From the perspective of a veteran operator.
By the time the year 2022 fades into 2023, the professionals who market and promote the Visit USA product abroad will witness some changes in the way they do business. But it’s likely that many of the core tenets of the process will likely remain the same, according to Jeff Karnes.
Karnes should know. Since before the 21st century began, he has been executive vice president of New World Travel, operating out of its Los Angeles headquarters. (Its U.S. headquarters are in New York City, where the company’s president, Peter Dorner, is based. The operator is part of Germany’s DER Touristik and its agencies, which send scores of thousands of visitors to the U.S. each year. The company is owned by the German retailer REWE, one of the largest in the world.)
Germany and the scores of thousands of visitors it sends to the USA, is a most important market. The latest data from the U.S. Department of Commerce’s National Travel and Tourism Office (NTTO) in Washington D.C. show that, for the first half year of 2022, Germany ranked Number 3 among overseas source markets, sending more than 570 thousand visitors to the USA.
For its clients in Germany—and, in fact, for much of Europe—Karnes told INBOUND with a slight smile, it is likely that that the holiday in the United States is going to remain, largely, a-two-week fly-drive-with-stops-in- San Francisco-Los Angeles-and-Las Vegas-along with-some-familiar-national-parks.
What prompted the characterization of German visitors to the USA was, in part, the news coverage given to the slide of the euro to parity vs. the U.S. dollar for the first time in 20 years.
Did you hear about the currency crash? The slide in the value of the euro against the U.S. dollar that began last year crashed through a barrier of sorts last week as the two currencies are at par for the first time in 20 years. Will it have any impact on the rest of the 2022 holiday season? We’ll have to wait and see.
Time magazine boiled everything down to a paragraph: “The drop in the euro’s value results from recent global economic challenges–a war in Ukraine, supply-chain shocks, inflation and pandemic inspired stagnation, all of which are hitting Europe much harder than the U.S. Even so, the implications of the currency move will reverberate across America and the E.U. for years, experts say.” Click here for complete article.
A Ten-Year Portrait
U.S. Dollar v. Euro and British Pound*
|Year||U.S. dollar ($)||European euro (€)||U.K. pound sterling (£)|
* Figures from x-rates.com. Based on mid-market day for the 20th of each July. Table by INBOUND. Numbers rounded to nearest U.S. cent.
The table includes the UK’s pound, which is an integral part of the mix above and the two currencies—the euro and the pound—comprise the medium of exchange for at least two-out-of-five visitors to the United States.
Inclusion of the pound in the table also serves as an economic history book of sorts, during which the reader will see episodes of stagnation/recession, along with a 20-plus percent drop of the pound vs. the U.S. dollar in the aftermath of the June 2016 “Brexit” vote that triggered the departure of the UK from the European Union (EU). Still, both the EU and the UK survived.
And what about the post-pandemic tourism industry? Beyond any impact of the euro-vs.-pound-vs.-dollar discussion, there was still the ongoing recovery from the global pandemic that was triggered by the COVID crisis.
For starters, Karnes told us that he expects a “a modest” recovery for the inbound tourism industry to the United States. And he went on to make a number of points, some of which are noted here:
● Consumer behavior in the post-pandemic marketplace is telling. Consider how the visitors from different markets and countries have been accommodating their “pent-up” demand of travelers.
Professionals in the travel trade are finding out that the German consumer is somewhat conservative and methodical in planning a holiday, as opposed to Americans, many of whom are last-minute or impulsive, “do it now” bookers. The concept or practice of a static contract is well-known to the German traveler and operator. For the U.S. traveler? Not so.
● Will the second half of 2022 experience a difference? Yes. One change already apparent is that travelers to the U.S. from Germany and other European source markets have begun to explore destinations and experiences that are further away from large cities and urban hubs. Meanwhile, Americans are “re-enjoying” reliable favorites among the attractions and destinations that they are visiting.
● Midst all the “busy-ness,” consumers are sharing a now familiar lament. Yes, more Germans are now using OTAs to book shorter trips. However, those who assemble their own holidays online find out that they are all alone if something goes wrong. If one books through DER or other operators, they have backup and 24-7 service operators provide.
● Hotels represent a real challenge for some industry partners. While hotel room rates are back at pre-pandemic levels and healthy occupancy rates have returned, services and amenities have not. Beleaguered by an industry-wide shortage of employees, reports of reservations that are missing and unkept beds have become a fact—and they are not infrequent. There have been some instances in which hotels have simply lost reservations.
● For likely the same reasons affecting operators, agents and consumers are experiencing a shortage of available airline flights. It seems to be a chronic condition: There simply are not enough skilled workers to maintain the planes or operate the highly computerized infrastructure used by air traffic.
● Perhaps it’s a matter of a safe or a safer harbor for those who like breaches, but it doesn’t seem to matter to those enjoying the experience, as the numbers of travelers going to Hawaii are “through the roof.”
● And again, expect the industry’s recovery to be modest. This means that the pace and volume of sales might not reach pre-pandemic levels next year, 2023. In other words, the industry should work to make 2024 the next 2019.
A note: for INBOUND, a conversation with Karnes is a refreshing experience. Not only does he know what he’s talking about, but he does so with a refreshing courtesy—in a way that makes one want to use the archaic word “courtly.” If you would like to carry on the conversation with the courtly Jeff Karnes, you can reach him at [email protected].