Since receptive tour operators (RTOs) represent the closest link to sales, we asked several of them how they were being impacted and we received a variety of answers. One major operator, probably reflecting the attitude of others who are worried about losing business to a competitor, told us that he would try to absorb the difference within his markup even if it meant breaking even; but he wasn’t interested in being a loss leader
Enzo Perretta, CEO, Teamamerica, who seems to place his finger pulse of the market by personally traveling to the four corners of the earth on sales calls, told INBOUND that he saw the exchange rate collapse coming in late Summer of last year. “If we had done nothing, our sales in 2015 would have been completely flat or maybe up one percent,” he explained. “But we decided to aggressively move into emerging markets that are less competitive by opening sales offices in Morocco to build the Middle East, and in Manila, the Philippines, where we will have a hub that will service Asia. Currently, we are already up 26 percent for the coming year.” At this year’s Arabian Travel Market (May 4-7 in Dubai), Teamamerica will be all in with a booth about 90 square meters (1,000 sq. feet) in size.
Anticipating that clients may be asking for deals to mitigate the effects of the exchange rate, Perretta was showing visitors to his stand an ultra-slick brochure/catalogue called “TeamPlayers” that featured value-added specials similar to those found in American Express Platinum Card offerings—extra nights, bottles of wine, free breakfasts, complimentary Wifi and complimentary upgrades.
Gary Schluter president of Rocky Mountain Holiday Tours, a regional operator that specializes in programs around U.S. National Parks in the West, told us that his business was bursting at the seams and this year sales reached the highest level in the company’s 27 year history last year—up 20 percent in 2014. So far in 2015, with 90 percent of his summer product already sold, bookings are running ahead by 15 percent. RMH’s wholesale clients cater to travelers who select a different destination each year … and this was their year for the U.S., which they booked well in advance. He believes that they may scale back hotel selections and meals. The most affected, he believes will be last minute travelers who will book with OTAs in May for a summer trip.
Graham Bendelow, vice president of product, Americantours International (ATI), calculated that if all current rates charged by airline rates, hotel rates and food, etc. remained the same, the currency changes would result in a 12 percent increase; but, of course hotel rates are scheduled to increase 4-6 percent and airline rates are forecast at 2-3 percent which, combined with normal inflation, will probably result Eurozone package rates increasing close to 20 percent for 2016-17 season.
Based on a conversation with another ATI principal, Nick Hentschel, vice president, business development, it appears that ATI’s has found another way to zig while others zag. Not only has the company doubled down on escorted tour motorcoach programs, it picked up the pieces from Mauiva’s ill-fated Air Cruise product by launching own “Wings Over the West” program in 2014 that sold out with strong reviews from clients and engendered grudging compliments from some of their competitors—proving, once again that adage that “pioneers get arrows in their backs while the settlers take the land.” ATI has also discreetly developed a hybrid form of escorted fly-drive tours with China’s largest travel agency, Ctrip. (Note: Ctrip will be making a presentation about their company at NAJ’s sold-out Active America China on April 7-9 in Las Vegas.)
Peter Van Berkel, president of Travalco, said that he believed that the countries in Southern Europe would certainly be the most affected by the weakened Euro. While there seemed to be a consensus that demand from Germany and the UK would be less affected for the coming summer season because most holiday bookings had been made and paid for, arrivals from southern Europe would suffer—especially from countries with stagnant economies such as France, Italy and Spain w9ill be the most negatively impacted.