Which Are the Top Buyer Delegations at IPW? The List Might Surprise You.
EDITOR’S NOTE: Inbound readers are welcome to visit NAJ staff at www.THETOUROPERATOR.Com booth at IPW (Booth #855, next to Disney). Also, watch for THE TOUR OPERATOR, our annual state-of-the industry magazine, which will be distributed with Monday’s ipw Daily.
Since the last time ipw was held in Orlando—five years ago in 2010—the number of tour operators from China at this year’s event, which launches on Saturday, May 30, will have increased 400 percent! This is what Malcolm Smith senior vice president of business development and general manager of ipw for the U.S. Travel Association, revealed when he discussed “What’s New for ipw in 2015” at NAJ’s recent RTO Summit East in New York. There were just over 20 operators from China five years ago and now, Smith said, 109 are expected to attend the trade show (May 30-June 3) in Orlando.
While China is on track to become the largest overseas source market for inbound tourism to the USA within the next several years, tour operators from the UK–the current top overseas market–seem to be ensuring that the British will strengthen its position as a leading market: In what Smith described as “an explosion out of the UK” since 2010, the number of British tour operators is expected to increase 40 percent—from 123 delegates five years ago to 172 this year. The No. 3 delegation in international buyers this year will come from Brazil, whose numbers will increase 30 percent—from 56 in 2010 to 73 this year.
The following two tables show the top ten buyer delegations to ipw in Orlando in 2010 and 2015.
Other numbers presented by Smith at the RTO Summit East seem to reflect the profile of an industry in recovery, as 2009 was a trough year following the global economic recession of 2008-09. Overall, it is reflected in the total number of international delegates–both buyers and journalists.
In addition to increases in the number of international buyers and journalists, the makeup of the event and its branding has changed as well, Smith noted, explaining that it is more about Brand USA and less about US Travel. As a result, it is identified as “ipw, powered by US Travel,” while Brand USA represents the U.S. as a destination.
Perhaps the key change to the show’s identification since 2010 has been the disposal of “International Pow Wow” as the name of the show, selecting instead the “ipw” brand just after the 2013 show took place. US Travel will soon announce host cities through the year 2024—a move that will help travel companies worldwide to build their own calendars around the event. At the moment, the host cities (following Orlando) will be:
-New Orleans, Louisiana – 2016 (last hosted in 2002)
-Washington, D.C. – 2017 (first-time host)
-Denver, Colorado – 2018 (last hosted in 1991)
-Anaheim, California – 2019 (last hosted in 2007)
-Las Vegas, Nevada – 2020 (last hosted in 2013)
Brazil Sinks into Recession just before IPW—How Will it Impact 2016-17 and Beyond?
The Central Bank of Brazil reported last week that the nation’s economy contracted by 0.81 percent in the first quarter of 2015, compared to Q4 2014 which, in turn, shrunk 0.2 percent when compared to Q3 2014. Thus, Brazil is technically in a recession, as two consecutive quarters of decreasing economic activity fit the textbook definition of a recession. The national economy’s performance numbers seem to validate predictions by some economists earlier this year that, after growing just 0.1 percent overall in 2014, Brazil’s economy would contract 1.2 percent this year. If that prediction plays out, it would mean the worst performance by Latin America’s largest economy since 1990. Already, Brazil’s economy has contracted 1.18 percent in the 12 months ending March 31, according to the Central Bank report.
Along with reports of a decline in the amount of credit card purchases—a staple in measuring middle-class spending in most categories of consumption, including travel—it begs the question: Will this have an impact on outbound travel from the No. 4 overseas source market for inbound travel to the USA?
The Good, The Bad and Jogo do Centura: While Inbound awaits the opportunity for in-person discussions with tour operators and trade journalists from Brazil to help answer the question, we were able to cover the presentation at NAJ’s recent RTO Summit East in Manhattan of Celyta Jackson, who has worked the Brazil market throughout her professional career, including five years during which she served as vice president of tourism for New York City & Co. She summed up why she believed that, despite a list of economic and political factors that seem discouraging at the moment to U.S. travel supplier, they will still be able to count on Brazilians: It’s because of “Jogo do Cintura.”
Literally translated as “game waist,” the expression suggests more an attitude that a player takes into a challenging game. For Brazilians, it means “having the dexterity and flexibility to overcome obstacles and situations” said Jackson. “Brazilians have this … tour operators have this, too.” They also have parcelizing, she emphasized at one point, a practice that takes away the pain of consumer payment for a product—including the travel product—by spreading payments out into smaller parcels for 10 to 24 months. Highlights from her presentation follow.
The Bad: One need not be an expert, Jackson suggested, to know that, during the past year, Brazil seems to have fallen from a perch it occupied as “the” hot market. “Brazilians were outspending everyone else,” said Jackson. And then, “something happened.” Within a short window of time, there were these realities:
- China—it seemed as if, suddenly, it became the market that drew everyone’s focus.
- Widespread protests against the amount the Brazilian government spent to host soccer’s 2014 World Cup;
- A contentious presidential election that revealed a sharply divided nation;
- Scandal over far reaching corruption involving Petrobras, the semi public Brazilian fuel and energy corporation that is the largest company in the Southern Hemisphere;
- Inflation that is running an annual rate of nine percent;
- Drought, power outages and mudslides that have plagued urban areas;
- Construction delays imperil the outlook for 2016 Olympic Games to be hosted by Brazil;
- Deficit spending by the government;
- An increase in credit card interest rates burdens consumers;
- High consumer credit card interest rates; and
- A strong U.S. dollar that has resulted in the most unfavorable current exchange in a dozen years.
- Brazilians love to travel;
- Brazilians were born to travel;
- Travel is in their DNA; and
- They have the time and they have the opportunity … and visas to visit the USA are easier than ever to obtain.
- They especially have the time because “Brazil must have invented the concept of bridge holidays,” said Jackson.
Brazilians and Their Holidays—Official and De Facto:
Because of National Holidays (15), State Holidays and
School Holidays, and “Bridge” Holidays, the Brazilian Holiday Calendar
Looks like this …
The Competition: “Brazilians are still traveling, but they’re doing it differently” Jackson told Summit delegates. While the proclivities of Brazilians suggests that they will travel despite the factors that discourage them, these same factors are making some of them forego their long-haul travel (the USA is the favorite long-haul destination) in favor of domestic travel and travel within Latin America. Also, travel to Europe is competing with Visit USA travel. (“It’s because of Europe’s cultural appeal. Brazilians have a huge affinity for anything European,” explained Jackson. “They think it’s chic.”) A survey of tour operators indicated that bookings for upcoming travel have shifted, with 51 percent favoring domestic travel, with 48 percent booking international trips, with 47 percent of the latter going to the U.S.
Also … The change in the way Brazilians are traveling because of economic challenges also extends to those who do travel to the USA. For instance, Jackson noted, in Miami—it is the number two U.S. destination for Brazilians after Orlando and it is where Jackson is based–many are now staying in B&Bs, are eating in and are doing less shopping. “The exchange rate plus interest rate increase has put a dent into shopping,” she said, adding that the cost of living in Brazil runs about eight percent greater than it is in the U.S.
The Parceling of Payments for Everything: Parcel payment for purchase of a product is a uniquely Brazilian practice, Jackson told delegates. It goes back to 1968 when the Brazilian government, as way of stimulating the economy through increased consumer spending—including spending for travel—had businesses offer consumers the option to pay for their purchases in monthly installments. Usually, there are 10 to 12 monthly payments for a product, but some tour operators have extended the terms to 24 payments.
Asked by Dennis L. Swayne, business development manager for the Blue and Gold Fleet in San Francisco, how far out in advance consumers begin paying for their travel, Jackson surprised delegates when she explained that people travel first, then pay later, pointing out that Brazilian tour operators “have deep pockets; they finance the trip themselves.” As well, she noted, “Brazilians don’t book as far out as travelers from other markets. They’ll make their travel purchase as early as three months out … they’re very spontaneous.”
To illustrate just how deeply rooted parcelizing is in the Brazilian model of doing business, Jackson pointed to such items as iPhones and Nike athletic shoes as items that Brazilians purchase via parceled out payments.
The Tour Operators—What They are for: Not normally a point addressed in such a presentation, Jackson did so because “the principal goal of the Brazilian tour operator is almost more to serve as a financial tool than it is as a travel planner,” adding that “the line between tour operators and travel agent is almost imperceptible.” Many travel agencies, she explained, have an in-house tour operator, so that they can qualify immediately for a tour operator rate in buying the packages that they then re-sell to the consumer. They save a huge amount of money this way, noted Jackson, and the operator keeps volume levels high by paying 12 percent (not 10 percent) commissions, as well as incentivizing agencies through prize giveaways.
Types of operators run the gamut. Some specialize in tours for pets, for graduation travel, pub crawls, concert events, youth events, wine tours, favela tours (in which groups of people go in to the favelas and build houses and schools) and environmental and sustainable tours. As has been the case in other major markets, the tour operator community has experienced consolidation through acquisition and mergers in recent years.
The Online Factor: Jackson pointed out how important OTAs and social network channels are to travel and tourism by underscoring the fact that Brazil is second only to the U.S. in social media penetration, with 86 percent of its people belonging to some social network. As well, mobile broadband use is soon expected to reach an 85 percent level of use in the country.
The Shopping, with the Internet as a Value Added Purveyor: The notion that Brazilian travelers are world class shoppers is axiomatic. A challenge, Jackson told delegates, is how to blunt the impact of the higher 6.38 percent surcharge on credit card purchases abroad—a government measure implemented early last year in order to prevent capital flight from the nation.
In response, travelers have taken to shopping by Internet—many use Amazon—to pay for their purchases in advance, before they travel, and have the merchandise shipped to the U.S. hotels at which they’ll be staying. This tactic, Jackson said, decrease the amount of time that Brazilian travelers spend on shopping and “means is that they have more time to do other things—like going to … to a Broadway show.”
(Indeed: research conducted by the San Francisco Travel Association earlier this year confirmed that Brazilians coming to the city were shopping online before they visited the U.S. A slide during the San Francisco Travel’s annual meeting showed that Brazilians were visiting three times as many attractions as visitors from other countries.)
U.S. travel suppliers can help Brazilian travelers avoid surtaxes on purchases by bundling some value-add items in the product they sell tour operators—such as $100 gift cards for their hotel or attraction’s gift shop, vouchers for a gas purchase for fly-drive travelers or packs of gift cards good for purchases at more than one retailer in a shopping mall.
The Outlook: It depends to some extent on the Jogo de Cintura of the U.S. supplier, not only the Brazilian tour operator or travelers. Given the challenges that she outlined at the start of her presentation, Jogo de Cintura means: working with the right tour operator; if you don’t have a social media program, develop one immediately; packing everything; not allowing the media to take control of the story regarding Brazilian tourists—“They’re not just about shopping,” said Jackson in closing her remarks.
In Germany, the Trade Limps through Spring to ipw
With the exchange rate of the Euro against the U.S. dollar down by more than 20 percent than what it was a year ago, it should come as no surprise the travel trade in Germany—the largest inbound source market in the Eurozone—is feeling queasy about the outlook for the remainder of 2015 just as ipw launches on May 30 in Orlando. More than 50 buyers are expected to come to Orlando from Germany.
- Bookings for winter and summer holidays had increased by just 1.7 percent,
- Summer 2015 sales were slightly better with a 2.8 percent rise; and
- The resulting cumulative increase was 5.9 percent.
- The German travel trade publication, fvw, had its own take on the numbers calling the 1.7 percent monthly increase “surprisingly low.”
And now, reports fvw, German travel agents are more pessimistic about sales prospects this month. According to the publication’s latest monthly fvw sales climate index survey, in May, only 30 percent of surveyed agents reported “good sales” compared to 34 percent last month, while the number with “poor sales” increased to 28 percent vs. 16 percent last month. Twenty-four percent of travel agents now expect weaker sales in the coming months compared to just 14 percent last month.
Just before IPW, Report Shows Shift in UK Outbound Travel: Are Brits Traveling More In-Country or Outbound?
Just before ipw in Orlando, when a record number of UK tour operators and travel journalists descend up the destination for the trade show, the UK’s Office for National Statistics (ONS) released its report on 2014 travel by UK residents, which showed that they made 4 percent more trips abroad last year—8 percent more to North America.
Also, as the ONS reported: “Between 2008 and 2009 there was a major change in the holiday visits of UK residents, with a 16 percent fall in visits abroad according to the International Passenger Survey. At the same time the Great Britain Tourism Survey, which looks at GB residents only, found a 17 percent increase in holiday visits to destinations in Great Britain. These figures widened the gap between visits to GB and non-GB destinations.
“The most recent figures show that this gap may be starting to narrow, there was a 4 percent increase in the number of UK residents holidaying abroad between 2012 and 2013, alongside a 1.3 percent decrease in visits to GB destinations. When more data becomes available for 2014 it may become clearer if tourists are once again travelling abroad or if the staycation is here to stay.”
Number of Holidays Visits
To GB and Non-GB Destinations
The Most Expensive Tourist Attractions in New York City
It now costs more than $100 for a ticket to a Broadway show, making the experience, by far, the most expensive ticketed attraction there is for a visitor to New York City. This is the determination of the list of the most expensive tourist activities in the city that is repeatedly ranked as the most popular or desirable destination to visit in the USA. Be aware that the list navigates around all sorts of qualifications—such as the daily cost of a two-day ticket or seven-day ticket, or what a ticket might cost if bundled into a package—and footnotes a number of exceptions, including those in the list as we’ve prepared it.
Most Expensive Tourist Attractions in New York City
|Attraction, Event or Activity and Rank||Basic Ticket Price for Adults|
|1. Broadway Show||$103.88 (ave.)†|
|2. Gray Line Double Decker Bus||$59|
|3. Circle Line Tour around Manhattan||$41*|
|4. Madame Tussauds||$37|
|5. The Bronx Zoo||$33.95|
|6. One World Observatory||$32|
|7. Empire State Building||$32**|
|8. INTREPID Sea, Air & Space Museum||$31††|
|9. Rockefeller Center Skating Rink||$27|
|10. Museum of Modern Art||$25 (suggested donation)|
†Prices are, In effect, “rack rates”
* The list notes, but does not include, an air tour with a somewhat similar route—the Liberty Helicopter Ride—which starts at “around $150”
** $52 if a visitor wants access to the smaller interior viewing area on the building’s 102nd floor
†† Includes access to the Space Shuttle Pavilion; regular admission is $24
NAJ’s ipw POP QUIZ
Test your tour operator-IQ with this simple 10 question IPW-Orlando Pop Quiz. Print out and bring your answers to thetouroperator.com booth #855 at IPW. Those answering all questions correctly will receive a prize. Correct answers will be posted in the post-ipw issue.
1. Which collateral is best to leave behind for your appointments with tour operators at IPW?
- Full printed brochure materials
- 56” flat screen TV (playing a loop video of your commercial)
- One page (front & back) summary w/ photos and captions and follow it up with a pdf
- USB Thumb drives containing all information about your product
2. What % of your ipw appointment time should ideally be spent “pitching” vs “listening”?
- 100% pitching/0% listening (they have nothing interesting to say and it’s “all about me”
- 100% listening/0% pitching (You are somewhat intimidated)
- 50%pitching/50% listening (You go first…)
- 50% listening/50% pitching (..No,You go first)
- 20% pitching/40% listening/then 40% pitching
3. If you meet with an operator who has no interest in your product, what should you do?
- Show them pictures of your children.
- Thank them for their time and end the meeting early.
- Discuss your favorite sports team to see if you have anything in common.
- Inquire about their business to determine if there might be interest at a later time
- See a therapist to discuss your rejection issues.
4. How soon should you expect to see materialized from a tour operator that you are meeting for the first time?
- 1 Month
- 1 year
- 2 years-3 years
- It depends on the sector/type of receptive operator
5. If you are meeting with a tour operator interested in your MICE product or services, which of the following should NOT be included in your presentation
- Group-friendly restaurants
- Your best, most creative VIP Itinerary for the destination
- Proximity to an Apple Store
- List of conventions and meetings that they can use for 2016-17
6. When meeting with someone already familiar with your product or destination, which of the following is most important to highlight?
- The weather
- What’s new/what’s changed in the past year that can help them make money
- What you can do for them.
- How their business is faring and what new directions they are pursuing
7. As a supplier what are the range of discount rates acceptable to international tour operators?
- 20-25% below rack rate
- 20-25% below Best Available Rate (BAR) in order to protect the receptive operators
- Rates commissionable at 20-25%
- 10% agency commission
- 30% off BAR along with an under-the-table personal kickback of 10% for their trouble.
8. You’re an hotelier and your appointment requests rates for 2015-16 season, which you do not yet have. How should you respond?
- Tell them to pick a number between 5 and 15%
- Provide them with an estimated range of % change based on most recent industry forecasts
- Compute an average of the past five years
- Show them you really care by calling your manager during the meeting
- Rock/paper/scissors—it’s so much fun.
9. An operator tells you that Euro exchange rate is making your destination/product too expensive. Should you…
- Cave in and give them whatever price they want
- Inquire as to the estimated volume levels to which they are willing to commit
- Tell them you’ll discuss with your team and get back to them with costs of value-added that they can include as a package
- Act outraged and storm out of the meeting
10. As an attraction, which of the following is least appropriate to mention during your appointments?
- Guided (or audio) tours in multiple languages
- Special event and catering capabilities
- What’s new for this year
- Last minute discount deals
- Customization possibilities and ideas
How I Got My Start in the Travel Trade
“How I Got My Start” is a regular segment in which we cull a couple of selections from our interviews with international operators, domestic operators, receptive operators, destinations, hotels and attractions to explore the path that led to a career in the travel trade industry. One thing we have learned: the road to where they are is almost never the same. In this issue, we feature Billie Moser and Robert Y. Graff.
Billie Moser, vice president, tourism sales, Travel Portland: I grew up in Austria, and it’s common that youth at 14 meet with a job counselor and a parent to discuss higher education and career options. My mother told the counselor that I was really good at entertaining during our extended family get-togethers and that I enjoyed setting the table really pretty. The counselor said, “OK, she’ll be good in tourism.” And so I went to tourism college.
Robert Y. Graff, vice president of marketing, Papillon Group: I lived in Greece when I first signed up for TWA’s frequent flier program. When I returned stateside, penniless, I sold those miles to buy my first car. I drove that car to my new job working in concierge guest services at the MGM in Las Vegas. Thank you, TVA, for “funding” my fledgling career in the travel industry.
HODGE PODGE—Shifts, Shakeups and Occasional Shaftings in the Tour and Travel Industry
As a result of a just-announced management reorganization at Thomas Cook Germany, CEO Michael Tenzer is leaving the company “at his own request.” Thomas Cook Group CEO Peter Fankhauser praised Tenzer’s achievements at Thomas Cook Germany, saying that Tenzer “has decisively influenced our company in recent years and modernized the tour operator business … With his tourism expertise he substantially accompanied the transformation of our company.”
Replacing Tenzer, effective Aug. 1, is Stefanie Berk, a former senior manager in Germany who is currently head of Product & Yield in the UK. As head of Central & Eastern Europe, she will also be responsible for Poland, Czech Republic and Hungary.
Also at Thomas Cook Germany, former TUI Germany manager Kirsten Feld-Türkis will join the organization as group head of premium product and longhaul. At TUI Germany, Feld-Türkis headed both the luxury tour operator Airtours and also long-haul holidays.
Greg Allison has taken over for Amy Kaufman as director of travel industry sales for Visit Mesa. (Kaufman has since left the travel industry and is now development coordinator, operations, for the Banner Health Foundation in Phoenix). After spending all of his life in Fairbanks, most recently as the director of tourism for Explore Fairbanks, Allison and his wife relocated to Arizona in a move that enables him to be closer to family.
Under its executive director, Diane Shober, the Wyoming Office of Tourism has undergone a reorganization that results in the following management level lineup: James Scoon, director of global sales and services; Michell Howard, director of strategic partnerships; AnnDrea Boe, director of brand strategy; and Anita Benton, director of business operations.
At the Metropolitan Museum of Art, which is situated on the east side of New York City’s Central Park, Victoria Cairl has been promoted to senior manager, tourism marketing and business development; and Haley Ward has been appointed tourism marketing associate. Ward replaced Carly McCloskey, who left her post last year to become tourism sales and marketing manager at the Museum of Modern Art, not quite 30 blocks away in Manhattan.