Is China Tightening the Screws on Outbound Travel to U.S.?
Chinese hi-tech researchers have been told “not to travel to the U.S. unless it’s essential.” According to a report last week in the South China Morning Post, the newspaper cited a source indicating that staff for research agencies have also been warned to clear their mobile phones and laptops of sensitive information if they have to go to the U.S.
These actions were announced following the arrest of Meng Wanzhou, the chief financial officer of Huawei Technologies. Meng was taken into custody in Vancouver, Canada, on Dec. 1, at the request of the U.S. She faces extradition to the United States, where she is accused of helping Huawei, a major electronics manufacturer, evade American sanctions on Iran.
China’s foreign ministry has already summoned the U.S. and Canadian ambassadors to China to protest the arrest of Meng.
The arrest shows that, despite the agreement between world’s two biggest economies for a 90-day truce in the trade war between them, tensions between Beijing and Washington have continued to escalate over technology and security … and, as result, tourism.
“China is likely to have a travel ban.” The Chinese protest, as well as the warning to hi-tech Chinese researchers about travel to the U.S. seemed to be a possibility as far back as last April when Yiling Pan, associate editor of Jing Travel—a publication that covers trends among Chinese travelers, especially luxury travelers—told delegates to NAJ’s RTO Summit East in New York that “if it keeps up, China is likely to have a travel ban on the United States.”
“Imminent Cooldown” Seen for Chinese Market: At about the same time as that China warned hi-tech researches about visiting the United States, Jing Travel told its readers, “There’s an undeniable slowdown across the entire Chinese travel market right now, with travel-related retailers and destinations both struggling. Even executives at China’s biggest online travel agency Ctrip.com International have signaled that they expect an ‘imminent cooldown’ in the market. Right now, the slump mostly has to do with anxiety surrounding economic fears, but the numbers are not looking good for a lot of Chinese travel industry players.” Read the whole article here.
Germany: DER Restructuring in 2019– High Level Management Turnover + 10% Staff reduction
INBOUND readers who regularly visit our HODGE PODGE section might have noticed last week’s news that René Herzog, head of DER Touristik’s Central Europe division—it is the company’s largest—is leaving the company with no particular place to go. At the same time, Ingo Burmester has left the top job at Thomas Cook UK to take the top position at DER Touristik in a handover that will be effective next May.
The movement is part of a restructuring by DER Touristik of its German tour operator business that will also include a 10 percent cut in the company’s work force. Planning for the move has been underway for some time. It was first announced in March 2017.
The DER Touristik Group comprises four divisions: Central Europe, Eastern Europe, Northern Europe along with Destination Management Companies & Hotels. The largest division is Central Europe (Germany, Austria, Switzerland), which is the one that Burmester will lead.
The restructuring takes place in the wake of a fairly aggressive expansion on the part of DER Touristik that included the acquisition of the European tour operator businesses of Kuoni in 2015, as well as the acquisition of Kuoni France earlier this year.
According to a report in the German travel trade publication FVW, the restructuring will address DER Touristik’s under-performing German tour operating business, which covers six brands: Dertour, Meiers Weltreisen, ITS, Jahn Reisen, ADAC Reisen and Travelix. The restructuring is designed to make DER Touristik Deutschland “leaner, more efficient and faster” in order to respond more quickly and better to the wishes of customers, sales partners and suppliers.
In an interview with FVW, CEO Sören Hartmann explained that the DER Touristik Central Europe business accounts for two thirds of the group’s revenues but only one third of its profits. However, the international businesses (outside of Central Europe) have been successfully and profitably restructured over the past three years, and now generate two thirds of group revenues although only one third of revenues.
DER Touristik is Germany’s third largest tour operator and one of the largest producers of Visit USA business in Europe. According to the company’s profile in the delegate registry for this year’s IPW trade show in Denver, the company indicated that it sends more than 100,000 visitors a year to the U.S.
From Hotelbeds.com—The Year in Review + Outlook for 2019
Consolidation in the global hotel sector will continue: In a fairly comprehensive dispatch from Hotelbeds, Sam Turner, the company’s global director of sales and sourcing, discussed the top issues that the tour and travel industry and, in particular, the accommodations sector dealt with in 2018, and what we can expect in 2019 and, in some cases, beyond. Following are the key points made by Turner.
—The intermediary market for hotel sales strengthened in 2018 and the trend will continue. This has been yet another year where growth in the intermediary market for hotel sales has outstripped the growth in the direct channel for the hotels. This is in part because the three largest OTAs globally–Expedia, Booking.com and Ctrip are growing at double the rate of the direct channel
—The trend for intermediaries growing their share of hotel sales versus the direct channel will continue into 2019 and beyond. It shows that consumers are generally more comfortable–for a range of reasons– with buying from intermediaries and on balance favor that over going to a hotel dot com.
—Consolidation has been a key part of the accommodation sector over the last twelve months and will continue in 2019. Both investors and owners have recognized that the sector is just way too fragmented. How many other industries can you name where the top 10 brands generate less than a quarter of revenues?
—This explains not just the mega deals of recent years, but also the medium sized chain deals of this year such as Minor Group acquiring NH and Accor acquiring Mövenpick– as well as the constant acquisition of smaller brands and start-ups by Accor and other major chains.
— “The bedbank sector too remains highly fragmented and this explains the rationale behind our acquisition of both Tourico Holidays and GTA last year
Other points of note:
- Last year everyone was still assuming that the alternative accommodation sector would just keep growing exponentially. But this year has seen a massive slowdown in growth and we expect that to continue.
- The Chinese outbound market remains largely untapped.
- Strong increase in hotel distributors offering re-seller content is unsustainable and bad for consumers
- Over the last few years we’ve seen a trend for airlines approaching us to start selling hotel accommodations on their website. In 2018 this has increased, but we predict that in 2019 it really will begin to snowball.
- Service will slowly become the key differentiator for hotels, not price – helped by technological innovation
- Trend for greater price transparency driven by metasearch is leading to a technological arms race
Mergers and Acquisitions
- Travelport is Acquired: Siris Capital Group and Evengreen Coast Capital, private equity affiliate of Elliot Management Corp., have announced completion of their buyout of the UK-based GDS operator Travelport. The price tag was $4.4 billion. The headquarters of Travelport, which once owned GTA, Travelport’s headquarters will remain in Langley, Berkshire, following the acquisition, which is expected to close in the second quarter of 2019and is subject to customary closing conditions, including approval by Travelport shareholders and receipt of required regulatory approvals. Once the transaction is completed, Travelport will become a privately held company and Travelport common shares will no longer be listed on any public market.
- LVMH Moët Hennessy Louis Vuitton SE, better known as LVMH, a French multinational luxury goods conglomerate headquartered in Paris, has entered into a definitive agreement for LVMH to acquire UK-based Belmond, a hotel and leisure travel products company that operates luxury hotels, trains and river cruises in 24 countries around the world. The company was formerly known as Orient-Express Hotels Ltd.The deal—LVMH is paying $2.6 billion got the acquisition—is expected to be completed in the first half of 2019.
- Adventure tour operator G Adventures has acquired small-group youth travel specialist, UK-based TruTravels. Its customers are mainly young travelers ages 18 to 25. Joe Fallon and Mark Pope, who founded the company in 2012, will continue to run TruTravels as partners and minority shareholders. G Adventures founder and owner Bruce Poon Tip says that he views TruTravels as a “complementary business.” TruTravels has 25 employees in southwest London plus 40 tour guides across Asia. With the G Adventures acquisition, TruTravels now plans to expand its sales team. G Adventures will support TruTravels in extending its supply chain access, as well as with shared resourcing in technology, talent acquisition and finance.
- Double Deck Tours in Niagara Falls has been purchased by Ambassatours, a sightseeing tour company from Eastern Canada. With the purchase, Ambassatours says it has become the world’s largest owner-operator of vintage routemaster double decker buses. Bert Watson, whose family owned Double Deck for 54 years sold the company after having it in his family for three generations. He said that “from the start, we felt we could trust Ambassatours to honor our half century commitment to presenting Niagara Falls through the vantage points afforded by our classic, British double decker buses.” Double Deck Tours will continue to operate under its already established brand and with the new owner-operator in place they will be looking to expand its sightseeing tours and charter buses. Ambassatours has also announced that its founder’s grandson, Dustin Watson, will be the new service manager for Double Deck Tours and Terri McCulloch will be the team’s general manager starting in the spring of 2019.
LET’S GET PERSONAL: Sedona’s Sachiko Sado on How a DMO Deals with Too Many Visitors
We happened to visit Sedona, Arizona last month and, as is our wont, decided to stop in for a visit with the local tourism bureau. While the CEO, Jennifer Wesselhoff, was out of town, we visited with Sachiko Sado, director of tourism development. What we found was a small but mighty team of highly motivated marketers passionate about the destination they love. During the interview, Sado touched upon the thorny issue of “over-tourism,” which has been a hot topic in parts of Europe, but not a top-of-mind issue among U.S. destinations—until now. Following are excerpts from our interview with Sado.
INBOUND: How did your travel career begin?
Sado: As a Japanese student at Northern Arizona University (in Flagstaff) 17 years ago, I applied for an internship with the Sedona Chamber of Commerce’s Jennifer Wesselhoff, who was then involved in a junior marketing role, who was then communications and public relations manager, and is now the president and CEO of the chamber and tourism bureau.
INBOUND: How did you end up staying 17 years?
Sado: I met Arizona’s Japanese representative, Osamu Hoshino, who was conducting a media tour in Sedona that year, which included a writer, a photographer, and a Japanese celebrity from Cosmopolitan Japan, who wrote a very positive article about the surprising uniqueness of the red rock vistas—which are not found elsewhere—as well as the destination’s spiritual appeal and location between Phoenix and the south rim of the Grand Canyon. At the time, Cosmopolitan was one of the magazines that influenced other Japan journalists and opinion leaders and I began using the article as way to convince the Japanese trade to include Sedona in its programs.
INBOUND: Who is the target audience today?
Sado: Internationally, our top three targets are the UK, German speaking Europe and Japan. Our sweet spot is a traveler who appreciates outdoor adventure and sustainability. In the past year or so Sedona has developed an “over-tourism” problem with an abundance of day trippers traveling between the Grand Canyon and Phoenix coming to Sedona during our primary seasons clogging traffic and (causing) complaints from locals who find themselves in lines for restaurants, and streets clogged with traffic.
But, since tourism is Sedona’s main industry, we needed find a way to address this so we decided we had to evolve from a Destination “Marketing” agency to a Destination “Management” chamber that focuses on marketing only during low seasons and investing in areas that will disperse tourists to a wider array of attractions away from the center of downtown.
INBOUND: How do you do that?
Sado: In 2014, our CEO Jennifer Wesselhoff worked with the Sedona lodging industry to increase the hotel tax that enabled us to achieve formula funding. This increased our public funding from $500,000 to $2.1 million in three years and allowed us to attend more trade events and market more aggressively. As Sedona’s hotel ADR and occupancy grew, so did our budget.
But to manage the flow of tourism, we decided in 2018-19 that we would freeze our marketing budget at the same level as the prior year and use the additional funds only to drive tourism during our summer and winter need periods. We also refocused our marketing efforts to the trade and have chosen the three target markets based on their propensity for multiple overnight stays with midweek arrivals. We would rather have 100 visitors staying three nights than 300 visitors for one night.
Additionally, to help mitigate the traffic issue, we purchased a property in Uptown Sedona where we were able to add additional parking and invested in wayfinding signage and we followed up with “Walk Sedona” initiative.
INBOUND: What else?
Sado: In order to disperse visitors from the popular areas where we see concentration of visitors, we developed Sedona Secret 7 (www.SedonaSecret7.com) that introduces seven locations under seven categories —Hiking, biking, star gazing, vista for sunrise and sunsets, arts & culture, spiritual, and picnicking, which we hope will disperse travelers and will offer local experiences for them. The Chamber & Tourism Bureau gives back part of its public funding for “Sedona in Motion” which was developed by the City of Sedona to mitigate traffic congestion.
INBOUND’s Conclusion: The fact that Ms. Wesselhoff was able to retain tourism marketing staff for 17 years was an example of an instance in which the destination, the leadership and the staff all were able to grow into their roles at a similar pace.
Receptive Tour Operator of the Month
Founded only a decade ago, WORLD2MEET is 100 percent owned by the IBEROSTAR GROUP, which is headquartered in Palma de Mallorca, Spain. W2M offers travel services in more than 175 countries, accommodation, transfers, excursions and tours, handling services. W2M’s main clients are tour operators, wholesalers and agencies. A global accommodation and travel component provider with more than 245,000 properties worldwide distributed via API or Web Interface, the company can point to the following facts: It has a global turnover of more than $500 million; has had 5.1 million passengers served; 9,500 directly contracted hotels; an inventory of more than 245,000 properties, 5,000 clients connected. Long-time tour and travel industry veteran Roselle Masse is W2M’s contracting manager for the U.S. West Coast
The TourOperatorLand.com website by the NAJ Group (it also publishes the INBOUND Report) 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. Visitors to the website can use its exclusive Receptive Finder™ to find the right RTO. It is 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 listed on TheTourOperatorLand.com, who are vetted and qualified by the NAJ Group, also take part in at least one of NAJ’s RTO Summits series. The Summits take place annually in Los Angeles, New York City and Orlando.
If you would like to make personal contact with World2Meet, check out the RTO Summit at the West in Marina del Rey, California, February 13-14, 2019. Roselle Masse is W2M’s contracting manager for the U.S. West Coast, will be there. For more information, visit: www.rtosummit.com, or www.TourOperatorLand.com.
Wrinkle in Visa Waiver Program—Visitors to USA Need to Apply at least 3 Days in Advance
A new requirement for the Visa Waiver Program says that international travelers to the United States will now need to apply for their U.S. ESTA (Electronic System Authorization) for at least 72 hours before travel or risk being offloaded from their flight, with the U.S. Government no longer granting “real-time” ESTA approvals.
Although most air passengers flying to the U.S. from the 38 countries that comprise the list of countries that make up the Visa Waiver Program—especially those in pre-formed groups—apply for and receive their ESTA well in advance their flights, there are occasions when busy business travelers or some leisure travelers simply forget, or don’t realize their previous ESTA had expired, and they were able to apply at the airport, get speedy ESTA approval and board their flight as they normally did. (ESTA authorization is generally valid for multiple trips over a period of two years starting the date that one receives approval or until their passport expires, whichever comes first.)
Under the change, effective immediately, “arriving at the airport without a previously approved ESTA will likely result in being denied boarding,” says the U.S. Customs and Border Protection (CBP).
ESTA costs a traveler to the U.S. $14.
Travelers would only need to apply for a new ESTA if their previous approval has expired or they’ll be using a new passport to enter the United States, as each ESTA is linked to a passport, not to the traveler themselves.
It wasn’t clear from the notice given by CBP why the change was implemented, but that does matter. What does matter is that U.S.-based receptive tour operators and international tour operators overseas make their clients aware of it.
1 – Citizens with Taiwanese national ID number only.
2 – Only British Citizens are eligible to participate in the Visa Waiver Program.
NEW AIR SERVICE
—First: What effect will the bankruptcy of Avianca Brazil have on service to and from the USA?
According to a statement from the company, which declared bankruptcy last week, operations are not expected to be affected and “passengers can have complete peace of mind to make reservations and buy tickets, since all sales will be honored and flights will be operating.” Currently, the carrier serves 37 destinations—all but five are within Brazil. Of those five, only two are long-haul: to Miami and New York JFK. However, it serves as a feeder into Sao Paulo and Rio de Janeiro, from which passengers can make international connections. It should be noted that Avianca Brazil, a brand of Oceanair Linhas Aereas SA (Oceanair), is not part of the group Avianca Holdings S.A, based in Colombia. The airline recorded net losses in the first half of the year of 175.6 million reais ($44.9 million), up 24.4 percent from the same period last year.
—Starting June 1st next year, TAP Air Portugal will run five return flights per week from Lisbon to Chicago O’Hare. On 16 June 2019 the airline will additionally add five weekly trips from Lisbon to Washington-Dulles. The new Chicago route will leave Lisbon at 1:05 p.m. and will arrive at Chicago O’Hare at 4:05 p.m.; the return leg will depart Chicago at 6:05 p.m. and will arrive in Lisbon at 7:50 a.m. on the following day. To Washington-Dulles; the flights will leave Lisbon at 4:30 p.m. and arrive at 7:20 p.m. and the return will depart at 10:40 p.m. and will arrive in Lisbon at 10:50 a.m. the next day.
—Also from TAP, the carrier will fly five weekly nonstop round-trips year-round, between San Francisco and Lisbon starting in June next year. The SFO flights will operate Mondays, Tuesdays, Thursdays, Saturdays and Sundays, from June 10, departing SFO on at 4:10 p.m., and arriving in Lisbon at 11:25 a.m. the following morning. Returning flights leave Lisbon at 10am, arriving into SFO at 2:40 p.m. Economy fares from SFO to Lisbon start at just $380 one way, all-inclusive of taxes, or from $800 round-trip.
—Air India has returned to the Mumbai to New York JFK route after an eight-year absence. On Dec. 1st, it began three-times-a-week service on a route it last flew in October 2010 when it offered a daily rotation. Flights to JFK will leave Mumbai at 1:00 a.m. on Wednesdays, Fridays and Sundays, returning from JFK at 11:05 a.m., landing back in Mumbai just after midnight the following morning.
—Air New Zealand launched its longest non-stop flight on Nov. 30th, beginning three times weekly service between Auckland and Chicago O’Hare. The route measures 13,176-kilometers (8,187 miles). With this launch, the New Zealand flag carrier connects Auckland to five US destinations, with it already flying to Honolulu, Houston Intercontinental, Los Angeles and San Francisco. The airline also operates a daily service to Vancouver in Canada from New Zealand’s largest city and its home base.
—Eurowings began operations on its latest transatlantic route on December 1st, with the carrier taking over from Lufthansa on the 6,035-kilometre link between Düsseldorf and New York Newark). Eurowings already offers six times weekly service between Düsseldorf and New York JFK. No other airline will link Düsseldorf and New York this winter, giving Eurowings a monopoly in the market where it will offer 11 weekly flights.
TourOperatorland.com in 2019: Retooled for “Group Tours for Independent Travelers”*
A new design to make customizing tailor made tours for more intuitive. As baby boomers age one of the most profound trends will transition from fully planned itineraries to Group Tours for Independent travelers and TourOperatorland 3.0 has been redesigned so that buyers can create tailor made tours for their clients AND marketing collateral for their sales teams, that will ultimately result in free advertising for our TourOperatorLand partners. Check it out here.
Additionally, new “business development” aspects have been added as follows:
—A “Receptives Who Sell Us” call to action features. To make it easier for international buyers to purchase TourOperatorLand.com attraction or a hotel partners, the site will include two call to action options:
- A link on each destination, attraction or hotel portal page to a selection of five receptive operators from which buyers can purchase your product or destination. OR…
- TourOperatorLand.com will send a one-time e-mail on behalf of TourOperatorland clients to operators in their top three source markets. Additional Cost to TourOperatorland.com partners? $0; included in the annual contract. Cost to TourOperatorland partners: $0
—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.
—Exclusive Tracking system: NAJ knows how important tracking is to DMOs and supplier partners; only TourOperatorLand.com sends a notification to a partner’s inbox whenever a buyer downloads images or even views or enters a partner’s portal. Cost to TourOperatorland partners: $0. Included with the annual contract. For those interested in lead generation: Operator names and contact information are available for those who opt for an enhanced package.
—Special Photo-tracking service for attractions and hotels. To help suppliers learn who’s downloading their hi-res images, we have built a dedicated trackable portal micro-site at TourOperatorLand.com—it is used by more than 4,000 international and domestic operators as well as travel agents and MICE planners (more information here)— that sends notifications whenever your images are downloaded. The attraction/hotel portal includes the following:
- An overview of their products
- The company’s tour and travel sales contact, photo, e-mail address and website
- 9 high resolution images of their choice
- Trackability—each time an operator downloads one of their images, they receive an e-mail alert with their company’s name, industry segment, base country, and it shows if they plan to attend.
* This is Part Two of three in a series of items showing how NAJ can help its partners at TheTourOperatorLand website increase their business. Part Three will appear in the next issue of the INBOUND Report.
At a Glance: Corning Museum of Glass
For full information click here.
HODGE PODGE: Shifts, Shakeups and Occasional Shaftings in the Tour and Travel Industry
Sally Berry Davis is leaving her position as global sales and marketing manager at the Corning Museum of Glass at year’s end. Davis, who has been with the attraction for more than eight years, plans on devoting her efforts full time to growing her tourism training and consulting company and on helping others become China ready marketers. Her website is SallyDavisBerry.com. (You can read last month’s interview with Ms. Berry here.)
Christine Valls has been named by American Airlines as its new general sales director for Florida, the Caribbean and the Hispanic market in the United States. A native of Miami, Valls has been with American, and operating out of Miami, for more than 28 years. She began her career at the carrier as a management intern, advancing over the years to her current post.
Kane Webb will resign his position as head of the Arkansas Department of Parks and Tourism at the end of the year, as the department prepares to merge with the Department of Arkansas Heritage. The departure was announced in a press release from Gov. Asa Hutchinson’s office, which said that Webb is taking a job as the director of executive communications at Walmart Inc. Hutchinson tapped Webb to head Parks and Tourism in October 2015. Webb served various tenures as an adviser and speechwriter for the Republican governor.
After more than eighteen years, Lucille Yokell is leaving her position as director of sales and marketing of the Wellington Hotel in New York City. A long-time veteran of the tour and travel industry, Yokell had previously operated her own hospitality and consulting firm serving hotels, restaurants, tour operators and shopping venues.
Mark Mitchell, has left Affinion International Travel, where he was senior business director, “to pursue other opportunities.” Mitchell, who joined the company from TUI in 2008, was part of the team which set up Affinion and progressed through the organization to his most recent role as senior business director.
David Peterson is leaving his post as interim director of the Nevada Department of Tourism and Cultural Affairs to join the Carson City Culture and Tourism Authority as its next executive director. At the Nevada Department of Tourism and Cultural Affairs, Peterson started as chief operations and finance officer in September 2014 before becoming deputy director in January 2017. Prior to that, Peterson was director of research at the Nevada Commission of Tourism, Nevada Department of Tourism, from September 2001 to August 2014.
Haley Ward has been named sales director at Hudson Yards Experiences in Manhattan, New York City. She joins the organization from the Metropolitan Museum of Art, where she was head of tourism sales and marketing. Ward was with the Museum or four years.
J.D. O’Hara has been named president of Travel Leaders Group, the parent company of 19 major travel agency brands, including Altour, Barrhead Travel, Colletts Travel and others. O’Hara joins from Certares Management, LLC, where he served as senior partner. He was also part of the original management buyout of Carlson Leisure Group from Carlson Companies in January 2008.
Brad Jones, recently left his post as executive director of Visit Rochester (Minn.) to take over as executive director of Visit Bellevue. He had been with Visit Rochester for 13 years. Prior to that, Jones had been executive director of the Macknaw Area CVB.
Zachary Holifield has been named director of leisure business development for Visit Mississippi Gulf Coast. He joins the organization from the state’s Visit Mississippi DMO, where he served for more than four years.
Anita Nuñez Cepollaro has been name national sales manager at Visit Baltimore. A veteran of nearly two decades in sales and business development, she joins the DMO from the Hiltons of Washington D.C., where she was senior sales manager. Nuñez Cepollaro has also served as brand sales manager with Meet Puerto Rico.
Bob Harris has been appointed executive vice president of sales for the Myrtle Beach Area Chamber of Commerce, which also serves as the area’s DMO. Harris brings significant CVB sales and marketing experience to the Myrtle Beach area. Harris has worked at the Greater Williamsburg Chamber & Tourism Alliance in leadership roles since 2007. Previously, Harris worked at the Georgia Department of Economic Development as director of global sales and marketing.
Richard Buck for 27 years at AgriTours North America
Donna Keren for 16 years at New York City & Company
Lori Timony for 14 years at Smart Destinations, Inc.
Scott White for 8 years at Greater Palm Springs CVB
John Stine for 5 years at I-Drive 360
Tim McAlpin for 5 years at City of Prescott Department of Tourism
Claudio Liondi for 3 years at Quetal Travel