Ctrip Expands with Big Bus Tours Partnership and Trip.com Acquisition
China’s largest travel company, Ctrip, announced at the end of November a strategic partnership with London-based Big Bus Tours, which operates hop-on-hop-off tours in 19 cities (Budapest, Istanbul, London, Paris, Rome, Vienna, Chicago, Las Vegas, Miami, New York, Philadelphia, San Francisco, Washington DC, Abu Dhabi, Dubai, Muscat, Darwin, Hong Kong, Shanghai and Sydney) across four continents. Some points that come to mind with the announcement include the following:
—The partnership gives Ctrip a global reach and equips both Ctrip and Big Bus Tours with the opportunity to pursue marketing opportunities that would otherwise not be possible. For instance, Big Bus Tours can leverage its connection to Merlin Entertainments¹—it the world’s second largest attractions operator, behind only Disney, with such well-known brands as Legoland and Madame Tussauds—so that the partnership can package and sell all components of a travel holiday, both to and from China.
—Underscoring the latter point was Ctrip’s launch, just prior to the announcement of its Big Bus Tours partnership, of Trip.com—a new website that debuted after Ctrip had acquired the site, a travel recommendation service formerly known as Gogobot. There seems to be a belief among tour and travel industry observers that Trip.com will be a version of Ctrip for business outside the Chinese-speaking world.
—The Ctrip-Trip.com news came just about a year after Ctrip’s November 2016 acquisition, for $1.75 billion, of Skyscanner, the Edinburgh, Scotland-based fare comparison and meta-search site which has a strong presence in Europe, but also has offices in China and the U.S.
—It was a busy month last year as, at the end of October, Ctrip signed a partnership agreement with L&L, Ctour, (formerly Seagull Holidays), a Los Angeles-based receptive operator that has China’s largest Visit USA market share on the West Coast; and Tours for Fun, a Los-Angeles based OTA that focuses on the Chinese market. That agreement gave the trio of U.S.-based companies access to Ctrip’s more than 250 million online users.
A Different Bottom Line: As Ctrip becomes more of a global market force, its management practices have become somewhat of a new standard, relying as they do on scientific practices in its decision making. One example of this was its use of a randomized control trial the company ran on telecommuting. Given the uncertainty over the impact of telecommuting on company profits they decided to rigorously evaluate its impact before making any management decisions. Ctrip conducted an experiment on 242 employees, sponsored by professors at Stanford University and Peking University. The experiment found that employees randomly assigned to work at home for 9 months increased their output by 13.5% versus the office-based control group, and their turnover rates fell by almost 50 percent. Adding in the savings from cutting office space telecommuting was found to have substantially reduced costs, leading Ctrip to roll this practice out across the firm.
¹ In February 2016, Merlin invested $34.4 million in Big Bus Tours for a total participation of 15 percent in the company.
As Stagnant German Population Ages, Industry Finds Growth in Senior Market
“The number of older Germans going on holidays and other leisure trips will rise significantly in the coming years, making them more important to the travel industry than ever before,” reports the German travel trade publication FVW, citing data in the just released results of the annual FUR Reiseanalyse market survey.
For those who have been following trends in the German population for the past decade, the development comes as no surprise and it signals to travel suppliers worldwide who have sold to the German market—this includes the United States, for whom Germany is the Number 4 overseas source market—that they will have to dig deeper into the base of traveling Germans, whose overall numbers are stuck in a “no growth-slow growth” path, as the following data suggest.
Now, here is the population of Germany that overlaps the same period. It has remained essentially unchanged.
The reason for the static population is that the birth rate among Germans is the lowest among the world’s developed countries. Two years ago, Germany’s birth rate fell below that of Japan, the previous holder of the distinction of having the lowest birth rate. In Germany, an average of 8.2 children were born per 1,000 inhabitants during the five year period of 2010-2015, according to a study by German auditing firm BDO with the Hamburg Institute of International Economics. It said Japan saw 8.4 children born per 1,000 inhabitants over the same time period.
And, according to the CIA’s World Factbook, in 2016, Germany had the world’s third-highest median age (46.8 years), just behind that of Japan (46.9 years) and Monaco (52.4 years) among 227 countries.
The Growing Silver Travel Market: As a consequence of its aging population, more German seniors are traveling more. Here are some highlights from the FUR Reiseanalyse:
—Germans aged between 65 and 74 went on 8.65 million trips last year. In comparison, working people aged 55 to 64 undertook 7.1 million vacation trips last year.
—By 2025, 60-69 year-olds will account for 17 percent (vs. 14 percent now) of travelers.
—By 2025, people aged 70 over will account for 19 percent (vs. 16 percent now) of all holiday trips.
—Put another way, older travelers will comprise well over one third of the German travel market by 2025.
At the same time, the FUR Reiseanalyse predicted a decline in the share of all other age groups, except for 30-39 year-olds whose share could rise slightly to 14 percent.
What Does This Say About German Seniors? The managing director of the Institute for Tourism and Spa Research in Northern Europe (NIT), and FUR’s lead researcher, Martin Lohmann, told FVW: “The importance of pensioners will increase in the coming years due to demographic trends … Older people today are more flexible, fitter and more accustomed to traveling than they used to be.”
USA as a Brand Drops Dramatically in World Ranking
Germany has taken over the top spot of the Anholt-GfK Nations Brand IndexSM study, which is based on six indices, from the United States. The U.S. was the only country among the 50 nations surveyed whose overall brand declined in 2017. The survey’s ranking relies on measurements in the following categories: exports, governance, culture, people, tourism and immigration/investment (more on the categories below).
“The USA’s fall in the governance category suggests that we are witnessing a ‘Trump effect’, following President Trump’s focused political message of ‘America First,’” said Professor Simon Anholt, who created the study in 2005. “However, Americans’ assessment of their own country is notably more positive this year than last.”
Anholt pointed out that the United States suffered a similar drop after the 2000 election of George W. Bush, when its ranking declined to seventh. However, the setback was only temporary. “Previously, America has never stayed outside the top ranking for more than a year at a time,” he noted. “It will be interesting to see whether this holds true in the 2018 ranking.”
Germany moved into the top spot even thought it did not rank first in any individual category but did make the top five in all categories save tourism. The United States placed in the top five in exports, culture and immigration/investment.
More on the Index: The Anholt-GfK Nation Brands IndexSM—it helps governments, organizations and businesses understand, measure and ultimately build a strong national image and reputation—measures the power and quality of each country‘s “brand image” by combining the following six categories:
—Public opinion about national government competency and fairness, as well as its perceived commitment to global issues.
—The public’s image of products and services from each country.
—The level of interesting in visiting a country and the draw of natural and man-made tourist attractions.
—The power to attract people to live, work or study in each country and how people perceive a country’s quality of life and business environment.
—Global perceptions of each nation’s heritage and its appreciation for its contemporary culture.
—The population’s reputation for competence, openness and friendliness and other qualities such as tolerance.
Following are the 50 nations measured in 2017:
—North America: Canada, the U.S.
— Western Europe: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Holland, Ireland, Italy, Northern Ireland, Norway*, Scotland, Spain, Sweden, Switzerland, UK
—Central/Eastern Europe: Czech Republic, Hungary, Poland, Russia, Turkey, Ukraine*
— Asia-Pacific: Australia, China, India, Indonesia, Japan, New Zealand, Singapore, South Korea, Taiwan, Thailand
—Latin America: Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru
—Middle East/Africa: Botswana*, Egypt, Kenya, Nigeria, Qatar, Saudi Arabia, South Africa, United Arab Emirates.
* Indicates the three nations newly added into the NBI in 2017. Also, three nations (Cuba, Iran, and Kazakhstan) were measured in 2016 but not in 2017.
The Results: Western market economies, along with Japan, continue to dominate the top 10 countries as ranked in the Nation Brands IndexSM. In the wake of a substantial drop in global perception of the USA, Germany retakes the top overall ranking, while France climbs to second place. The UK has regained the ground lost last year after the Brexit vote to hold onto third place, while Japan jumps into the top five for the first time since 2011, standing fourth-equal with Canada.
Just-Launched Site Offers Service Comparing Escorted Tours
A new UK-based website is now offering its users a place where travelers—mostly Britons for time being—can compare what escorted tours have to offer. The site is TourHound (www.tourhound.co.uk) and it enables holiday makers to compare the components of a tour not currently covered in travel websites.
As veteran travel writer Fred Mawer describes it in a piece for the Daily Mail, “There are plenty of websites that will help you find and compare flights and hotel deals, but TourHound is the first to provide a one-stop search of touring options … The tours shown are all available, and prices are clearly displayed – you can include flights where offered, and amend the prices so they are for a single traveler. And results are shown in an unbiased way. A neatly presented summary of each tour is given, and you can click through to the relevant company to book.”
While Europe understandably leads the world regions featured on the site (Europe, Asia, Australasia, Africa, South America and North America), North America leads other regions in long-haul product, with 710 tours featured.
To illustrate the ease with which one can navigate the TourHound site, Mawer said that it took him “less than a minute to find a digestible 11 tours, offered by three companies, for cultural and foodie small-group tours to Italy next May,” and that he was able “to pare down more than 100 cultural tours of the USA in May 2018 to seven that visit New Orleans.”
All tours show are all available, and prices are clearly displayed. A visitor to the site can include flights where offered, and adapt prices for a single traveler. And results are shown in an unbiased way. A neatly presented summary of each tour is given, and one can click through to the relevant company to book.
For the moment, the new site is a bit of a work in progress, as TourHound doesn’t provide background information on the variety of tours, or guidance on choosing a suitable tour. But that should change as the site grows.
CVC Poised to Benefit from any Recovery in Brazil
Tour and Travel Industry Indicators also Positive: For the first time since the economy of Brazil crashed into its deepest and longest recession ever in the middle of 2015, there are some positive, though tentative, numbers which suggest that the nation’s economy, including its tour and travel industry, is in recovery.
What makes a recovery? To quote Ed Dolan, a blogger for EconoMonitor, “The logical way to start … would be to cite an official definition of ‘economic recovery,’ but it turns out there isn’t one. The Business Cycle Dating Committee of the National Bureau of Economic Research, which is the group that calls the economy’s cyclical turning points, does not use the term ‘recovery’ at all. In the committee’s words, ‘a recession is a period between a peak and a trough, and an expansion is a period between a trough and a peak.’ That leaves no room anywhere for ‘recovery.’”
It is clear that the economic crisis—Brazilians refer to the economic situation simply as “The Crisis”—has taken its toll on the ability of many traveling Brazilians to visit the United States during the recession.
The Latest Numbers: The most recent quarterly data, for Q3 2017, show the following.
—The revenue of tourism companies revenues grow 4.3% in 3Q17 compared to the same period in 2016.
—Two thirds (66 percent) of the companies show the intention of making new investments in 2017.
—The most significant increases were in the segments of parks and tourist attractions (+ 11.4 percent), air transport (+ 11.2 percent), operators (+ 10. percent) and travel agencies (+ 9.3 percent).
—Of the companies that intend to invest part of the revenues, 15.2 percent are receptive, followed by events (8.1 percent), lodging (5.2 percent) and air transportation (4.7 percent).
—Overall, GDP closed the third quarter of 2017 with a rise of 0.1 percent compared to the second quarter, in the seasonally adjusted series. Compared to the third quarter of last year, GDP growth was 1.4 percent. (Even so, GDP accumulated in the last four quarters, however, remains negative, closing at 0.2 percent in relation to the immediately preceding four quarters.)
What the data suggest is that, should Q4 show a second consecutive quarter of GDP growth, it appears that the Brazilian economy will have entered a period of recovery—even if the U.S. National Bureau of Economic Research doesn’t use the term.
A Speculative Note: Should the Brazilian economy—and the performance of its tour and travel industry—have bottomed out, and should it be in a recovery mode, one winner is CVC, the largest tour operator/travel agency in the country, which will be well positioned to benefit. While a number of tour and travel businesses shut down or curtailed their operations during The Crisis, CVC made acquisitions and launched a campaign at the beginning of 2016 to build a 100 news agency stores a year through 2018. According to the latest reports, the company has built 200 new stores (It now has 1,200 nationwide) with a 100 to go. All of the new stores were built in less-populated or rural parts of the country, as CVC pushed to get the country’s residents to travel domestically, while awaiting better conditions to push for outbound international travel, for which it is already the industry leader.
New International Air Service
—Air Canada is dramatically expanding its North American footprint in order to drive USA travelers to its key international connecting airports of Toronto, Montreal, Vancouver and Edmonton. New routes scheduled to launch next spring include:
- Toronto to Eppley Airfield (OMA) in Omaha, Nebraska, daily service starting May 1, 2018
- Toronto to Green Airport (PVD) in Providence, Rhode Island (seasonal), daily service starting May 17, 2018
- Montreal to Baltimore–Washington International Airport (BWI) in Baltimore, Maryland, daily service starting May 17, 2018
- Montreal to Pittsburgh International Airport (PIT) in Pittsburgh, Pennsylvania, daily service starting May 17, 2018
- Vancouver to Sacramento International Airport (SMF) in Sacramento, California, daily service starting May 17, 2018
- Edmonton to San Francisco International Airport (SFO) in San Francisco, California, daily service starting May 1, 2018
—Azul airlines has launched a new route from Belém, the capital of the state of Pará in the northern part of Brazil to Fort Lauderdale. The new service is offered on Mondays, Wednesdays, Fridays and Sundays, landing at 4:20 am and departing at 1:30 p.m.
—LEVEL, the long haul low cost airline brand of the International Airlines Group (IAG)—it includes British Airways— will operate three weekly flights between Paris Orly and Montreal starting on July 2, 2018. One way flights start at $199 (Canadian). The IAG brand, based in Barcelona and operated by IAG’s Iberia and OpenSkies, is establishing a base in Paris and will also be introducing four weekly flights to Newark (New York) on September 4 from the French capital.
—On Dec. 1st, Aeroméxico began flights from the Merida to Atlanta. Aeromexico Is emphasizing the point that the flight to the home base of its partner, Delta Air Lines, now gives passengers from the state of Yucatan access to 148 destinations in the United States and Canada.
—Also on Dec. 1st, Air Canada began service between Vancouver and Melbourne, Australia marking the first ever direct, non-stop flight from Canada to the Australian city. The new route offers a seasonal four times weekly service until 4 February, before beginning a year-round service in June 2018.
—Aeroméxico has begun operating a new route from Mexico City to Portland, Oregon. The daily leaves Mexico at 6:05 p.m, arriving in Portland at 9:05 p.m. The return flight leaves Portland at 11:20 p.m. and arrive in Mexico at 6:40.
Gray-and-Silver Haired Brits Like to Look for New Travel Product Launches
But They Still Like TV over Online Launches: Results from a new demographic study of British travelers show that one out of eight (12 percent) of Baby Boomers (aged 53 – 73 years) and 14 percent of Traditionalists (aged 74 and over) say they’re most likely to be on the lookout for new travel brands or experiences. This is one of the key findings derived from a study commissioned by the UK-based launch marketing specialist agency, Five by Five.
While travel brand launches are important to what Five by Five describes as “The Grey Pound,” the picture is different for other groups:
—Only 9 percent of UK consumers overall say that travel launches are what they look out for most,
—Almost one in five (19 percent) most anticipate new technology products.
—Only 5 percent of Millennials say that travel launches are their number one focus.
—In addition, one in ten Traditionalists say the travel industry delivers the most memorable launches, compared to only 3 percent overall.
The survey also found that in a world of digital and social media, TV is still the main medium by which older consumers learn about new product launches:
—Fifty-three percent of Baby Boomers say they first noticed new products when they appeared on television
—Fifty-one percent of Traditionalists say they first noticed new products when they appeared on television, while
—Only 3 percent of Baby Boomers saw them on social media and 5 percent in online ads.
James Roles, sales and marketing director for Five by Five noted that “shareable content and social buzz allow travel brands to generate pre-launch engagement in a way no other medium can hope to match. However, it seems many brands have been launching online with the product in mind and not the customer. A lot of older people still rely on TV and print ads to learn about new holiday destinations and opportunities.”
Most Don’t Seem to Notice at All: The new research also found that 61 percent of UK consumers – rising to 74 percent of Baby Boomers – are not aware of any new launches from the past 12 months at all.
—In addition, only 3 percent believe celebrity endorsement makes launches stand out.
—Just one in 14 people (7 percent) said they actually noticed a launch because a celebrity or influencer mentioned it.
—On social platforms: Only one-quarter of consumers (and only one in five Baby Boomers) say they would share branded content or information about a new product or service launch in return for a promotional offer while less than one-quarter (23 percent) would share branded content if they felt it met a friend or family member’s needs.
At a Glance: The Countryside of Philadelphia
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HODGE PODGE: Shifts, Shakeups and Occasional Shaftings in the Tour and Travel Industry
Ron Erdmann, the U.S. National Travel and Tourism Office’s (NTTO) deputy director for research and analysis, has announced his retirement, effective at the end of December. Erdmann, known by virtually anyone who has prepared a table of numbers on inbound travel to the United States, is leaving NTTO after 30 years of service as a federal employee. He is known universally as a professional truly dedicated to his duties—he once returned a phone call on a Saturday night to a recorded message left by INBOUND’s editor—and helpful to anyone with an inquiry.
Dan Lincoln, president and CEO of the Cincinnati USA CVB, and a highly respected and beloved industry professional will retire at the end of the year due to unspecified health concerns, the bureau has announced. The CVB has hired a national search firm to find a replacement. Mike Laatsch, CVB’s chief operating officer, will serve as Interim CEO until a successor is named. Lincoln has served in position since May 2006.
The United States Tour Operators Association named its 2018 board of directors, five of whom serve as the associations’ Executive Committee, at its Annual Conference & Marketplace, Nov. 27-Dec. 1 in Hollywood, Fla. Heading the Executive Committee as newly-appointed chairman will be Dana Santucci, vice president of development at EF Education First, who will joined by Harry Dalgaard, president of Avanti Destinations, as vice chair; Charlie Ball, executive vice president, Princess Cruises & Tours, as treasurer; Scott Wiseman, president, Travel Impressions, as secretary; and Paula Twidale, executive vice president, Collette, as immediate past chair.
Helen Parry is leaving her post as regional sales manager for trade at Jet2holidays to start her own travel agency. Parry had worked at Jet2holidays since 2013. Prior to that, she had worked for 18 years at TUI in various roles, lastly as general manager for TUI UK & Ireland.
Kyle Edmiston is leaving his post as assistant secretary for the Louisiana Office of Tourism to become as the new chief operations officer/deputy director of the Lake Charles/Southwest Louisiana CVB. Edmiston, who had held his post as assistant secretary for nearly six years, was previously president and CEO of the Ruston Lincoln Parish CVB. Active in numerous tour and travel industry organizations, Edmiston currently sits on the board of directors of Brand USA.
The board of directors of Visit Mississippi Gulf Coast has tapped Milton Segarra, currently CEO of Meet Puerto Rico, to be the new executive director of the organization. Segarra, who starts his new position on Jan. 8, succeeds Renee Areng after the board seven months ago did not renew her contract. Segarra has been with Meet Puerto Rico for almost five years. Previously, he held high-level marketing and business development positions with several different organizations.
