strongest brand among travel agencies in Brazil, CVC has increased its brand popularity percentage two points (from 19 percent to 21 percent) over last year, according to the just released Top of Mind report by the Brazilian polling company Datafoha.
It’s a different matter for airlines. Tam still registers as the most remembered brand, even though it merged with Lan airlines in 2012 to create Latam. Claudia Sender, president of Latam Brazil, who had some reservations about the brand conversion, said in an interview with Folha de São Paulo, “As the two brands are very strong, well-known, we had a super cool in the belly about how long it would take for passengers to understand that Tam is now Latam, and Lan is now Latam.”
A note on methodology: According to Datafolha, 7,247 people were interviewed in 217 Brazilian municipalities. The average age of the interviewees is 39 years.
Acquisition of Transat France Makes Tui Largest Operator in Europe’s Two Largest Source Markets
Announced this past May, the acquisition of Paris-based Transat France—the parent company, Transat, is based in Montreal—by TUI has made the latter the largest tour operator for the combined German and French overseas inbound source markets, No. 4 and No. 7, respectively, for the United States. Together, the two source markets sent more than 4 million visitors to the USA in 2015.
The process of clearing the acquisition through government regulatory agencies that reviewed the transaction for any anti-competitive aspects as well as its impact on the jobs of those employed by the Transat brand was completed by the end of September. According to published reports, TUI already has a 16 percent share of business volume in German and now, following the completion of the Transat purchase, it has a 21 percent market share in France. Prior to the acquisition reported figures gave TUI a 12 percent market share and Transat France 9 percent.
TUI paid €54 million ($62 million) for Transat France, which owns the well-known Look Voyages and Vacances Transat brands, employs a workforce of 560 and had 375,000 customers.
The French travel trade news site suggested that, with the completion of the deal, TUI can take advantage of TUI Group’s reach into other markets, economies of scale and the synergies that it benefit from as the company folds all national brands into one TUI brand—a move announced earlier this year and expected to be complete by late 2017.
What both companies brought to the new TUI France:
– Turnover: € 613m ($665.5 million)
– 704,000 customers
– 12 percent market share
– No. 1 in the medium-haul markets
– 46 holiday clubs
– 717 employees (end of September 2016)
– 55 own travel agencies including 25 TUI stores
– 156 agents including 10 TUI stores.
– Turnover: € 460 million ($500 million)
– 450,000 customers
– 9 percent market share
– No. 1 in North America, Mexico, Ireland, Senegal, Bulgaria
– 40 holiday clubs
– 582 employees (staff at the end of September 2016 excluding clubs)
– 42 own travel agencies
– 17 franchisees.
Ports of Entry and Departure for International Air Traffic Detailed in New NTTO Report
Lost midst all of the attention given to the World Travel Market (WTM) held Nov. 7-9 was the release on Monday Nov. 7—WTM’s first day—in Washington, D.C. by the U.S. Department of Commerce’s National Travel and Tourism Office (NTTO) of data for the first half of 2016 that reveal some slight but potentially significant shifts in overseas source markets and just as more international visitors choose to visit the United States. The Inbound Report has culled some of the figures from the NTTO release and presents them here.
First, one might take a look at Table No. 1 and you will notice that the Middle East now accounts for 12.8 percent—one out of every travelers—of overseas travelers to the United States.
Second, it does not come as a surprise that London’s Heathrow Airport tops the list of airports outside the United States in the volume of international traffic to and from the USA. But that No. 3 on the list is Cancun, Mexico.
Third, Table No. 3 affirms the pre-eminence of airports in the gateway U.S. cities of New York, Los Angeles and Miami in the number of international passenger comings and goings.
Fourth, the U.S. legacy carriers—United, American and Delta—are securely at the top of the list of USA-based carriers in international passenger traffic to and from the United States.
Finally, in Table No. 5, one learns that the top-volume months for international travel to and from the United States are October, February and February—in that order—not the peak leisure travel months of May, June and July
HODGE PODGE: Shifts, Shakeups and Occasional Shaftings in the Tour and Travel Industry
Gary Vetri has resigned as regional product director for the Americas at Destinations of the World.A veteran of the tour and travel industry, Vetri started his career at ATI and has since held various management positions in contracting, sales and group operations at GTA, AlliedTPro and Travalco.Gary is looking forward to enjoying some time off as he explores new opportunities in the industry
Gabriel Goldszier has been named Tourico Holidays’ regional director for South America, after having served almost a year regional manager for Argentina, Uruguay, Bolivia and Paraguay. Goldszier started with Tourico in 2015 as a product manager in Buenos Aires. Prior to that, he was director of sales at Melia Buenos Aires Hotel.
Carolyn Nightingale has been named the new travel trade manager for Australia and New Zealand for L.A. Tourism. Based in L.A. Tourism’s Sydney office, Nightingale will report to Craig Gibbons, regional director, Australia and New Zealand. Prior to joining L.A. Tourism, Nightingale spent seven years as the business development manager at Delta Air Lines in Sydney.
Carla Biancato has joined the sales team of the tour operator E-HTL Travel in São Paulo. She joins the company from Schultz Pacotes de Viagens (Travel Packages), where she spent 11 years handling various sales accounts.
Daniel Santos, a director of the National Inn network in Brazil, has just joined Salvatur, one of the leading corporate travel agencies in the Northeastern part of the country. Santos will head a Salvatur team in the company’s new São Paulo office.