In a unique first for the U.S. inbound tour and travel industry, two groups of a dozen leaders each from key sectors of the industry—they included receptive tour operators and senior officials from CVBs, attractions, ground transportation, shopping destinations and hotels—gathered in two different locations on two different days (Sept. 13 in Orlando and Sept. 15 in New York City) for salon discussions of the current state of the industry, as well as the challenges and opportunities of the near-term future. (Note: the salons were organized as part of the annual fall “Listening Tour” of Jake Steinman, founder and CEO of the NAJ Group, which publishes the Inbound Report, during which he calls on nearly 40 inbound tour and travel industry leaders in New York City, Orlando, Washington D.C. and Los Angeles.)
Overall, there was general agreement across the two salons among conditions at top country markets that included the following: For most destinations and suppliers, the UK is surprisingly strong and no post-Brexit slump in travel to the USA has developed; Germany is weak and arrivals to the USA will be down this year; Brazil seems to have stopped hemorrhaging and should stabilize by the time 2017 arrives; and China, as well as other Asia and Pacific markets, are strong. While the strong U.S. dollar does not seem to have discouraged visitors from traveling to the USA, it does seem to have resulted in lower per capita traveler spending while visitors are in a destination. As one participant said, “They’re buying one pair of shoes instead of three.” And this surprise: some Europeans don’t consider the U.S. a long-haul destination.
While there was also general acknowledgement that the state of the receptive tour operator (RTO) industry has evolved to the point that there are now three categories—the global bedbanks of GTA, Hotelbeds and Tourico Holidays; traditional national RTOs such as AmericanTours International and AlliedTPro; and small-to-mid size operators that specialize in niche or regional markets as well as categories of service—there was pointed disagreement as to what will happen in the near-term future to small operators. Some believe that many small operators will simply be out of business in the next five years as they will be unable to keep up with technological changes and overcome the reluctance of hotels to offer allotments to them; others feel that these receptives will do what they have done in the past—adapt to changes and demands, and innovate.
In both Orlando and New York, the format was simple. The salons opened with a general introduction by Steinman—followed by around-the-table individual self-introductions by participants which included brief explanations of their products and the international markets that they target. The remainder of the sessions focused on specific markets, specific challenges, and what they and their organizations are doing to respond to challenges. Also, some spoke of innovations they have development or techniques they are testing.
Needless to say, both sessions ran over the time allotted, with participants expressing the desire to continue the salons as a regular industry feature.
Salon Orlando Participants
Nancy Hahn Bono, senior director, global development, Visit Orlando
Ofir Cohen, executive vice president-strategic development, Tourico Holidays
Patrick Yvars, Travel Industry Sales Director, Latin America, Visit Orlando
Fernanda Vanetta, chief financial officer, Pegasus Transportation
Johanna D’LaRotta Russo, travel industry sales and marketing manager Latin America, Visit Orlando
Don Dooley, area general manager, Simon Property Group, operator of Orlando Premium Outlets
Stefan Merkl, founder and owner, Explore Marketing
Jessa Venegas, sales and marketing director, Incredible Adventures;
Gisa Kusserow-Hansen, general manager, AlliedTPro Florida
Karen Kurth, sales director, international, Disney Destinations, LLC
Marcelo Pigatto Personal RGE Tours
Lori Tedder, groups and incentives, Meeting Point International
Tania McCall, travel industry sales, Rosen Shingle Creek, Rosen Hotels
Salon New York Participants
Luis Alvarado, team manager for corporate and travel industry sales, Entertainment Cruises, Inc.
Juan Sepulveda, wholesale/leisure sales manager, Paramount hotel
Stephen Braun, manager, northeast region, tourism marketing programs, Macy’s
Elaine Kellogg, executive director, business development, Gray Line/City Sightseeing New York
Sheelagh Wylie, vice president, business development & head of sales, Midways Attractions, North America, Merlin Entertainments
Makiko Matsuda Healy, senior vice president, global tourism development, New York City & Company
Mary F. Farrell, senior director-sales, Top of the Rock & Rockefeller Center
Marilyn J. Reis, president, Reis Tour & Travel-RTT Services, Inc.
Sally Davis Berry, tourism sales and marketing manager, Corning Museum of Glass
Jennifer Tsou, owner, Apple Express
Mahua Sehgal, manager, tour services, New World Travel
Reginald Charlot, vice president, tourism development, Europe, NYC & Company
With the above as a preface, here are notes from each location. First, Orlando:
Nancy Hahn Bono said that the Brexit vote and the resultant instability within the UK has not had an impact on travel to Orlando so far. It’s felt that any potential impact on business would not be seen until the 2017-2018 travel season. Also:
—The exchange rate for the Brazilian real has meant a devaluation from 2.5 reais to 3.26 reais to the U.S. dollar, causing middle-class Brazilians to focus on Europe which is now more affordable especially the UK.
—On the bright side: Clients don’t seem to care about exchange rates as long as it’s stable. Orlando is seeing more sales and early symptoms of recovery. As well, TAM and AZUL airlines are initiating direct service to Orlando creating lower airfares.
—Three to five percent of the market can afford to travel internationally.
—Brazilians are staying shorter time and spending less. The main drive for theme parks is for repeat visitors, but receptive tour operators have complained that Disney multi-day, park-hopper passes are now cost more than airfares.
—The market from Colombia is strongest and will experience an increase in air service.
—Main challenge for Latin American markets: U.S. may lose market share because European destinations don’t require visas, as does the U.S.
—In Argentina, the new government has initiated reforms to deal with the exchange rate. In the past, a 30 percent rate of inflation, as well as a black market for currency, caused travelers to the U.S. to book six months in advance in order to lock in exchange rates. Today, with a consistent currency rate, consumers are booking closer to departures when they can get better deals on airfares. Currently it is cheaper to travel to U.S. than internally.
—From Mexico, consistent increases to the USA are expected due to new low cost carriers like Volaris and Interjet offering more service to U.S. destinations.
Ofir Cohen pointed out that:
—Tourico’s groups department is refocusing for the fourth time, targeting Chinese groups by offering just five itineraries in the U.S.
—Every itinerary must include outlet shopping.
—The company is frustrated with limitations by hotels as to where and which markets they can sell—this limits flexibility.
—Lemonade out of lemons. Every negative event—the devalued euro, Brexit, Zika, etc.—has created a new opportunity for Tourico to expand its distribution as more hotels are willing to provide inventory.
Gisa Kusserow-Hansen made the following points:
—In addition to its presence in the leisure market, the company has to MICE in its Latin America markets.
—The size of groups has become smaller and itineraries now include a day off to make a holiday more affordable.
—However, they are spending more money and staying longer as they are planning their trips adjacent to festivals.
—Colombia is very strong
—AlliedTPro seems to be experiencing an upswing from Australia and Scandinavia.
—Among the challenges it faces is the reality that hotels don’t want to deal with small groups.
—Attractions are difficult to sell on a pre-arrival basis because of few open days and other limitations.
Jessa Venegas noted the following:
—Her company has experienced increased interest from Japan for adventure travel, with smaller group sizes.
—The lead time for bookings from the UK booking has grown shorter—from six to nine months down to three months.
—They are seeing more active older people and younger retirees who have money booking their tours.
—Groups want smaller buses and vans. Even when offered 55 passenger bus for the same, clients prefer smaller vehicles. Manufacturers are deluged with demand for smaller vehicle resulting in extreme delays in delivery.
Lori Tedder said that, for Meeting Point International,
—Europe is flat.
—However, the company is still able to sell Canada as a North American destinations, because the exchange rate is better.
—South America is down.
—It has not seen much of an impact from Brexit
On the subject of trends in shopping, Simon Property’s Don Dooley explained that:
—The level of spending by visitors is generally down.
—There are fewer luxury retailers.
—Bus traffic, mainly from Brazilian groups, is down 56 percent.
—Retail across the board is flat to down.
—Teen brands in the U.S. are being replaced in malls by European brands such as H&M and ZARA.
As Ofir Cohen (left), executive vice president-strategic development, Tourico Holidays, makes a point, other participants (left-to-right) listen: Patrick Yvars, Travel Industry Sales Director, Latin America, Visit Orlando; Fernanda Vanetta, chief financial officer, Pegasus Transportation; Johanna D’LaRotta Russo, travel industry sales and marketing manager Latin America, Visit Orlando; and Don Dooley, area general manager, Simon Property Group, operator of Orlando Premium Outlets
Gisa Kusserow-Hansen (left), managing director, AlliedTPro, makes a point to her colleagues (left-to-right): Karen Kurth, sales director, international, Disney Destinations, LLC; Marcelo Pigatto Personal RGE Tours; Lori Tedder, groups and incentives, Meeting Point International; Tania McCall, travel industry sales, Rosen Shingle Creek, Rosen Hotels.
Nancy Hahn Bono, senior director, global development, Visit Orlando and Ofir Cohen, executive vice president-strategic development, Tourico Holidays, concentrate on points being made by another Orlando Salon participant.
And from New York …
In general, the group agreed on these points:
—If the Brexit vote in the UK had any impact on USA or New York City bookings, it was brief and not consequential. In fact, for some, there seems to have been a spike in UK activity.
—The USA still benefits from the perception that it is a safe destination, as terrorist attacks in Europe have made some travelers skittish about visiting some cities there.
—New York City remains the number one long-haul destination for Europeans, even if packages are now featuring non-gateway itineraries. And many Europeans do not consider New York or the USA as a long-haul destination.
—Blue skies are good for business; Rockefeller Center, its Top of the Rock, open-top tour buses and NYC river cruises all had a great spring and summer because of sunny days and little rain.
—The U.S. South is “big” as a destination.
New York City & Company’s Makiko Matsuda Healy made these points:
—NYC is expecting nearly 60 million visitors this year, record, and international visitation will exceed the 12.3 million number of international visitors it received in 2015.
—Travelers/consumers from abroad are continuing to come, but they’re spending less money.
—There is now a new international market of consequence: Ethiopia. The country’s Ethiopian Airlines began new Addis Ababa—New York flights last June. The carrier is considering launching flights to Chicago and Houston in 2017.
Sheelagh Wylie, whose company owns the Madame Tussauds and Legoland attractions, told fellow discussants that:
—The company is seeing a shift to more domestic traffic at its attractions.
—Canada, Brazil and a handful of other international markets have been down.
—The UK has recovered from a post-Brexit dip.
—Argentina and Colombia are up and look strong for the near term.
Elain Kellogg, whose company, Gray Line/City Sightseeing New York, has been operating in the New York City area for decades, said that:
—The company has noticed a shift in the origin of its business to 55 percent domestic and 45 percent international.
—The U.S. is perceived as a safe destination. The country and New York City “are not perceived in the same way as others … we are the city break, we are the shopping trip.”
—The UK is up, Brazil is down, but Argentina is healthy.
—(In a point that raised eyebrows) Some larger operators are now booking their groups through Expedia (because) “they don’t want to deal with contracts.”
Juan Sepulveda touched upon some changes in the hotel business:
—Visits are now three to four nights when they used to be a week.
—Families are traveling like groups.
—As a result, expect to see an increase in the application of minimum-stay requirements.
—The safety issue “is a big thing,” and the U.S. is benefitting from security issues in other countries.
Luis Alvarado’s brief market update on Latin America:
—Mexico is up.
—Colombia is up.
—Brazil is down—“We were expecting that.”
Mary F. Farrell’s take on matters included these points:
—Rockefeller Center and its Top of the Rock attraction are not seeing a big difference in UK traffic following the Brexit vote—“Our UK numbers are up year-over-year.”
—One reason is that, for UK visitors, the Top of the Rock has become a “must do” activity while in New York City.
—An unidentified European tour operator told her that his clients prefer New York among over major European destinations in the wake of terrorist episodes in the past year, explaining to here that “When Paris fell, London fell … The perception is that New York is safe.”
—This year, “the weather helped” Top of the Rock. “When you have an observatory, it helps.” To which Alvarado added, “It works for boats, too.”
Marilyn Reis, whose 2001 book, “The Receptive Operator,” remains the definitive text on the subject (it is still available from Amazon and other sources), had the following points:
—This year is a big year for visitors from Italy, Israel, the UK, France, Australia and New Zealand.
—The dimensions of the group have changed; it averages five to eight visitors, translating into 2 room nights. It used to be 25 rooms.
—Spending is less; for it to increase, the price of the tour’s components have to be lower.
—Added value? “They’re always asking for added value.”
—“Added value” could translate into booking a lower quality hotel, but one that includes breakfast in the price.
—“Added value” could also mean children stay free. (A note: Merlin Entertainment’s Wylie noted that her company’s attractions offer free admission for children during summers to children ages 3-12 … “We can afford to take the risk.”)
Sally Davis Berry
—China is down; India is up.
—The UK and Australia are up; Germany is down.
—For attractions, such as her Corning Museum of Glass, Viator, the online group that sells tours, attractions and activities, is a good thing.
—The Wine, Water and Wonders of New York partnership (Corning Museum of Glass, the Finger Lakes, Rochester and the American Niagara Falls) have added a new partner—Hershey/Harrisburg, Pennsylvania. The group has already become a very popular “beyond-the-gateways” partnership.
—he U.S. South is picking up; she has never seen so much demand.
—Expensive tours are not doing well.
—Retail sales (the Museum of Glass is the largest museum gift shop in the USA) are flat.
—Speculating as to why Israel is such a strong, new market, Berry suggested that Israelis like to see water—there aren’t many bodies of water in Israel—and water is plentiful on the Wine, Water and Wonders itinerary, which includes the Finger Lakes and Niagara Falls.
The wall décor makes it clear that this is the New York Salon. It doesn’t seem to matter to these participants, who are concentrating on the discussion at hand (left-to-right): Mary F. Farrell, senior director-sales, Top of the Rock & Rockefeller Center; Marilyn J. Reis, president, Reis Tour & Travel-RTT Services, Inc.; Sally Davis Berry, tourism sales and marketing manager, Corning Museum of Glass; Jennifer Tsou, owner, Apple Express; and Mahua Sehgal, manager, tour services, New World Travel.
The tone is just as serious on the other side of the table at the New York Salon (left-to-right): Makiko Matsuda Healy, senior vice president, global tourism development, New York City & Company; Sheelagh Wylie, vice president, business development & head of sales, Midways Attractions, North America, Merlin Entertainments; ; Stephen Braun, manager, northeast region, tourism marketing programs,Macy’s; Elaine Kellogg, executive director, business development, Gray Line/City Sightseeing New York; and Juan Sepulveda, wholesale/leisure sales manager, Paramount hotel.
It’s not all stern expressions. Participants chuckle as Jake Steinman (face not shown), founder and CEO of the NAJ Group and host of the New York City Salon, makes a humorous point to colleagues (left-to-right): Sheelagh Wylie, vice president, business development & head of sales, Midways Attractions, North America, Merlin Entertainments; Elaine Kellogg, executive director, business development, Gray Line/City Sightseeing New York; Stephen Braun, manager, northeast region, tourism marketing programs, Macy’s; Juan Sepulveda, wholesale/leisure sales manager, Paramount hotel; and Luis Alvarado, team manager for corporate and travel industry sales, Entertainment Cruises, Inc.
Finally, the Trump Factor: As one participant put it, on every overseas visit to an operator or some other travel trade professional, “the first two to three minutes of every visit is about (Republican Presidential candidate} Donald Trump.” They can’t believe it.” Others indicated that some travel agencies in Europe are not going to push the USA that much because of their dislike of Republican Presidential candidate Donald Trump. Still others in the trade have told the Inbound Report that they are passively boycotting Trump branded properties. Still, one participant in the salon summed it up simply by suggesting that, when it comes to their holidays, “People who are going to go are going to go.”
More to Come: In the next issue of the Inbound Report, we’ll have some notes on the Listening Tour’s stop in Washington, D.C. And later, we’ll report on the next industry salon—date to be determined—in Los Angeles.