Heads Roll at Visit Florida. CEO Ousted after $1 Million Pitbull Deal is Revealed.
Governor, Legislators Get Visit Florida’s Top Three Officials Fired on Same Day: One wonders who would want to take a $120,000-a-year job to head up an agency, Visit Florida, and its $78 million budget after what has happened to Will Seccombe, who was ousted last week from his position as president and CEO of the public-private sector organization over an expired $1 million dollar contract with a globally known rapper whose video on behalf of the state has generated 10.9 million YouTube views of a flashy performance celebrating the state’s beaches.
Seccombe had to submit his resignation last Friday after he was asked for it by Florida Gov. Rick Scott in the midst of a controversy—primarily over the $1 million contract it had with Armando Christian Pérez, better known as Pitbull, a Miami-born-and-reared rapper (he still lives there) who has more than 23 million followers on Twitter alone. During the tenure of his contract with Florida, Pitbull posted two Tweets each month touting the state’s destinations and attractions. These, in turned, prompted hundreds of thousands of queries/leads from Pitbull’s international followers.
For overseas travelers, Florida is the second most-visited U.S. state—New York is first—with one out of every four overseas travelers visiting the state.
Overseas Travelers to the USA
Top Ten States Visited
Source: U.S. Department of Commerce, International Trade Administration, National Travel and Tourism Office
The concern that grew into rage on the part of state legislators over the Pitbull contract developed because Visit Florida maintained that it could not release the contract details because it contained proprietary information and details regarding Pitbull’s production company. Following the decision of Visit Florida not to make the contract public, state legislators filed suit. This prompted Pitbull to release the contract himself—via his Twitter account.
Some legislators also questioned the “Florida values” that were conveyed by Pitbull in the centerpiece video—“Sexy Beaches”—that is used to promote the state to potential visitors. You can view the complete version of the video here: Pitbull – Sexy Beaches ft. Chloe Angelides
Critics of Visit Florida also took the agency to task for its ongoing sponsorship deals with the London-based Fulham Football Club, a professional soccer teams that is London’s oldest. Orlando itself has a major league soccer team and is also the site of soccer training camps that are popular British visitors and an IMSA (The International Motor Sports Association) racing team. IMSA is the top racing body sanctioning body, is based in Daytona Beach, which feeds racing fans into the Orlando area.
For “spending hawk” legislators, the million-dollar contract with Pitbull and the sponsorship of recreational activities with no immediately apparent value to the revenue side of the ledger gave them a field day for laying into Visit Florida. A sampler:
—State Rep. Dane Eagle, R-Cape Coral, told the Tallahassee Democrat that the $1 million Pitbull contract was a blatant misuse of tax dollars that could have been better spent on law enforcement salaries. “If you read the contract, two times to tweet something for $1 million?” Eagle said. “Think of the better ways we could have spent that money, like think about how many more law enforcement officers we could have on the streets.”
—”There are plenty of ways we could better spend that money, things like schools that never seem to get enough,” said Rep. Evan Jenne , D-Dana Beach, said. “Why are we going to hand that money to somebody who won’t even tell us how they’re going to spend it?”
Seccombe was not the only victim of this episode. Before he resigned, he had to terminate two senior agency officials—Vangie Fields, chief financial and operating officer; and Chief Marketing Officer Paul Phipps—who had the misfortune to be associated with the Pitbull contract and the organization’s refusal to make it public. Earlier in the day on which the three agency leaders were let go, state legislators had eliminated funding for the jobs of Phipps and Fields.
What Next? The controversy-turned frenzy was such that it required that three people, not just one, be thrown under the bus. Over the past weekend, e-mail conversations within the tour and travel industry expressed disbelief and shock over the situation. In the discussions that we had, or monitored, regarding this episode, two ironies emerged:
First, while asking the Visit Florida board to fire Seccombe (Because the organization is a public-private sector entry, Gov. Rick Scott had to ask William Talbert, president and CEO of the Greater Miami CVB and chairman of the Visit Florida board, to do the asking), Scott praised the accomplishments of the agency under Seccombe’s four-year tenure.
Second, everyone agrees: Who would take such a job for $120,000 a year—a sum that is less than the salary of scores of leaders of CVBs and DMOs throughout the U.S. with lesser budgets and programs affecting smaller constituencies? Perhaps the budget-conscious Florida legislature will crowdsource the funding for the positions left vacant by the departures of Seccombe, Fields and Phipps.
A copy of Scott’s letter to Talbert follows:
UK Vacation Prices Could Increase 15 to 20 Percent in 2017
Although figures and/or projections from the U.S. National Travel and Tourism Office and the UK’s Office for National Statistics show healthy increases in travel to the USA and for all outbound travel by Britons, a new report on key UK travel companies suggests that holidaymakers in the UK can expect price increases in the range of 15 to 20 percent this year.
Travelzoo said that almost a fifth of the 15 travel firms it had just surveyed believed the increase in holiday prices “could be as high as 15-20 percent” in the coming year. In addition, the company reported, 80 percent of the UK travel businesses questioned, said they were “bracing themselves” for price hikes in 2017.
Cited as reasons for the dim outlook were: the decline in the value of the British pound sterling vs. the U.S. dollar; continued uncertainty surrounding Brexit; the rising price of oil; and ongoing geopolitical fallout. Anyone of these factors, Travelzoo suggested, may create a rise in holiday prices during 2017.
Travelzoo’s UK managing director, Joel Brandon-Bravo, said: “The impact of sterling’s fall in particular has not really been felt in holiday pricing to date, however all the signs are pointing in the direction of price hikes for many popular holiday destinations in 2017.”
Indeed, the pound is at its lowest level against the U.S. dollar in more than 20 years—lower than it fell in the immediate aftermath of the Sept. 11, 2001 terrorist attacks in the U.S. or in the trough of the 2008-2009 economic recession.
During the past six months, data show that the pound fell from a high of $1.49 on June 23, 2016—the date of the UK vote to withdraw from the European Union (the “Brexit” vote)—to a recent low of $1.22 on Oct. 27, 2016.
“Until now British travel companies have been absorbing some price increases on costs such as hotel rates set in euros and many have been selling holidays at prices set before the June referendum,” explained Brandon-Bravo, adding, “Businesses cannot do this indefinitely however and we expect pricing for next year’s holidays to increase by at least 10 percent. For almost one fifth (17 percent) of those we spoke to the increase could be as high as 15-20 percent.”
And the news in the past week has provided few developments that would cause Travelzoo to change its mind; for instance, a decision by the U.S. Federal Reserve Bank to increase interest rates is seen as a move that will make the dollar stronger against all currencies, while decisions by OPEC and non-OPEC oil-producing nations to reduce output will only increase pressure on price points of products, including travel, that ae dependent on oil-based energy.
Brazil on its Way to Recovery? Three Brazilian Travel Experts Weigh in.
Thoughts from a Panel of Experts: Though industry-specific numbers are spare and we seem to rely on anecdotal accounts for encouragement, what data there are, along with the opinion of key economic analysts and industry observers suggest the Brazilian economy and its tour and travel industry—following a year of severe economic and political distress, which included the impeachment and removal from office of President Dilma Rousseff last August—are entering a modest phase of recovery as we approach 2017.
“The year 2016 was one of the most complicated in recent history in economics, and the reflexes, of course, were seen in tourism. Fifteen consecutive months of retreat in domestic travel and a steadily falling GDP, even in the year of the Olympics are just a few of the examples,” wrote Rafael Faustino in the Brazilian travel trade publication, Panrotas, and then, as if to take a breath, added, “For some, however, the worst has already passed and a timid recovery has already begun, gaining momentum throughout 2017.” (“Timid” is what the Inbound Report would emphasized in the expression, “timid recovery,” as the forecast of the U.S. National Travel and Tourism Office does not foresee a reversal in the downward trend of Brazilian visitors to the USA until 2019.)
At the same time, the Focus Bulletin, a weekly publication that collects and digests the projections of 100 economic analysts, says that expectations for real economic growth and reduced inflation have improved. As reported by the business news site, InvestinBrazil.biz, economists now expect GDP to grow by 1.10 percent, following a period in which GDP actually contracted.
And then, last Thursday, Rousseff’s successor, President Michel Temer, announced an economic program designed to stimulate the country’s shrunken economy, including measures to reduce red tape and boost productivity by, for example, offering more credit from state development bank BNDES to small businesses and reducing paperwork for hiring. The government is also looking at measures to reduce the time it takes to get authorization for imports and exports and spur new-home purchasing, among other things, the president said.
In addition, reported The Wall Street Journal, Finance Minister Henrique Meirelles said the government will take steps to help companies stretch out payment of some overdue taxes, to allow them access to credit and invest more. Meirelles also listed measures to reduce the cost borne by lenders in credit operations, in hopes this will lead to lower interest rates.
Where to from Here? In order to get a clearer picture of where the tour and travel industry in Brazil is headed, the Inbound Report called on Celyta Jackson, a global marketing and communications professional who has extensive experience with the Brazilian market (she was also once vice president of tourism for New York City & Co.), who got together with two other respected Brazilian travel industry experts—a Silvio Cioffi, former tourism editor for Folha de São Paulo, the largest circulation newspaper and news site in Brazil, and Tereza Lobo, who is the principal of Conecta2You, a luxury hotel marketing company with offices in Rio de Janeiro and São Paulo—who advised us on what to expect.
One point on which all three agreed is that the U.S. is still the favorite destination of long-haul Brazilian travelers. With this point as preface, here are what the three panelists had to tell us.
Celyta Jackson: I believe that the reforms President Temer has put into place are a long time coming and will serve as a palliative for the middle class. Those reforms are not enough but I don’t think the guy has much time left in office and certainly doesn’t have enough support from his party to implement bigger changes even if he does stay till the October 2018 elections. For the moment, I think Brazilians just want to feel some normalcy. If they do, then Brazilian travel might see a modest uptick. But not spending levels. I’m betting those stay flat. The only positive thing I can say about Trump is that he understands the value of tourism and is familiar with the Brazilian market so I doubt he’ll mess with Brand USA or make it harder for Brazilians to get visas.
Silvio Cioffi: There are three burning questions for Brazilians:
—Will President Temer skirt economic adversity with his government spending caps, small business incentives, and easement of tax collecting processes and take his government out of the cross-hairs of the Lava-Jato† corruption scandal?
—What will happen to the U.S. economy under Trump?
—Will it be harder for Brazilians to get visas now?
(Even so) the U.S. will continue to be the preferred destination for Brazilian tourists because the cost/benefit of U.S. travel for Brazilians continues to be excellent regardless of exchange rates. For all the same reasons as years past—lots of flights and still less expensive than Brazilian domestic flights, it’s safe, shopping is better, even the most basic hotels are better. In sum, U.S. tourism just works. Brazilians are obsessed with travel. Worrying about the Brazilian market is a false problem.
† (Fabiano Silveira, Brazil’s minister for transparency, monitoring and control, had to quit his post last May as a result of leaked tapes which suggested there was a coordinated, high-level campaign to quash the Lava Jato [car wash] investigation into a kickback scandal involving the state-run oil company Petrobras and dozens of politicians.)
Tereza Lobo: The situation of outbound tourism had been worsening gradually since 2015 when the dollar increased almost 50 percent. The economic situation together with an unprecedented political crisis generated uncertainty and, consequently, a halt in the middle-class travel planning. Until then, Brazilians were accustomed to an artificial appreciation of their currency and the Brazilian facility of splitting any purchase into monthly installments.
But what most hurt our industry was the increase in unemployment [12 million] and widespread fear of job loss.
The airlines began a tariff war—it was mainly in business class—offering advanced ticket purchase with up to 50 percent savings. In contrast the operators saw the high dollar valuation further reducing their skyrocketing margins (from 25 to 35 percent of the net) and suffered more. The end user became more aware of the cost of money, began to research via the internet before talking with their booking agent, and to object to prices quoted comparing them with internet pricing. In the case of airlines, the end user does not have as much opportunity to evaluate flash sales. And that made airline tickets more of an impulse buy.
With some exceptions, in a way, 2016 was almost stable. The dollar was already at a plateau without intervention of the Central Bank in terms of foreign currencies [or cost of the overseas traveler]. But the great villain was fear of unemployment. All companies were cutting staff in this third year of recession. To survive the era meant (and still does) to cut back to bare bones, “secar” (dry). The tourism industry suffered more than other sectors for not being an essential industry.
In the second semester of 2016, especially after the impeachment episode, and because that all unfolded legally, within the laws of the Constitution, agents began to see a timid resumption of international travel—but with a difference: most reservations and purchases were short term. This is explained not only by the proliferation of special offers but because business executives in this uncertain economic climate, could not plan months in advance.
Some signs in the economy already cheer: Inflation rates that skyrocketed in 2015 will end the year within target levels, and while positive growth for 2017 is predicted to be barely over 0.7 percent, after three years at zero; even that small uptick is positive.
The U.S. as a destination continues to surpass others. What has changed most was the spending of Brazilian tourists. Levels decreased and then stabilized in August. Those spending levels are still stationary. The upper-class Brazilian continues to travel but with adjustments—shorter trips, deluxe rooms have replaced suites.
The election of Trump had no effect here except slight instability in exchange rates, which soon passed.
I see 2017 with hopeful eyes: the country has survived an impeachment, continues to jail those who are corrupt whether they are executives or politicians. We are starting to crawl out of the bottom of the well—the new economic team has credibility, and there seems to be a general feeling that the new regime is at least better than the one we had. Tour operators and travel agencies all suffered a decrease in revenues, whoever claims otherwise is lacking in truth.
But a trend was born of this crisis: these days, even the rich seek special offers, deals, bargains when planning a trip and they are not ashamed of it! Consequently travel agents and tour operators will have to work even harder moving forward.
NAJ’s Active America China Launches Bilingual B2B WeChat Channel
Inform, Engage, Connect our tourism community around Active America China Summit 2017:
The NAJ Group, publishers of the Inbound Report, has launched a bi-lingual B2B WeChat channel designed to bind tour operators, travel planners, U.S.-based Chinese Receptive operators together with North American destinations and suppliers into a community network around Active America China Summit and TourOperatorland.com.
“We have assembled a great team to help us build the network and communicate in a way that will be uniquely entertaining, informative and engaging to our Chinese trade partners,” commented Jake Steinman, founder of NAJ and Active America China, “our goals is to grow our community of 300-500 trade buyers by March of 2017.”
—Daniel Shen’s team at East/West Marketing, (our agents in China) will be promoting the channel to our network of over 300 Chinese-based operators who have attended Active America China since 2009 as well as to their database in the travel industry.
—Z.J.Tong’s team at China Pro Partners, will be in charge of design, production, translation and promotions to generating trade followers.
—Gayle Morris, a long-time veteran of our tourism industry whose experience includes tenures as senior sales and marketing leader at Tourism Richmond, the Vancouver Convention & Exhibition Centre and Gaylord Hotels ResortQuest division, will serve as Creative Content Strategist.
Weekly messaging will include the following on a rotational basis:
—What’s new at Active America China Summit; Host City updates, who’s attending, Pre&Post FAM opportunities and more
—TourOperatorland.com “Destination of the Week” links
—“I Love to Win” with Active America; weekly travel incentives and giveaways, provided by Active America China supplier partners
—“Farm to Chop Stick,” group friendly restaurants that Chinese travelers love to experience
—“The Dumpling Trail,” favorite Chinese restaurants for groups and FIT visitors
—“Shopping is the Best Outlet,” and therapy too! links to shopping vouchers from TourOperatorland
—“Dancing Destinations,” Links to US-dance videos sponsored by an AA China destination
—“Did You Know?” Relevant and fun facts and research sourced from The Inbound Report
About Active America China Summit (April 23-25, 2017, Portland, OR). Now entering its ninth year, the NAJ Active America China trade show is the only US-based show that brings qualified Chinese tour operators to the event’s U.S. host city for to build new U.S. and Canadian product.
For more information about Active America China Summit go here: http://www.activeamericachina.net/
Bain Capital Sells Apple (Leisure Group, that is)
As the Inbound Report predicted last month (Nov. 10 issue), Boston-based venture capital firm Bain Capital Private Equity was expected to complete the sale of its Apple Leisure Group (which includes the operator Apple Vacations®) by this month. And it has.
The announcement came Dec. 13 that New York-headquartered KKR, a private equity firm and an affiliate of Denver-based KSL Capital Partners have entered into a definitive agreement to acquire the company from Bain. Financial terms of the transaction were not disclosed.
Apple Leisure Group, the statement announcing the acquisition said, is “North America’s top seller of all-inclusive vacation packages,” Apple Leisure Group’s collection of leading subsidiaries includes AMResorts (hotel management and marketing services), Amstar (the largest destination management company for Mexico and the Dominican Republic), a portfolio of travel distribution brands in addition to Apple Vacations (Travel Impressions®, CheapCaribbean.com®) and the exclusive Unlimited Vacation Club travel program.
Already a part of KSL’s portfolio of properties are such famous names as: Squaw Valley/Alpine Meadows; Barton Creek Resort & Spa; The Grove Park Inn; The Homestead; La Costa Resort and Spa and Rancho Las Palmas Resort and Spa.
“We are pleased to be partnering with KKR and KSL for our next phase of growth,” said Alex Zozaya, CEO of Apple Leisure Group. “They share our commitment to the vision of Apple Leisure Group as we continue to deliver great results to travelers, guests and hotel owners. We are extremely appreciative of Bain Capital Private Equity’s partnership and support in executing our growth mission and helping us strengthen our leadership position over the past four years.”
It was in 2001 that Zozaya founded the resort sales, marketing, and brand management company, AMResorts. A decade later, Zozaya helped create Apple Leisure Group by making tour operator, Apple Vacations, a sister company of AMResorts.
Bain Capital acquired a majority stake in Apple Leisure Group in late 2012, which then acquired online leisure wholesaler CheapCaribbean and B2B tour operator Travel Impressions from American Express, in 2013.
The transaction is expected to close during the first quarter of 2017, and is subject to customary regulatory approvals. KKR’s investment is being made principally from its eleventh Americas Private Equity investment fund.
Golden Week in China to Create Record Outbound Travel—USA is Tops for Long Haul
An estimated 6 million Chinese are expected to travel abroad during the upcoming Spring Festival holidays (January 27 to February 2), a record high for a weeklong holiday, according to a report by the online travel agency Ctrip.
“China’s Spring Festival holidays … will be a global Golden Week,” the company said. The 10 most popular destinations are: Thailand, Japan, South Korea, Taiwan, Singapore, Hong Kong, USA, Indonesia, Malaysia and Australia.
Given the unstable political situation in South Korea and the deployment of the Terminal High Altitude Area Defense (THAAD) anti-missile system, Chinese enthusiasm for that country has cooled, Zhang Lingyun, director of the Tourism Development Academy at Beijing Union University, told the Global Times of China (GlobalTimes.cn). However, the number of Chinese traveling to Southeast Asian countries, especially the Philippines, Vietnam and Cambodia, is on the rise mainly due to low costs and geographical advantage, he said.
Besides, bookings for long-haul destinations have peaked, with the U.S. and Australia as the most popular, according to the report, which said that U.S. travel packages for NBA games, outlet shopping or visits to Hawaii are popular.
Although it costs more to travel during the peak season, prices are about the same as they were last year, the report noted. That is due to an increase in the number of flights, advanced purchase of travel packages and travel agency discounts.
The cost of traveling to Thailand, the U.S. and the Philippines is 5 to 15 percent higher than last year. However, it’s cheaper to travel to South Korea, Singapore and Italy, down 10-30 percent from the previous year, said the report.
Easier visa application requirements, more flights and lower prices have induced overseas travel, according to the report.
“After the U.S., Canada and Singapore granted 10-year visas to Chinese, Israel and Australia followed suit. In addition, Thailand reduced its visa fees for Chinese visitors in December, January and February,” a travel agent surnamed Chen at domestic online travel agency lümama.com, said in a statement sent to the Global Times.
HODGE PODGE: Shifts, Shakeups and Occasional Shaftings in the Tour and Travel Industry
Phil Hannes has been named senior director of international marketing for the San Diego Tourism Authority. A 28-year veteran of the hospitality industry, Hannes was most recently Director of Tourism Development at Visit Anaheim, a position he held for 20 years. Hannes’ previous positions include director of sales and marketing at the Holiday Inn Hotel & Conference Center in Buena Park, CA and director of sales at the Doubletree Club Hotel and Comfort Inn & Suites, both in Santa Ana,
Oliver Dörschuck will leave his job as chief operating officer—the de facto No. 2 position—of Tui Germany at the end of December in order to take up a “new challenge” elsewhere. It is unclear whether he will remain in the travel industry or not. He is currently responsible for TUI’s entire tourism program. He has been with TUI Germany for 14 years and a member of the management board since 2012.
Marek Andryszak, the new number two at TUI Germany, starting January 1, 2017, will be Marek Andryszak, the former TUI Poland chief who took over as CEO at the group’s German last-minute holidays specialist L’Tur only this summer and is currently restructuring the company.
Roseworks Marketing principal Rosemarie Reyes has announced the addition two senior tourism experts: Véronique Hennebelle (left), based in Brussels Belgium, and Shoshana Puccia (right), based Pasadena CA. Based in Paris, Roseworks specializes in tourism and entertainment marketing. Hennebelle, based in Belgium, bring over 50 years of experience as tour operators in New York as well as tourism marketing professionals. Puccia rounds out the team with experience on the tourism supplier side, having worked with shopping centers and cultural institutions such as The Getty Museum, Beverly Center and Universal Studios Hollywood. Hennebelle started her career managing the No. 1 French Tour Operator, Nouvelles Frontières, in its New York office for 10 years
Rogério Guerra is the new commercial director for Gol Airlines. He replaces Fabio Mader, who returned to CVC to take over the International Products board. Guerra has more than 20 years of experience in telecommunications, having worked in companies such as Claro and GVT.