OTAs vs. Receptive Tour Operators: Which is better for Independent Hotels?
As a part of its move to develop and prepare for launch early next year of its DMO as Matchmaker© program—this initiative will help DMOs maximize their ability to bring a destination’s smaller hotels and independent properties together with receptive tour operators (RTOs) and avoid the heavy fees and other practices of OTAs—the NAJ Group has sponsored research shows clearly that independent hotel properties have a clear advantage on matters related to margins, inventory control and integrity of bookings when they take advantage of the RTOs vs. OTAs. The data illustrated in the table below were researched through interviews with a half-dozen revenue managers from independent properties who are part of small management groups.
“During my recent visits with receptive operators, I learned that their main interest for hotel contracting has moved to independent hotel properties,” said Jake Steinman, founder and CEO of the NAJ Group (it also publishes the Inbound Report). This, he explained, is happening for 3 reasons:
- More chain hotels are opting to go independent once their chain contracts lapse as owners realize they are able to replace bookings from chain hotels with OTA’s without the dictates issued by the corporate chains.
- While operators are looking for independent hotels as a way to offer new product they are not able to find them at trade shows such as IPW as they have limited budgets and their management knows very little about the international inbound opportunity.
- The OTAs are generally loathed by independents due to their commission structure and their ability to force rate parity that limit hotels to offering the same rates to the public as the OTA’s. Not to mention massive cancellation rates (40 percent for Booking.com; 28 percent for Expedia) and, in Booking.com’s case, frequent instances of fraudulent bookings.
We believe the sentiment among independent hotels towards OTA’s creates an opening for RTOs and, since these hoteliers are not found at trade shows the DMO’s, who know both the independent hotels in their communities and the RTO’s are uniquely positioned to serve as matchmakers. To facilitate this further, NAJ will be offering incentives to DMO’s attending next year’s RTO Summits to bring lists of independent hotels and serve as the “Matchmaker” by facilitating introductions following the event.
To help our DMO clients educate independent hotels, we will share a power point presentation that will explain the receptive channel and include side by side comparisons such as the table below.
Look for news of additional features of NAJ’s DMO as Matchmaker© program in future issues of the Inbound Report prior to program’s official launch early next year.
Helping Houston after Harvey
Our friend Jorge Franz, Vice President, Tourism for Visit Houston told the INBOUND Report that no one from his department has suffered extensive losses from flooding. However, the home of Pete Garcia, who many remember from his days as director of sales for Continental Airlines, was completely flooded and last weekend and Franz was among 20 of Garcia’s friends who came together to help with the cleanup. (See photo below).
Here is a link to one way in which those interested can help Houston with its post-Harvey recovery: htt
Brand USA Pushes Back “100-Million-Visitors” Goal to 2023
Midst an ongoing buzz heard wherever more than a handful of inbound international tour and travel professionals have gathered since the election of Donald Trump as President of the United States, the marketing committee of Brand USA’s board of directors was to have gathered this week to apply the finishing touches its marketing plan for Fiscal Year 2018, which begins Oct. 1st.
The 100 million-visitors-by-2021 was established during the mid-point of the Presidency of Barack Obama, when the number of annual visitors to the USA had reached nearly 68 million. And as arrivals pushed past 77 million in 2015, the goal looked achievable—on paper. For, 2015 also brought with it a dollar that strengthened considerably vs. the British pound sterling, the euro, the Mexican peso and the Canadian dollar—suddenly, travel to the USA had become 20 percent more expensive for consumers in some markets. To make matters worse, Brazil lapsed into its worst economic recession in a century.
It is still too early to gauge definitively the impact of President Trump and his immigration policies, which are deeply unpopular abroad. Early statistic signals seem to suggest, however, that some travelers in major markets are forgoing holidays in the USA because of Trump.
But even before a few recent readings on Trump, the U.S. Department of Commerce’s National Travel and Tourism Office (NTTO) was finally able to address some of the collection issues it had to deal with in the way the Department of Homeland Security’s was providing passenger arrival data in a timely fashion and recently came out with First Quarter numbers for 2017 that do not augur well for the rest of the year.
The indications are that Brand USA will formally push back its goal of attracting 100 million visitors a year to the United States by two years. This action and others were to be discussed at the Sept. 13 marketing committee meeting. The results of that meeting are expected to be approved at next week’s (Sept. 20) meeting of the full board of directors.
Two Week Holidays and “Booze Cruises” are Thing of the Past in British Travel
An extensive look over past 20 years recently conducted by the UK shows, convincingly, that while British travelers are forgoing the traditional two-week holiday and booze cruises (it used to be popular to make the short voyage from the UK across the English Channel, stopping long enough to make purchases of untaxed alcohol and tobacco in France.) Also, British travelers were barely familiar with Internet travel purchases.
Following are some of the highlights from the ONS 20-year look back.
Brits are taking more holidays. In 2016, UK residents went on more than 45 million foreign holidays, up from 27 million in 1996. This is a 68 percent increase in the number of holidays, while the UK population increased by just12 percent in the same period. However, the total would likely be even greater were it not for the devastating impact on travel by Brits of Great Recession of 2008-2009.
Total Number of Holidays Overseas by UK residents
1996 to 2016
One of the biggest changes noticed by ONS over the last 20 years is the marked decline in the popularity of 2-week holidays and the rise of short breaks. The week-long break is a lot more popular than before, and there’s also been an increase in the number of holidays lasting 10 nights.
Duration of holidays overseas by UK residents,
1996 and 2016
One of the most likely explanations for UK residents going on more, shorter, holidays, according to ONS, is the growth of the budget airlines. Throughout the 1980s and 1990s, the European Council relaxed the rules to create a common aviation area across Europe, allowing low-cost carriers including EasyJet and Ryanair to enter the market. Between 1996 and 2015 (the most recent figures available from the Civil Aviation Authority), passenger numbers at UK airports increased by 85%, from 135 million to 251 million – continuing a long-term trend. And according to the UN’s International Civil Aviation Organization in 2003, “around 50 percent of the traffic on low-cost carriers is newly generated” – which means half of the people flying on budget airlines in Europe weren’t making those journeys before.
Top 10 destinations for UK holidaymakers: One constant over the past 20 years has been the enduring popularity of the USA as the number one long-haul overseas destination for UK travelers. Spain and France have remained the top two international destinations overall, while Belgium and Turkey have dropped out of the Top Ten list. Interestingly, cruising is now on the list. It is four times as popular as it was 20 years ago. ONS speculates that this “could be due to an ageing population, with increasing numbers of older people in the population – but cruise operators are also trying to extend their appeal to younger holidaymakers too.”
Top 10 Destinations for UK resident Holidaymakers
1996 and 2016
Receptive Finder™ Now Available
The new TourOperatorLand.com website that has introduced both receptive tour operators, U.S. tour operators and international tour operators to travel product and services of U.S. travel suppliers and DMOs now features Receptive Finder™—the new one-stop shopping venue designed to help both the travel trade and travel suppliers find the right U.S. based receptive tour operator to sell their products on the international travel market place.
The receptive operators, who are vetted and qualified by the NAJ Group—hosts of TourOperatorLand.com—also take part in at least one of NAJ’s RTO Summits series. The Summits take place annually in Orlando (Sept. 19-20, 2017), Los Angeles (Feb. 21-22, 2018) and New York City (April 17-18).
Receptive Operator of the Month: The Inbound Report is introducing a different receptive tour operator regularly in order to help operators, suppliers and DMOs.
Teamamerica will be taking part in the RTO Summit East next week in Orlando.
Japanese Trade Outlook Sees USA Traffic Holding Steady
Released a full quarter behind its usually scheduled release date, the latest Survey of Travel Market Trends—the survey results are based on interviews conducted for second quarter of 2017—from the Japan Association of Travel Agents (JATA) nonetheless tells us that the travel trade community in Japan has a level of confidence in outbound travel to the USA that has not differed markedly for the past two years. The trade’s level of confidence for outbound travel to the USA and Canada extends through the remainder of this year. Confidence in the Hawaii product remains strong.
As for specific segments that comprise the Japanese travel marketing, the JATA Survey reported that: business and technical visits and incentive tours, which declined during the January – March quarter, enjoy good demand. Educational tours and students have dropped remarkably while working women and solo travelers are enjoying a moderate recovery.
We’ve included the two most important tables from the survey below. It’s relatively easy to translate the value of the numbers in the tables; just refer to “A Note on Methodology” following the tables.
A Note on Methodology: The Japan Association of Travel Agents (JATA) asks all member companies to register as survey monitors. JATA conducts the quarterly Survey of Travel Market Trends involving 548 registered companies and publishes the results. The Survey of Travel Market Trends is designed to grasp trends in the travel market based on responses to questions on current conditions and those anticipated over the next three months. The survey asks participating companies to rate their sales results for each destination and customer segment by choosing from three categories: “good,” “average,” and “poor.” For items outside their business scope, respondents select “do not handle.” Each share of “good,” “average,” and “poor” is then divided respectively by the denominator, which is equal to the total number of responses minus the “do not handle” (including “no reply”) responses. Finally, each share is processed into the Diffusion Index (DI) by subtracting the percentage of “poor” from the percentage of “good.” The highest possible index figure is +100, and the lowest is -100.
This was an Internet survey, conducted from May 22 to June 12, 2017. The number of registered companies surveyed was 614; the number of responding companies responding was 341. Response rate: 55.5 percent.
To access the full JATA survey report, visit:
The 2017 Chinese Luxury Traveler: Independent, Tech Savvy and in Search of Shopping
U.S. destinations, travel suppliers and those who provide the shopping experience are well positioned to benefit from the increasingly larger segment of the Chinese travel market comprising the luxury traveler. This is just one of the points measured and explained in Fung Global Retail and Technology’s third annual proprietary survey of Chinese overseas tourists’ travel and spending. Commissioned together with China Luxury Advisors, the 2017 version provides more in depth information on the reasons and motivations behind their decisions and behavior when traveling overseas. This year’s data was collected by an online self-completion survey conducted from May 31 to 6 June, achieving a total of n=841 samples. All respondents are mainland Chinese aged 18–59, and have taken at least one overseas trip (including Hong Kong, Macau and Taiwan) with a minimum stay of one night in the past 12 months.
Following are the study’s key findings. Should you want your own copy of the full report, you can access it via the link at the end of this article.
Key Trends Observed
- Chinese outbound tourists have evolved into experienced and sophisticated travelers—some 67 percent of surveyed tourists have traveled more than once in the past 12 months, visiting an average of 2.3 destinations. Apart from shopping, they crave lifestyle experiences while traveling abroad.
- Japan has emerged as the most popular destination, visited by 55 percent of surveyed tourists in the past 12 months, followed by Hong Kong (35 percent) and South Korea (27 percent).
- Chinese tourists from lower-tier cities have become the growth engine of outbound tourism. Based on their most recent overseas trip, survey respondents said they spent on average $2,449, 10 percent higher than tourists from tier-one cities at $2,330. They also travel as frequently as their counterparts from tier-one cities, at an average of 1.9 times per year.
- Chinese tourists are extremely mobile-savvy, 98 percent of surveyed tourists used their smartphone abroad to keep in touch with others and to search for travel-related information. Some 72% of surveyed tourists use online resources such as travel websites, blogs and social media to plan their trips.
Travel Frequency and Arrangement
- The majority of Chinese tourists are now experienced overseas travelers, with 67 percent of those surveyed having traveled more than once in the past 12 months, visiting an average of 2.3 destinations.
- Traveling as part of a group (35 percent) is still a popular form of travel arrangement. However, the majority of those surveyed traveled independently without a local guide on their most recent trip, either by buying a travel package (32 percent), or by making their own travel arrangements (21 percent).
- Japan has emerged as the most popular destination, visited by 55 percent of surveyed tourists in the past 12 months, followed by Hong Kong (35 percent) and South Korea (27 percent).
- Europe (16 percent) is the top long-haul destination for Chinese tourists, followed by the US (9 percent).
- Almost all surveyed respondents considered security (96 percent) as an important factor when choosing the destination for their most recent overseas trip. Tourist spots (94 percent) and cuisine (88 cuisine) are the other important most-mentioned factors.
- Chinese tourists spent on average $2,335 during their most recent overseas trip; those from lower-tier cities spent an average of $2,449, 10 percent higher than those from tier-one cities at $2,330.
- On average, retail purchases accounted for 55 percent of their spending, or $1,282 in value. Chinese tourists are craving for lifestyle and experiences as well, with experience related spending, including food and beverage (15 percent), sightseeing (11 percent) and entertainment (10 percent) together accounted for 36 percent of their expenditure.
Shopping on Most Recent Trip: Apparel and Cosmetics are
the Most Popular Purchased Items among Chinese Tourists
Products Purchased on Most Recent Trip, by City Tier, May 2017 (%)
Duty Free and Department Stores represent 50% of all Chinese shopping purchases.
- Clothing, footwear and accessories (including handbags) is the most popular category, purchased by 75 percent of surveyed respondents during their most recent overseas trip. This is closely followed by fragrances and beauty products (66 percent), and food or drink products (50 percent).
- Duty free accounts for 29 percent of Chinese tourists’ retail spending on average, the highest among all retail outlet types, followed by department stores at 18 percent. These two retail outlets together capture almost half of Chinese tourists’ retail spending.
- Chinese tourists are now mobile-savvy, with 98 percent of surveyed tourists having used their smartphone abroad to keep in touch with others and to search for travel-related information.
- Online resources such as travel websites, blogs and social media are used by 72 percent of surveyed respondents to plan their trips.
Implications for Brands: Encourage Chinese visitors to Share their experience at Retailers
- As the market landscape for Chinese tourists transforms and becomes more sophisticated, brands and retailers need to adapt and update their strategy continuously in order to engage this large and growing market of consumers.
- Chinese tourists have diversified demographics and travel experiences, thus have different needs while traveling abroad. Brands and retailers should identify their target tourist segments and cater to their needs accordingly.
- Brands and retailers should engage with Chinese tourists online at every stage of their trip, apart from conventional advertising, encouraging Chinese tourists to share their experiences at retail outlets is more influential, as it directly reaches new potential customers.
At A Glance: Louisville
|AT A GLANCE IS A WEEKLY COLLABORATION BETWEEN ABA AND TOUROPERATORLAND.COM.|
Louisville at a Glance
Louisville royalty-free photo library click here.
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HODGE PODGE: Shifts, Shakeups and Occasional Shaftings in the Tour and Travel Industry
Keith Douglas has been named managing director of One World Trade Observatory in New York City. He comes to the position from KD&CO, also in Manhattan, where he was president and managing director. Douglas previously served for nearly a decade as managing director of Rockefeller Center and Top of the Rock.
Deleyse Langdale, a well known industry professional who recently left her role as international sales director with Sonoma County Tourism to launch her own business: Authentic Luxury Lifestyle. She plans to make the company the travel industry’s go-to source for luxury experiences across California. For more information, visit: www.authenticluxurylifestyle. com
Denise Rasmussen has been named general manager of Alcatraz Cruises in San Francisco. Rasmussen comes to the new position after serving 11 years as the company’s director of sales and marketing.
Andrew Waller has taken over from Graham Ramsey as chief executive of growing corporate travel group ATPI, with Ramsey remaining as chairman. Waller joined ATPI in January 2017 as international director of corporate development. Previously, he spent more than 10 years at Carlson Wagonlit Travel (CWT) in roles including executive vice-president for the UK, EMEA president and executive vice-president for global business transformation.
The French tour operator Jetset Voyages has appointed Céline Bonizec as a part of its sales team. She is the new commercial manager for Brittany, Pays de Loire, Poitou Charentes and Aquitaine. She takes over from Philippe Lionnet, who will take up other positions within the company. Céline Bonizec has 13 years of experience in the tourism sector, her latest a position being at Vacances Transat.
Nick Ashton has been appointed alliances manager for the Spanish low-cost carrier Vueling. His job is a new position directly linked to the Vueling Next project and whose aim is, according to a statement by the group, “to optimize the existing relationships and develop the company’s alliances strategy by focusing on the customer experience and ‘business optimization.” Ashton, has more than 10 years of experience in the aviation industry, has worked for British Airways, Qatar Airways and Virgin Australia.
Steve Barrass, who once headed up Gold Medal at the time it was acquired by dnata in 2014, has been named senior vice-president, new ventures (Europe) for dnata. In his new role Barrass will head up the effort to increase collaboration between the company’s B2B and B2C businesses. Barrass will be based in the UK and will be supported by Andy Stark, managing director of global.
Cecilia Herculino recently became account manager global accounts Brazil-FCM Travel at Kontik Franstur, which is headquartered in São Paulo. Previously, she was a customer service supervisor for Azul airlines. Herculino was also a sales manager at CH Travel TouchBrazil and an account manager for American Airlines.
American Airlines has promoted Tom Lattig to managing director – EMEA sales. He has moved up from his role as director – corporate sales programs, where he was based in Fort Worth, Texas. In his new role, he will be based at American’s European headquarters in London, overseeing sales activities such as supporting American’s growing network of routes throughout Europe, alongside its partner airlines British Airways, Iberia and Finnair. Lattig joined American Airlines in 1999.