It’s Déjà Vu all Over Again: Save Brand USA!
Organizations representing all 50 states and all sectors of the tour and travel industry as well as its partners in other sectors of the economy, late last week delivered a letter to Congress calling for a renewal of Brand USA before the 115th Congress is history. Brand USA’s funding was inadvertently diverted in the Balanced Budget Act of 2018. If you wonder how that could happen, consider just this one line (one of hundreds of such references in the Balanced Budget Act of 2018, which was passed by Congress last February): “That such amount is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.” What?
Unfortunately for those who support the work of Brand USA (Legally, it is still the Corporation for Travel Promotion), the agency has become an easy target for those who believe that funding for such activities should not be a government responsibility. In fact, it receives up to $100 million a year from revenue collected from international visitors from Visa Waiver Program countries to the U.S. when they register their travel through the ESTA (Electronic System for Travel Authorization). Of the $14 collected from each visitor, $10 is made available to match contributions received by Brand USA from private sector partners.
Since the revenues are not levied on U.S. taxpayers, they are not “taxpayer dollars.” Still, this notion has not stopped Brand USA critics in Congress and in the federal government from attempting to redirect the funds to other government activities.
Brand USA has survived such attacks before—most notably at the end of 2014 when U.S. Travel Association lobbyists were able to navigate channels on Capitol Hill and managed to get its reauthorization tucked away in an Omnibus Appropriations Bill.
A Bigger Boat: Aware that it faced the possibility of another last-minute battle, US Travel early this year was behind the creation of the Visit U.S. Coalition, which includes such organizations as the following: American Gaming Association; American Hotel & Lodging Association; American Resort Development Association; American Society of Association Executives; Asian American Hotel Owners Association; Cruise Lines International Association; International Association of Exhibitions and Events; International Franchise Association; National Restaurant Association; National Retail Federation; Real Estate Roundtable; Society of Independent Show Organizers; Travel Technology Association; and the U.S. Chamber of Commerce. Thus far, the organization has raised the profile of the urgency of the Brand USA situation, and the agency is hanging on through the last-minute funding bills.
Three possible scenarios: As Brand USA seems tethered to the life via temporary appropriations measures, Tori Barnes, senior vice president of government relations for US Travel, provided us with a concise status report from the organization’s government relations team on Brand USA’s current situation, as well as its immediate, near-term and long-term prospects. Following are what Barnes described as the paths available to Brand USA’s supporters:
- Omnibus Passage: The best-case scenario: Congress averts a shutdown by passing an omnibus spending measure—essentially, one large catch-all funding bill—that includes a reauthorization of Brand USA through 2027. While this is our ideal outcome, it is not the only path forward.
If Congress chooses to pass an omnibus spending measure without a Brand USA fix, there will be other opportunities to secure the program’s reauthorization in another vehicle in the first quarter of 2019.
- Continuing Resolution: Congress may vote on another short-term resolution that would keep the government funded for a limited amount of time while negotiations continue. The short-term resolution could result in: the passage of an omnibus with or without Brand USA; another long-term resolution (which could also result in the passage of an omnibus with or without Brand USA); or, if subsequent negotiations ultimately fail, a government shutdown at a later date.
If no deal that includes Brand USA is reached, the opportunity to get the program reauthorized in first quarter of 2019 will remain.
- Shutdown: A government shutdown could end in the passage of an omnibus or a long-term continuing resolution into next year which may also include Brand USA. If a Brand USA fix is not included, there will still be another opportunity to get a deal done in Q1.
Said Barnes: “Of the many initiatives sidelined by the budget debate, Brand USA is among the best positioned, with a course charted for every scenario moving past next Friday (Dec. 14th). More than 580 travel industry organizations signed the letter sent to members of Congress last week touting the many economic benefits of Brand USA, and urging Congress to act on the program’s reauthorization. Last month, 36 Republicans and 34 Democrats signed a similar letter to House leadership, and U.S. Travel members have penned numerous op-eds in support of Brand USA. U.S. Travel will continue to push Congress toward Brand USA’s inclusion in a funding bill, and is confident that that the program will be ultimately be reauthorized, as it has been in the past with overwhelming bipartisan support.”
How NAJ Wants to be Your Business Development Partner in 2019–Part One
The NAJ Group, publisher of the INBOUND Report, has announced that it is redirecting its 2019 programs to better help its clients generate new business. Jake Steinman, founder and CEO of the NAJ Group, explained changes that will be implemented at its series of Receptive Tour Operator (RTO) Summits and TourOperatorland.com. The initiatives are highlighted below.
To help RTO Summit Attendees Develop More business…
— New! “Automated Follow up” for Attendees. NAJ’s appointment software vendor will develop automated “follow up” functionality so that operators that delegates meet at the Summits will receive personal follow up messages via the system one week after and six months after a show. The message may include attachments or “What’s New since the Summit “and will be a supplement to the suppliers existing follow up. Cost to delegates? $0. This feature is Included in the registration fee.
—Receptive Consultations in Roundtable Groups: During the first afternoon of each RTO Summit, delegates will have an opportunity to meet up to six more receptive operators who will provide product consulting and guidance to make their face-to-face appointments more effective. Groups of 5-7 attendees, will be at roundtables and every 30 minutes a different receptive consultant will work with you. Cost to delegates $0. Included in the registration fee. (Note: Receptive Operators will be paid an honorarium for their time)
—To help Destinations Convince More Hotels to Sell Receptives: The NAJ team has developed a Power Point presentation deck, “Educating the Independent Revenue Manager,” which explains the benefits of selling through the receptive operator distribution network from a revenue manager’s perspective. During 2019, a series of one-minute video testimonials with revenue managers will be developed. Cost to TourOperatorLand partners? $0. Included with annual contract.
Note: Parts 2 and 3 will be published in the next two issues of INBOUND.
What are the Top 50 UK Travel Companies based on YoY Growth?
Bolstered by new technology, traditional tour operators in the UK have been able to develop new products and new ways of reaching new customers while, at the same time, technological progress has powered some dramatic growth among OTAs. This is the key finding the Travel Team at BDO UK—the UK branch of the international tax, consulting and business advisory firm, BDO—in its just published “Travel Diaries—The annual update from the BDO Travel Team.”
As the report put it, “New technology has facilitated the impressive growth of beach-focused OTAs such as Love Holidays, On The Beach and Travel Republic which deliver approximately 3 million UK passengers to beach destinations. Meanwhile, luxury tailor made operators and escorted tour providers have developed product and customer acquisition strategies that meet the needs of a cohort of asset rich baby boomers eager to tick off their bucket lists.” This has created new entrants into a growth market, fueling merge and acquisition activity, the report added, which helps to explain the steady announcements of mergers and acquisitions in the UK tour and travel industry.”
Using the information gleaned from its research and analysis of the British travel market, BDO came up with its Travel Growth League—a collection of the Top 50 travel companies—tour operators and OTAs, that have used technology and M&A strategies to grow their businesses over the past three years.
Notes on the Growth League 50:
—The BDO Growth League is based on the highest turnover growth among the largest 75 ATOL (Air Travel Operators License) holders in the UK. One needs an ATOL to conduct a tour operator business. Turnover growth is measured by the three-year compound average growth rate (CAGR). As only ATOL holders have been included, this league excludes travel businesses that do not sell flights (e.g. domestic operators).
—Strong Growth for the OTAs: There has been a continuous offline-to-online channel shift which has benefited the OTAs with online penetration in the UK at 65 percent in 2017 and forecast to grow to 72 percent by 2020 in the UK (Source: Phocuswright 2016 – UK Online Travel Overview Twelfth Edition).
—Loveholidays remains the current standout UK-based OTA for growth and this is reflected in its sale to Livingbridge. It would be no surprise if Loveholidays retains it top No. 3 spot in the second edition for The Travel Diaries in 2019. On The Beach, the UKs largest beach OTA, will however be expecting that its acquisition of Classic Collection and the creation of a new “Classic Light” product range and a vast new agent distribution network will see it increase its YoY growth as it reaches new customers. Travelup will continue to drive volume, increasing its top line in the process, and we expect another strong performance from them next year.
—Don’t Forget about the Tour Operators: Five of the top ten companies in the league are traditional tour operators. All with CAGRs above 20 percent—Ocean Florida, the Florida specialist, Dnata and Jet2 Holidays are the top three tour operators with CAGRs of 40 percent, 36 percent and 31 percent respectively. The largest operator in the list, TUI UK, is in 30th place with a steady but strong CAGR of 8 percent.
—Surprisingly, despite being the third largest ATOL holder with 3.8 million passengers, Thomas Cook missed out on the top 50 with a negative CAGR of 5 percent. Trailfinders, the largest tailor-made operator in the league continues to benefit from the shift to more complex and itinerary-rich travel has a solid 3-year revenue CAGR of 7 percent.
—Private Equity Support is Helping to Deliver Strong Growth: Six of the companies on the growth league have private equity backing and a combined CAGR of 16 percent. Loveholidays, Iglu.com and ITC are the fastest growing. Private equity houses remain very keen on acquiring high quality travel assets and we would expect to see a higher degree of private equity-backed companies on the league next year.
ITB Berlin Has Sunny Outlook for European Outbound Travel
Europe’s largest outbound travel market, Germany, is forecasted to grow by four per cent in 2019, says a just-released World Travel Monitor conducted by IPK International and commissioned by ITB Berlin. This is probably the report’s most significant finding for U.S. travel suppliers and DMOs interesting into tapping into the German market, which is the Number 4 overseas source market for the U.S. inbound tour and travel industry.
Coming off what has been regarded by most international tourism analysts as sluggish, the World Travel Monitor is generally upbeat in its overview of the condition of the industry—both outbound and intra-Europe. We’ve digested some of the Monitor’s key points, which follow.
—Overall, European outbound travel grew by five per cent during the first eight months of the year. The outlook for 2019 is also positive. Further growth can be expected.
—On a global level, 2017 was an exceptionally good year, a development to which Europe contributed significantly. However, the first eight months of 2018 were unable to surpass those figures. ”Rising oil prices and air fares have dampened European growth as well. However, the trend remains clearly positive,” said Rolf Freitag, CEO of IPK International.
—Poland was the biggest source market for international travel, reporting a ten per cent growth year-on-year.
—Swedes and Russians undertook more trips this year, while the Italian, German and Austrian markets registered solid growth too. According to the IPK World Travel Monitor, which covers more than 90 per cent of global outbound travel,
—A look at long-haul travel shows that trips to the Americas recovered slightly from last year’s stagnating figures, growing by 3 percent. Mexico registered four per cent more visitors from Europe over the first eight months, while the USA reported an increase of one per cent
—Among Europeans, tour holidays are seeing a comeback this year with a growth of five per cent. Ever-popular sun & beach holidays were among this year’s growth drivers during the first eight months. With a plus of eight per cent, their growth was clearly above average.
—In 2018 City breaks showed positive growth, albeit less than in previous years. After frequently reporting double-digit growth in the past they achieved average figures this year (six per cent). So far this year, holiday trips overall increased by six per cent.
—Business travel stagnated in 2018, with traditional business trips dropping by five per cent, while MICE travel increased by three per cent.
—Looking ahead to 2019, IPK International forecasts a good year for the European outbound travel market and anticipates five per cent growth.
—The signs are positive for source markets like Denmark, France, Switzerland, Spain and Belgium.
Japan’s Model for the Future: Zero Growth
Sociologists and demographers who’ve been studying the subject have warned us for some time what people in the inbound tourism industry have known for about a decade: Japan’s population, afflicted with the world’s lowest national birth rate, has not grown in the new millennium, and that this is beginning to affect the nation’s ability to generate new visitors or increased numbers of visitors to the U.S. (Japan is still the second-largest source market for overseas visitors to the United States, although China will soon replace it.)
Japanese Arrivals to U.S.
A 20-Year Timeline (000s)
2001 to 2020
Setting aside the interests of the U.S. tour and travel industry, the main concern in Japan over its no-growth population “curve” comes from the realization that fewer people will be able to join the workforce in coming years. Without adequate numbers of people to fill positions within certain occupations, there will likely be a decrease in the overall productive capacity of a country. And a low birth rate means a smaller, younger population relative to the elderly. This will mean the less numerous working young will be strained to support the financial needs of a relatively larger population of elderly retirees.
And now the issue has become a high-visibility one in Japan, as evidenced by the recent approval by Japan’s parliament of a new law that, beginning next April, would begin allowing hundreds of thousands of foreigners into the country to ease labor shortages. Such a measure would have been incomprehensible a generation ago, as Japan has long been wary of immigration and has some of the stiffest regulations regarding people who want to emigrate to the country. The recently passed law creates two new visa categories. Workers in the first category will be allowed in for five years if they have a certain level of skill and some proficiency in Japanese. Workers with a higher level of skills would qualify for the second visa category and would eventually be allowed to apply for residency.
Note, in the graphic below, how elderly retirees will become a larger and large percentage of the population—one that is not likely to increase its holiday travel—over the next three decades.
One-Sentence Summary: If you are a U.S. destination or travel supplier, don’t be looking for Japan to be a growth market any time soon.
The Four US Cities that made it into the World’s Top 50 Destinations
When one studies the latest edition of the World’s Top Cities from Euromonitor International, it becomes apparent that a major shift in the nexus of global international travel activity from Europe and the West to points elsewhere is taking place.
To be sure, the United States has a strong appeal as a long-haul international destination, but the four cities from the USA in the Top 50 Destinations in 2018– New York City, Miami, Los Angeles and Orlando—along with Cancun, Mexico, constitute the only five destinations in the Top 50 Cities based on the number of international visitors who made the trek to the Americas in the past year.
Instead of making that long-haul flight or long connection to the USA, travelers from Asia and the Middle East are visiting destinations and cities within or near their home: of the Top 50 Cities, 31 are located in Asia and the Middle East.
It seems clear that this tendency on the part of travelers from Asia and the Middle East to visit within these regions—as more people globally are traveling internationally—is one of the reasons that the U.S. has lost share on the global travel market place.
The list below, culled from Euromonitor’s study of some 600 cities and its list of the Top 100 Cities, shows that the U.S. is going to have to work to increase its share as it competes in a marketplace crowded with attractive and appealing destinations who have become better marketers.
*Methodology and Definitions: Euromonitor International’s city arrivals research covers over 600 cities. This report highlights the top 100 cities based on 2017 international arrivals. International arrivals by city includes visitors from abroad who arrive at the city under review as their first point of entry, and also includes those visitors to the city who arrived in the country via a different point of entry, but then go on to visit the city in question during their trip.
Arrivals are defined as international tourists, i.e. any person visiting another country for at least 24 hours, for a period not exceeding 12 months, and staying in paid or unpaid, collective or private accommodation. Each arrival is counted separately and includes people travelling more than once a year and people visiting several cities during one trip. Arrivals encompasses all purposes of visit, such as business, leisure and visiting friends and relatives.
Arrivals excludes domestic visitors, same-day visitors, people in transit and cruise passengers as this can distort arrivals figures at important border crossings and cruise destinations, respectively. It also excludes those in paid employment abroad. Students that stay in a country for a period of more than 12 months are excluded and are considered as temporary residents. Military personnel and transportation crew are excluded, along with displaced people because of war or natural disasters. The ranking focuses on city hubs and tends to exclude beach and ski resorts that may enjoy high volumes of international visitors.
What Are the Four Most Trusted Travel Brands for UK Consumers?
Thomas Cook, TUI, Booking.com and Expedia were found to be the four most trusted brands among British travelers, according a the just released results of a study by UK brand technology agency Great State, which surveyed 1,154 consumers across the UK to explore their attitudes and behaviors in leisure at the end of this year’s peak travel season.
Beware, however, brand marketers. The same survey showed that more than half of UK holidaymakers (52 percent) are not loyal to any one provider.
At event held to mark the release of the survey results, Miranda Glover, business director at Great State, said the industry was “disenfranchised” and “fragmented,” adding, “the question we are asking is how can travel brands retain a share of the consumer’s wallet.” she said.
Other points made in the Great State survey report included the following:
—A lack of loyalty to travel brands is most evident among those in higher income brackets, with almost three quarters of those earning £65,000 ($83,000) saying they would never book with the same provider consistently.
—Regarding the four most trusted brands (Thomas Cook, TUI, Booking.com and Expedia) consumers surveyed also found the same four brands to be the most trusted to offer products which would deliver “end-to-end experiences.” This means if consumers booked through these four brands, they were less likely to have shopped elsewhere.
—Delays and cancellations (53 percent); queues (36 percent); and hidden costs (35 percent) were cited as the top frustrations that would discourage a consumer from repeat booking with a provider.
“Given how many things still go wrong when people are travelling – like delays, lost baggage and missed connections – that means it’s all too easy to disappoint consumers and lose them to an ever-expanding set of rivals,” said Matt Boffey, co-founder of Great State. “In this context, brands’ first priority must be to develop a great end-to-end customer experience, where common pain points are anticipated, and potential disappointment is transformed into delight. It’s the only path to winning a greater share of consumer attention, data and spend.”
At a Glance: Duty Free Americas
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HODGE PODGE: Shifts, Shakeups and Occasional Shaftings in the Tour and Travel Industry
Jerad Bachar has been appointed executive vice president of Visit Pittsburgh, replacing Jason Fulvi, who left several months ago to become president of VisitKC (Kansas City, Mo.). Bachar is returning to familiar territory. He was once national sales director for Visit Pittsburgh, from 2004 to 2008. He was most recently executive director of the Economic Development board for the nation of Bahrain.
Shauna Goodman has been named associate director of destination experience for Visit San Antonio. Most recently, Goodman worked for the San Antonio Economic Development Foundation with SA Works. Previously, she was an account supervisor with GDC Marketing & Ideation, a San Antonio-based marketing and communications firm.
Gary Stogner is retiring as senior marketing director at Visit Tallahassee at the end of the year after working for more than 35 years in the tourism industry. Stogner also worked at the St. Petersburg/Clearwater CVB, the former Florida Division of Tourism and served as the first state tourism director at West Virginia. He has headed up marketing, advertising, sales and promotions in Tallahassee for seven years.
Chris Mottershead (left) is once again taking over leadership of Thomas Cook’s UK business. He replaces Ingo Burmester, who took the job earlier this year, and is moving to DER Touristik to become its CEO for Central Europe. Mottershead joined Thomas Cook from TUI in 2015 and moved to a group-wide role of chief of product and operations in April. He will continue that role as well. A Thomas Cook spokesperson said Burmester has decided to leave to return to his home to Central Europe to be closer to his family. He starts with DER Touristik in Germany in May. He will succeed René Herzog following a one-month handover period. Herzog is leaving the company at his own request. Burmester came to Thomas Cook in early 2017, and moved to the UK to assume the role as chief of source market last April, moving from his position as chief of Thomas Cook’s hotels and resorts business.
Andy LeBouef has been named senior sales manager at ACCENT New Orleans, Inc., a DMC Network Company in New Orleans. LeBouef joins the company from Mardi Gras World, where he was director of sales. Previously, he served in senior sales positions at River City Venues and the NOLA Hotel Group.
Brazil’s largest tour operator/travel agency, CVC Corp., has announced that, starting in January 2019, Valter Patriani, who is leaving the company after 40 years, will start a new stage with the company, as a contracted consultant for the expansion of the company’s brands that operate in Argentina, where the company recently made acquisitions. Last year, Patriani was in charge of CVC Corp.’s Board of Aviation and Maritime Products. He completed the transition plan for his successor Fabio Mader last October.
Heike Pfeiffer has joined the team at Go Global Travel as a sales manager. A long-time veteran of the tour and travel industry, Pfeiffer joins the company from the German National Tourism Office, where she was sales manager for the U.S. Midwest. Pfeiffer spent 18 years with the office.
Anina Grasso has been promoted to the position product developer & contracting manager, Canada, at Destination America, located in Anaheim. She was previously product manager. Before joining Destination America, Grasso was product manager at YMT vacations.
Angus Bond has been appointed head of e-commerce and hotel sourcing at Virgin Holidays. Bond, who has been with Virgin for more than 7 years, has also served as head of product and commercial, and head of product and purchasing.
Robert Hansell for 13 years at Enterprise Travel
Jo Piani for 4 years at VVV Global Marketing
David Filipiak for 2 years at National Geographic Encounter: Ocean Odyssey