How Badly will Exchange Rate Woes Affect Tourism Arrivals?
It is the strong U.S. dollar and its impact on the change rate between the dollar and other major currencies—not the hostility toward U.S. President Donald Trump—that presents the principal obstacle to sustaining or increasing growth in visitor numbers from key overseas markets in 2017 and in the short term future.
This is what the Inbound Report picked up last week during the RTO Summit West—it is produced by the NAJ Group, which also publishes the Inbound Report—after speaking to a third of the 120 so U.S. travel suppliers who attended the event in Marina del Rey, California.
To be sure, the “Trump factor” is having a real impact on some markets, such as Mexico and Germany, but the concern over a weak Euro, Canadian dollar and Mexican peso is a systemic problem—one that seems to be non-partisan.
These three currencies represent the medium of exchange for the USA’s largest three markets: Canada, Mexico and (taken collectively) continental Europe:
- While the Canadian dollar, or loon, has begun to creep back up a little from its low point last year, it is still more than 13 percent lower than it was three years ago. This has resulted in a drop in inbound traffic to the USA from Canada of 4.5 million visitors since the loonie began its decline in 2013. That is a 20 percent drop-off. (For Canadian destinations and travel suppliers, the weak loonie is a boon, as the country is expecting its highest annual total ever of inbound visitation in 2016, once final figures are in, from the USA and overall.)
- In Mexico, where distaste for Trump is especially high, and where tourism officials work on both inbound and outbound as well as domestic travel, the focus will be to bring U.S. visitors into Mexico and to encourage Mexicans to take their vacations within the country, the tourism ministry has said that it expects travel to the USA to decline. Francisco Madrid Flores, the director of the Faculty of Tourism at the Anahuac University, has forecast that, in 20017, travel by Mexicans abroad will decrease by two percent.
- In the Eurozone, where tour operators seem to have adjusted to a euro that has been stuck at less than $1.10 for at least the past year, the forecast of the U.S. National Travel and Tourism Office (NTTO) has predicted virtually no growth in Europe’s top source markets in 2017—a minus one percent for Italy, a plus one percent for both Germany and France, and a plus two percent for Spain. (We’ll have a better sense of the European market next month after ITB—it is the world’s largest travel trade show—meets in Berlin.)
Research Firm Quantifies Impact of Trump Presidency on Tourism to USA
At about the same time that a U.S. Appellate Court panel of three judges ruled on Feb. 9 against President Donald Trump’s ban on nationals from seven mostly Muslim countries entering the USA, data measuring the impact of the measure, which was implemented in a Jan. 27 executive order signed by Trump, showed that the President and his policies appeared to be a deterrent to travelers from countries around the world. This was the general finding of a study conducted by ForwardKeys, the travel intelligence analyst, which monitors travel patterns by analyzing 16 million flight reservation transactions a day. The numbers speak for themselves:
The findings show that after President Trump’s initial travel ban (imposed on January 27) net bookings issued from those seven countries (Iraq, Syria, Iran, Libya, Somalia, Sudan and Yemen) between January 28 and February 4 were down 80 percent over the same period last year.
ForwardKeys also looked at wider international trends in bookings to the USA and discovered a 6.5 percent negative variation compared with the equivalent eight-day period the year before. (The analysis excluded China and Hong Kong because of the seasonal effect due to the timing of Chinese New Year.)
—Bookings from Northern Europe were down 6.6 percent.
—Bookings from Western Europe were down 13.6 percent.
—Bookings from Southern Europe down 2.9 percent.
—Bookings from the Middle East were down 37.5 percent.
—Bookings from Asia Pacific down 14 percent.
If one analyzes total outbound bookings from each of those regions to provide a benchmark, in every case, the USA has lost market share as total outbound travel from Northern Europe was flat, from Western Europe was down 1 percent, from Southern Europe was up 3.1 percent, from the Middle East was down 13 percent, and from Asia Pacific was down 8.9 percent.
Against this trend, bookings from Central/Eastern Europe and the Americas were up 15.8 percent and 2.3 percent respectively. However, when one looks again at outbound travel from those two regions of the world, total travel was up substantially, 12 percent from Central/Eastern Europe and 4.8 percent from the Americas so the increases in travel to the USA look less impressive from this perspective.
For the Middle East as a whole – beyond the banned countries – during the last year, bookings to the USA were already down 8.8 percent, but focusing on bookings issued from January 28 to February 4, they fell 38 percent. Bookings from Saudi Arabia were down 60 percent but the substantial decrease is probably due partly to a school break, from Jan 26 to Feb. 5, which fell at a different time last year.
While travel bookings on any given day can be significantly up or down compared to the same day a year before, variability over a few consecutive days is typically much less. The eight-day period coinciding with the travel ban is the first time since before the presidential election in early November that there has been a consistently long run of negative variations compared with the equivalent period the year before. For reference, inbound bookings to the USA for the whole of the past year were down 0.4 percent.
After Federal Judge James Robart placed a temporary block on Donald Trump’s travel ban on Feb. 3—it was upheld by the U.S. Appellate Court for the Ninth District which is based in San Francisco— bookings to the USA from Iran, on February 3 and 4, saw a dramatic surge, five times higher than the same two days last year. Most were for arrival on February 5 and 6 and with lengths of stay of 22 nights or more and, according to ForwardKeys data, Iran was the only country to see such a surge following the suspension of the ban.
Flight Searches down: In another report Hopper, a digital travel app, analyzed data which revealed that interest in travel to the United States had dropped sharply since Trump was inaugurated on January 20.
The app’s methodology is simple.
Hopper calculated a number of flight searches conducted two weeks before President Trump took office and the number of flight searches conducted two weeks afterward—making the period that was analyzed approximately Jan. 6 to Feb. 3. The app then broke down the data according to which airports were searched for and calculated the difference. During this same span of time, the Trump White House instituted the travel ban.
The results show that interest in travel to the United States declined 17 percent over the course of the tracked period. Understandably, searches really took a dive on the Saturday after the travel ban (Jan. 28). The data are based on averaging billions of flight searches, according to Hopper.
The Bottom Line: Hard data regarding the financial impact of the “Trump factor” and the ban were also hard to come by, but on Feb. 10, the Global Business Travel Association (GBTA) said the ban had cost the travel industry about $185 million in lost business. GBTA estimates that was the amount lost in the week following the executive order.
The association said travel business grew 1.2 percent in the week preceding the ban and dipped by 2.2 percent after the ban was announced.
A previous survey by GBTA found about 30 percent of members expected to see less overseas business travel during the next three months and almost as many believe low demand could linger for the rest of the year.
Industry Voices React to Impact of Trump Presidency on Their Business
In conversations during sales missions and sales calls, during phone calls with colleagues and at industry trade shows—including last week’s RTO Summit West in Marina del Rey, California—the reaction and behavior of the USA’s inbound tour and travel industry toward President Donald Trump and what he has said or done that has frustrated and flummoxed them seems to comport with the stand taken by the industry’s chief lobbyist in Washington D.C.—the U.S. Travel Association:
“US Travel has worked successfully with administrations on both sides of the aisle throughout out 75-year existence,” said Patricia Rojas-Ungár, the association’s vice president, government relations, in a statement posted on US Travel’s website, adding, “Given our legislative history, our economic clout, and the importance of travel to our way of life, we are confident that we will be able to engage with President-elect Trump effectively and productively.”
On one level, most tour and travel industry professionals have a reaction to Trump that is viscerally negative; on another level—the rational, real-world of sales and marketing the Visit USA product—there is the realization that one still has to work and sell in the marketplace.
We’ll just have to do so differently, said Jake Steinman, founder and president of the NAJ Group, during a brainstorming session of nearly 100 industry professionals that took place during NAJ’s RTO Summit West. “For the past eight years, we’ve been on offense. For the next four years, we’ll have to be on defense,” he said, adding, “We have to remain positive.”
Some other voices from the session—in which participants were called upon to discuss among themselves at tables arranged by industry segment the impact of President Donald Trump and his executive order imposing a ban on travel from certain overseas country markets—include the following:
—While acknowledging that “it’s great” that US Travel has forged a position that the industry can get behind, Lauren Rogers, director of global tourism, Simon Property Group, said, “But it’s up to us to say ‘You’re welcome,’ and that race, religion and sexual orientation doesn’t matter.”
—“We’re going to have to take a wait-and-see position,” Terry Selk, executive director of the Yosemite/Mariposa County Tourism Bureau, told his colleagues. “You have to be in the marketplace in good times and bad,” he added, pointing out that other countries “have experienced worse turmoil than we’re experiencing … actually the exchange rate is a greater danger.”
—Summing up the discussion at her table, Rachel Bremer, global trade manager, Utah Office of Tourism Film & Global Branding, said, “We really need to stay apolitical and positive.”
—Adding a historical perspective to the discussion, Juan Sepulveda, wholesale / leisure sales manager at Paramount Hotel Times Square New York, noted: “What we’re going through is nothing compared to what Argentina and Brazil and Venezuela have experienced … things that happened out there are now happening to us.”
—Pepe Avila, director of tourism development at Visit Anaheim, noted that, in the past week, his organization had just entertained trade groups and/or journalists from the Middle East, Japan and Mexico. “We cannot stop travel,” he said. “Travel is one of the last arsenals of diplomacy.”
And, lest suppliers believe that there is no Trump factor with potential international travelers, Timo Kohlenberg, president and CEO of Germany’s America Unlimited tours, on Feb. 11th posted midst the company’s appearance at the Abf Hannover—it is a trade show for adventure/active tourism): “Great times at Abf Hannover. If only there weren’t the Trump comments.”
Brand USA Taps Sean Bayliss for Global Trade Development
Underscoring the organization’s growing involvement in product development and its work with the global travel trade, Brand USA has announced that Sean Bayliss, a veteran in the U.S. receptive tour-operator industry, has joined Brand USA to head up the agency’s global trade development team.
Bayliss left his position as vice president, product, for Mark Travel to form the International Tourism Resources Group (ITRG) consultancy, and will join Brand USA on a contractual basis—he submitted the winning bid for the work; the award the $350,000 contract was announced last November—and will focus on expanding Brand USA’s international representation network and travel trade outreach and developing tourism products for Brand USA partners. Currently, Brand USA has a network of about 600 worldwide travel-related partners. One of Bayliss’s areas of concentration will be on enhancing Brand USA MegaFams, sales missions and trade show exhibitions.
“Sean’s extensive track record in promoting and managing strategies for tapping into international tourism markets makes him an ideal resource for our team,” said Cathy Domanico, Brand USA’s vice president for global trade development. “He will present educational seminars and webinars to our partners and work with them to create new programs to entice international travelers to the USA.”
Bayliss has more than 15 years of experience working in the receptive tour operator industry. Prior to his consultancy with Brand USA, he was vice president, Mark International. Prior to that, he held senior-level positions with GTA and AlliedTPro.
Private Equity Firm KKR Acquires Travelopia from TUI
TUI Group has reached an agreement with the New York-based private equity firm KKR, to sell Travelopia, its collection of 50 specialty tour operator brands, for £325 million ($405 million).
The travel giant announced its intention to sell Travelopia last May as part of its strategy of transforming itself into an integrated tourism business focused on hotel and cruise brands. Last April, the company also sold its bedbank, Hotelbeds, to the London-based private equity group Cinven and the Canada Pension Plan Investment Board (CPPIB).
“The sale of Travelopia is the next strategic step in sharpening TUI’s profile. We consistently continue to focus on becoming a vertically integrated tourism business,” said CEO Fritz Joussen. “Both the Group and its shareholders benefit from the negotiated result. We have ambitious goals and want to take the TUI brand into new regions in the world in the coming years. A clear strategic direction supports this course.”
The transaction is the second move in as many months by KKR into the tour and travel business. On Dec. 13th, KKR, joined with an affiliate of Denver-based KSL Capital Partners and purchased Apple Leisure Group (which includes the operator Apple Vacations®) from Boston-based Bain Capital.
More Germans Choosing Domestic Holidays in 2017, Says Survey
Tucked away near the end of a report on the results of the just-released 33rd annual Tourism Analysis by the Hamburg-based research organization Stiftung für Zukunftsfragen (Foundation for Future Studies) is a finding that tells the reader that outbound long-haul travel last year by Germans remained essentially at the same level as it was in 2015, with 11 percent of the country’s travelers making the long-haul experience their principal holiday. And North America, was the long-haul holiday destination of choice for 3.1 percent of German holidaymakers.
Of equal, if not greater, importance to the German travel trade is the slightly optimistic outlook the Tourism Analysis had for overall leisure travel this year. Dr. Ulrich Reinhardt, the head researcher at the institute, said that positive factors such as the stable economy, low unemployment, the strong euro (relative to currencies other than the U.S. dollar) and low interest rates help to account for the fact that travel intentions are higher than they were last year, as 44 percent of Germans already actively planning their holiday compared to 42 percent at the same time last year.
Other highlights from the Tourism Analysis—it was based on a representative survey of 4,000 consumers which was conducted in December and January—include the following:
- Germans traveled more and longer, and also spent more on their holidays in 2016.
- Fewer holidays in Spain and Turkey and more in Germany and Austria instead were the key destination trends last year
- Overall, 57 percent of Germans went on a main holiday of at least five days last year compared to 54 percent in 2015, while more than one in three travelers undertook two or more trips.
- The average number of days spent on holiday increased to 12.9 days from 12.6 in 2015 and a low of 12.1 days in 2014.
- Average total holiday spending per person increased to €1,166 ($1,241) from €1,109 ($1,180) in 2015
- The home country, Germany, remained by far the most popular holiday destination last year, with a two percentage point increase to 34.2 percent of all main holidays.
- Spain remained the dominant foreign holiday destination last year with 14.1 percent of all main holidays, even though this number was a fractional 0.1 percentage point decline.
- Italy dropped to 7.9 percent in 2016 from 8.8 percent in 2015.
- Turkey, beset by several episodes of terrorist activity within its borders, fell 1.6 percentage points to 4.4 percent.
- Austria proved popular, improving by 0.6 percentage points to 4.4 percent, while there was also growth for Croatia and Scandinavia, the survey showed.
Acquisitions & Mergers
Priceline Acquires Momondo: The Priceline Group has reported that it has signed a definitive agreement to acquire Momondo in a $550 million deal expected to be completed later this year subject to regulatory approval.
Momondo Group, which is based in the UK and Copenhagen, operates brands including metasearch engine Momondo and Cheapflights. It is currently owned by Boston-based Great Hill Partners and will be added to the portfolio of The Priceline Group, which already includes Booking.com, Priceline.com, agoda.com, KAYAK, Rentalcars.com and Open Table. Based in Norwalk, Conn., The Priceline Group is the biggest online travel agency worldwide.
Commenting on the deal, Momondo Group CEO Hugo Burge said, “Our business is in great shape across the 30-plus markets in which we operate, and we’re looking forward to the opportunity to build on that further.”
MakeMyTrip Merges with ibibo Group: I an announcement made in both New York and New Delhi,
MakeMyTrip Ltd. one of India’s leading online travel agencies, said that it has completed its merger of the ibibo Group. The merger creates one of the largest travel groups in India, bringing together a collection of leading consumer travel brands, including MakeMyTrip, goibibo, redBus, Ryde and Rightstay, which together processed 34.1 million transactions during fiscal year 2016.
MakeMyTrip Ltd. is the parent company of MakeMyTrip (India) Private Limited, India’s largest online travel company, MakeMyTrip Inc. (USA), MakeMyTrip FZ LLC (UAE), Luxury Tours & Travel Pte Ltd (Singapore), Luxury Tours (Malaysia) Sdn Bhd, the Hotel Travel Group (Thailand) and the ITC Group (Thailand).
Meier’s Weltreisen is Favorite Tourism Brand of Germans …TUI is No. 2
Meier’s Weltreisen, the DER Touristik specialist has scored ahead of TUI and Holidaycheck in a ranking of Germany’s favorite tourism brands. The ranking comes from a study conducted for the German travel trade publication FVW by consumer market researchers Yougov. Left out of the Top 10 were tour operators such as Neckermann Reisen and Alltours, as well as online behemoths Booking.com, Expedia, Airbnb and Tripadvisor.
As FVW explained the ranking process, two separate rankings of 42 different travel brands were produced: one showing the evaluations of existing customers; the other showing the opinions of non-customers. The rankings, compiled from Yougov’s ongoing broad-based survey of 1,000 German consumer brands from different sectors, reflect criteria such as image, quality, value-for-money, satisfaction and recommendation.
Notable in an analysis of the ratings is just how well-regarded travel brands are vs. other consumer bands: the top nine tourism brands in the customer ranking all scored more than 70 points. This is well ahead of the automotive industry, for example, which generally has ratings of between 40 and 50 points in consumer brand surveys.
うわー！(Wow!) Latest Google Addition Translates Japanese Instantly
Last spring, tour and travel industry professionals throughout the world took notice when Waverly Labs in New York announced that it planned to have a real-time language interpretation device available in the second half of 2017. Since that time, updates from Waverly has been most about the start-up’s progress in raising funding and in advance sales of its device, called Pilot, which will use ear buds. The latest report indicates that more than 21,000 units had been sold at $249 per unit.
While the industry waits, however, Google has expanded the capacity of its visual translation service. The company recently announced a new translation feature that will make it easier for travelers who don’t speak the language to go on a trip to a Japanese-speaking destination.
Google Word Lens—a service available through Google Translate on Android and iOS devices—allows you to point your phone’s camera at text, and it’ll show the translation on the screen in real time.
According to Masakazu Seno, a software engineer for Google Translate, “The Google Translate app already lets you snap a photo of Japanese text and get a translation for it in English … but it’s a whole lot more convenient if you can just point your camera and instantly translate text on the go.”
It is interesting that, when Andrew Ochoa, founder of Waverly Labs, discussed Pilot last spring with Forbes magazine, he made specific reference to the Japan market, telling the publication, “We don’t want to make any promises or references that this is incredibly real-time or that we could give you an earpiece and drop you off in the middle of Tokyo. That is not what we’re trying to convey at all.”
The Google app already offers translation for hundreds of languages, and the most recent addition to the live translation, Japanese, also works offline, so users don’t need to have a Wi-Fi connection to use it. But they will need to download a file for each language they would like to translate. For any languages that aren’t included in the live functionality, users can still take a photo of the text in the app and highlight what they want translated.
The initial version of Waverly’s real-time spoken translation, when available, is supposed to be support some European languages (English, Spanish, French, Italian), with others to be added. So far, funding has not been a problem for Waverly, which reports that it has raise $4 million via Indiegogo, the San Francisco-based crowdfunding website.
For those wishing to find out more about Waverly Labs and its Pilot, visit www.waverlylabs.com.
Also, a good background piece on Waverly and the Pilot can be found at:
Laughing All The Way– A Photo Sampler RTO West Summit
by Tom Berrigan
It was more like smiling, although some of the delegates attending Day Two of the NAJ Group’s RTO Summit West at the Ritz-Carlton Marina del Rey did chuckle or laugh as the Inbound Report’s photographer tried to generate happy laughter by telling a quick joke from his Rodney Dangerfield, most quickly retreated to a polite smile before we could take their photograph.
RTOW 2017 #20: Meagan McGuire, vice president, sales and services, Seattle Southside Regional Tourism Authority.
Greg Eckhart (left), manager, global sales, Travel Oregon; and Karen Viehoever, senior international tourism manager, Europe, Travel Portland.
Robert Miyano (left), assistant manager, packaged destination management department, JTB; and Tsutomo Natsuhara, general manager, J-Pac Travel.
Z.J. Tong (left), president, ChinaPro Marketing Partners; and Florian Hermann, creative director, NAJ Group.
( left to right): Harry Wade, tourism marketing manager, Duty Free Americas; Claudia Alex; and Juan Sepulveda, wholesale / leisure sales manager at Paramount Hotel Times Square New York.
The largest state delegation outside of the U.S. West at the RTO Summit in Marina del Rey, Calfornia was from Pennsylvania. It included (left to right): Jeffrey Yau, international tourism sales manager, Philadelphia CVB; Nicole Absher, group sales manager, Destination Gettysburg; Audrey Bialas, director of sales, Hershey Harrisburg RVB; Greg Edevane, director of sales, Chester County CVB; Julie Payne, group tour consultant, Hershey’s Chocolate World; Nathan Claycomb, business development manager, Sight & Sound Theatres®; Ann Pilcher, tourism sales manager, Pocono Mountains CVB; and Peggy Nana-Sinkam, group sales manager, Amish Farm & House.
HODGE PODGE Shifts, Shakeups and Occasional Shaftings in the Tour and Travel Industry
Abby Schrum, who has worked on staging meetings and conferences for the Pennsylvania Association of Travel and Tourism and other tourism-related events, is now president of her own company, Meetings Forte LLC.
Barbeiro “Kiko” Neto is the new commercial manager of PANROTAS, the largest Brazilian travel trade publication and news portal. Neto spent 20 years at Editora Abril, a major Brazilian publisher, where he worked on several projects, including tourism and other business segments. His team is made up of six account executives and two assistants in São Paulo, one in Rio de Janeiro and two in the United States.
Connie Kopecky has joined the staff of Visit Milwaukee as sales account executive. In her position, Kopecky comes to Visit Milwaukee with more than 20 years of experience at GMR Marketing LLC, where her most recent position was director of travel, corporate events, meetings and hospitality.
Doug Stagner has left SeaWorld to join the International Association of Amusement Parks and Attractions in the newly created post of chief operating officer and executive vice president of worldwide operations. Stagner began his 32-year career with SeaWorld in 1984 as a San Diego ride operator. Most recently he was vice president of international operations for SeaWorld Parks & Entertainment.
The Nevada Department of Tourism and Cultural Affairs has hired longtime Reno journalist Guy Clifton to serve on its public relations team. He will serve as a public relations specialist dedicated to the cultural affairs divisions of the department: the Division of Museums & History, the Nevada Arts Council, and the Nevada Indian Commission. Clifton is widely known known in Nevada for his work at the Reno Gazette-Journal, where he served for 22 years as a reporter, columnist, and editor