For U.S. consumers, the strong U.S. dollar vis-à-vis other major global currencies has meant less expensive imported goods and cheaper travel abroad. For those traveling to the U.S., the cost of doing so is up, in some instances, by more than 20 percent compared to what it was a year ago.
When asked what, exactly, will the impact of a 10-to-20 percent year-over-year decline in the value of the Euro vs. the dollar mean? Carol Rheem, vice president, research & analytics at Brand USA, told a March 12 meeting of the agency’s board of directors that, for every 10 percent decline in the value of a currency vs. the dollar, there is roughly a two percent decline in visitors, adding, “We do expect to see some impact on arrivals for the next year,” said Rheem. “We are expecting lower arrivals.”
A little less than three months later, when ipw opened in Orlando, Rheem made another presentation in which she furnished new data that seemed to substantiate the projection. While we won’t know what the impact of the strong U.S. dollar (or weak Euro, Real, Peso, etc.) is going to be until the final arrivals numbers for this year are in—and this won’t happen until next spring—one table in particular shows its impact is already having a telling effect.
Is Brand USA’s marketing program having an impact (1)? Prior to 2011, when Brand USA began to implement the first elements of an international destination marketing program for the USA, its share of the long-haul international travel market had declined. Now, U.S. share is holding steady, and even increasing, in top markets. Coincidentally, each of the top ten markets listed In the table below is one that is a target of Brand USA’s ongoing marketing campaign.
Is Brand USA’s marketing program having an impact (2)?
Overall, U.S. share of the long-haul international travel market has been increasing in each year of Brand USA’s existence. The agency was created in March 2010 through legislation that was signed into law by President Barack Obama.
Beyond the Data: Three months prior to ipw, at ITB in Berlin, we heard from a number of operators—particularly those from Germany, the largest overseas source market in the Eurozone—that the weak Euro had already had an impact on sales for summer 2015 product and that they had adjusted to the situation by diversifying and reaching into other markets.
In the case of Brazil, it might be worse. There, the Real is off by a double-digit percentage decline vs. the dollar. In addition, at the end of the first quarter of 2015, the nation slipped into a technical recession. One successful receptive tour operator based in Florida who specializes in the MICE market told us that business was off by 30 percent compared to last year. And at Orlando’s upscale Mall at Millennia, Brenda Lounsberry, marketing director, told us that Brazilian travelers, the number one international market (ahead of the UK) for the mall, was off from 2014. (Following the substantial dropoff in traffic following the 2008-09 economic recession, mall tenants were able to hang on because they were able to refocus attention on the 60 percent of the customer base that is local.)
Marketing Tactics: Rheem also gave an explanation of what factors go into the which countries Brand USA selects for its marketing activities. (Note: PPP, or Purchasing power parity, is a component of some is a technique or measure used to determine the relative value of different currencies.)
And finally, what Brand USA’s research tells us about the outlook for the next two years among top source markets.