Perhaps no other facts augur well for U.S. travel suppliers as they prepare for next month’s “Big Dance”—the IPW June 18-22 in New Orleans—as do these: overall, international load factors are down to traditional destinations of choice for Europeans; and the value of the U.S. vs. other world currencies has stabilized.
These were among the points touched on at NAJ’s RTO Summit East last week in New York City as Jake Steinman, NAJ’s founder and CEO, led off the program with a summary of trends affecting the receptive tour operator industry as it prepares to gather in New Orleans. A recap follows.
First, because of terrorist incidents in North Africa, the Middle East, Turkey and Europe itself, many Europeans and travelers from other parts of the world perceive the USA as a destination that is safe to visit.
Second, the value of the dollar vis-à-vis other currencies seems to have stabilized since IPW 2015. For example, in the all-important European market (Western Europe still delivers about 40 percent of all arrivals to the USA), the dollar is just about what it was against the euro a year ago, after bottoming out early last December. (See table: http://www.xe.com/currencycharts/?from=EUR&to=USD&view=1Y)
Third, data released last month by the International Air Transport Association (IATA) showed that global lift capacity increased by almost 10 percent, leading to a drop in load factor of 0.7 percentage points to 77.8 percent. Among world regions, North America experienced the slowest rise in traffic of any region. It was up by just 3.6 percent while capacity was up by 4.8 percent, leading to a 0.9 percentage point drop in load factors to 75.9 percent. The latter could decline further as new aircraft orders by carriers from the Middle East are delivered during the coming year.
Other industry trends, said Steinman, included the following:
—A healthy economy has translated into increased demand for hotel rooms in the USA, which means it is a seller’s market for operators who have to buy rooms.
—Receptive tour operators are diversifying by offering new product as the size of groups shrinks and
—A hybrid market component has emerged … the Partially Independent Traveler (PIT), which has meant that RTOs reduce some services and increase free time for those travelers who are “group averse.”
—An increase in lift capacity among Middle Eastern carriers (Etihad, Emirates and Qatar Airways) is translating into an increase in connecting inbound traffic from India.
—“Testosterone Tourism” is on the rise, as overseas travelers are visiting attractions in U.S. Southwest, particularly in the Las Vegas area, that allow them to drive exotic race cars on closed tracks and operate heavy equipment in ersatz construction sites. (“It’s the new golf,” explained Steinman.)
—Food and dining are becoming important influencers in the selection of a destination.
—Medical tourism, driven especially by huge medical campuses in Orlando and Las Vegas, is on the rise.
—“House Hunting” by Chinese investors looking to purchase homes as both an investment and a second residence has led to the creation of de facto Chinese communities in certain U.S. destinations.
—Intense competition among room providers and OTAs has resulted in some unique partnerships, such as that involving UK-based STA and Airbnb, where STA’s student groups use Airbnb as alternative lodging..
—Free Apps that enable In-home dining, or visiting a U.S. resident’s home for lunch or dinner, has emerged as an option for F.I.T. travelers and very small groups.
—Spend among European travelers in 2016—specifically Germans—is down 20% from the previous year, an indication that the major operators were not able to avoid a decline in bookings through currency hedging this year.
Nearly all of the trends have a common thread, Steinman said, explaining that visitors to the USA “are interested in doing things in the U.S. that they cannot do in their home country.”