While discussing his company’s profile during a presentation at NAJ’s recent RTO Summit-West in Marina del Rey, Calif., Bill Chambers, regional vice president of product development, Tourico Holidays, casually mentioned the fact that the company is meeting with officials of Alibaba, the giant online retailer based in Hangzhou, China—it also has a headquarters branch in Hong Kong—to discuss selling travel for the latter.
Alibaba “is huge,” said Chambers, noting that the online powerhouse has about 500 million users compared to 220 million for Amazon.com. Founded in 1998 in the apartment of Jack Ma, Alibaba’s executive chairman, the company’s market value was measured at $231 billion (vs. Amazon’s $165 billion).
Chambers provided no details regarding the discussions the company was having with Alibaba, which has more than a dozen other corporate entities that it operates, but the simple disclosure shows that the company’s global reach makes it a serious contender in providing travel product worldwide.
Last summer, Tourico closed the deal to become the booking engine for the travel division of Sam’s Club, the warehouse store component of Wal-Mart, the largest retailer in the world (interestingly, it is expected to be eclipsed by Alibaba in 2016, according to Forbes).
Tourico is also the exclusive travel provider for Air Miles Canada. Air Miles Canada is a loyalty program with a commanding presence in Canada. There are more than ten million active collector accounts across Canada; approximately two-thirds of Canadian households participate in Air Miles. The program has more than 100 partners, including Bank of Montreal, American Express, Shell Canada, grocery chains, drug store chains and more. Consumers collect Air Miles reward miles from sponsors, which can be redeemed for 1,200 reward choices, including (and especially) travel products.
As ITB Convenes, Not Everyone is Upbeat about the Outlook for Europe
Last week, the NAJ Group convened its RTO Summit West, one of three symposia held annually in the U.S. Gateway destinations (Los Angeles, New York and Orlando) that feature the market insights and outlook of receptive tour operators (RTOs), who bring to the discussion both a point of view and the most current information gleaned from their day-to-day updates of their sales data and personal contacts with other travel professionals. The RTO Summit symposia comprise the only conference series that focus on the USA’s international inbound tourism industry from the point of view of the RTO sector.
As ITB Convenes, Not Everyone is Upbeat about the Outlook for Europe: Officials from two of the largest RTO companies with operations in North America who spoke about the outlook for inbound tourism from Europe during the NAJ’s recently convened RTO Summit West in Marina del Rey, Calif. were hesitant to sound the same tone of optimism found in the data-driven reports of various government-sponsored research organizations and necessarily optimistic reports of the European travel trade, particularly that of Germany (See “In Germany, Consumers, Travel Trade in Buoyant Mood for ITB 2015”).
While acknowledging that the sales numbers for 2014 were better than they were for 2013, both Sanya Hamilton, head of leisure groups for Kuoni-owned AlliedTPro, and Sevil Arnavutoglu-Le, regional director, USA West, Hotelbeds (its parent company is Tui) reminded Summit delegates that a significant portion of the 28 EU nations have been slow to a recover from a recession that peaked in 2012 and had an especially damaging impact on the economies of Italy and Spain, both Top 15 overseas source markets for the U.S.
Hamilton said that 2014 was a better year for AlliedTPro, especially in key markets such as Italy, as it experienced a 20 percent year-over-year increase in sales volume; however, key markets were still only slowly emerging from recession. Hamilton should know: her key markets, which she monitors daily, include Italy, Denmark and Belgium, followed by the South American market of Brazil. For Hotelbeds, Arnavutoglu-Le noted, 2013 was a good year, and 2014 was even better, with a 25 percent increase in room nights sold last year. Such a spike has not necessarily translated across the range of Tui brands, as the company, overall, reported a relatively flat year.
Asked about the impact on business of the recent decline of the euro† versus the U.S. dollar Arnavutoglu-Le pointed out that, since Hotelbeds is a European company (it is headquartered in Palma de Mallorca, Spain) a decline in value of the euro has an effect. (Over the course of the last six months, the euro’s value, on a year-over-year basis, has declined by 12 to 20 percent against the U.S. dollar). She seemed more concerned, however, with the situation in Argentina and Brazil—both key source markets for Hotelbeds—where the national economies have experienced higher-than-usual rates of inflation and slowdowns in the growth. She added, however, that room night booking levels for 2015 from the two markets were already running at more than 60 percent of 2014 levels.
In addition to coping with changing economic forces, Hamilton reminded Summit delegates that her company is “going through a lot of changes,” an oblique reference to the news earlier this year that AlliedTPro’s owner, Zurich-based Kuoni, has put its tour operator division up for sale. Overall, she said, “there are many indications that things are getting better,” explaining that the company’s group bookings ahead of last year and key markets are rebounding.
Where is the Group Market Trending? In response to this question Hamilton first explained that AlliedTPro has gone after groups more aggressively in the past two years and is generating more MICE groups, with many coming from Latin America and Europe. Hotelbeds, meanwhile, had earlier developed a separate division within its structure just for groups, because the company believes in group business.
What are the Emerging Secondary Markets in U.S. for Group and FIT? Referring to her company’s market of Spain Arnavutoglu-Le answered this question by telling delegates. “It’s difficult to educate the Spanish people to come to Fresno and Chattanooga.” She was quick to add, however, that Hotelbeds will be sending clients beyond gateway because (she San Francisco as example) “there are no new hotels in San Francisco, so we’re shifting the focus to secondary markets.”
† (The euro is the sole currency of 19 of the 28 European member nations, most notably the key source markets of Germany, Franc, Italy, Spain and The Netherlands. Overall, the countries that use the euro have a population (2013) of more than 330 million, a little larger than the U.S. popular of nearly 320 million.)
In Germany, Consumers, Travel Trade in Buoyant Mood for ITB 2015
This week’s ITB—the world’s largest travel show—in Berlin takes place just as the news comes that the nation’s consumer confidence in the economy is high and as the German travel trade is registering bullish numbers for the summer travel season. Travelers from Germany comprise the USA’s largest overseas source market in continental Europe and ITB historically has served as a barometer on how the tour and travel industry in Germany and, to a great extent, in the Eurozone will perform in the coming year.
- First, from the research firm GfK comes the news that that consumer confidence in Germany could reach a level of 9.7 in March, up from February’s 9.3 rating. If so, this would be the highest reading in more than 13 years—since it reached the 11.0 mark in October 2001.
A GfK statement on the numbers said, “Despite the ongoing crisis in eastern Ukraine and uncertainty as to whether Greece will remain in the Eurozone, Germans remain confident that their economy is clearly on course for growth.” However, acknowledging that other factors in the global economy must be considered, the firm said that, “If developments in these areas cause uncertainty among German consumers, this will also have a severe impact on the consumer mood and therefore also consumption.”
- Second, Deutscher ReiseVerband (DRV)—the German Travel Association—reported Feb. 26 that bookings for summer holidays this year increased about five percent, year-over-year, in January, with DRV President Norbert Fiebig observing, “We expect further growth at a high level for the whole tourism year.”
DRV pointed out that, for the 2013-14 year that ended last October, the German tourism market once again hit record levels—Germany is the only European market that did not decline in the immediate wake of the 2008-09 global economic recession—with tour operators increasing their combined revenues by nearly 4 percent to €26.3 billion ($29.4 billion), which was about €1 billion ($1.2 billion) more revenues than in 2012/13. Growth was driven by cruises and demand for higher-value and higher-priced holidays. And while revenues grew by almost 4 percent, the number of customers increased by 2.5 percent, indicating that there was an increase in average prizes.
(Just before ITB was to open, ITB officials indicated that more than 110,000 trade visitors were expected at the event, held annually at the 1.7 million square-foot Messe Berlin convention center complex.)
Exchange Rate Plunge Leads to Bump in U.S. Travel to Canada
The most recent release of key tourism numbers by Statistics Canada suggests that a decline of 20 percent in the value of the Canadian dollar—the loonie—vs. the U.S. dollar over the past few years has something to do with a healthy uptick in the number of U.S. visitors to Canada, particularly among day-trippers (a sure sign that U.S. residents are crossing the border to do some shopping). Here is what the latest data from Statistic Canada say:
- Overall travel to Canada rose 3.6 percent in December compared with November. This was entirely the result of more trips made by U.S. travelers to Canada—as travel to Canada from overseas countries decreased 0.5 percent in December to 441,000 trips.
- Travel from the United States to Canada increased 4.7 percent to 1.7 million trips. Same-day car travel posted the largest percentage increase, up 6.5 percent to 618,000 trips, followed by overnight car travel, up 6.3 percent to 584,000 trips.
- Canadian residents made 5.2 million trips abroad, up just 0.2 percent from November.
- The number of trips made by Canadian residents to the United States rose 0.3 percent to 4.3 million. This gain was largely attributable to a 0.4 percent increase in same-day car travel to 2.4 million trips.
- The number of trips made by Canadians to overseas countries decreased 0.6 percent to 922,000.
As for the value of the loonie vs. the U.S. dollar, here is a snapshot of its decline over the past few years.
The Decline of the Loonie:
Value of the Canadian Dollar vs. U.S. Dollar
Past Two-and-a-Half Years
|Loonie = $
|Six Months Ago (8-26-14)
|One Year Ago (2-26-14)
|18 Months Ago (8-26-13)
|Two Years Ago (2-26-13)
|Two-and-a-Half Years Ago (8-26-12)
Source: xe.com; prepared by NAJ
Japan is Top Country Brand for 2014-15, USA is 7th
Despite its economic woes of late, Japan is received well abroad; for the first time in the ranking’s history, it has earned first place in the annual Country Brand Index by global brand consultancy FutureBrand. The index measures perceptions of countries around the world according to guidelines similar to those used to evaluate the strength of various consumer brands. (In “other findings” section of the country brand report, FutureBrand said that New York, London and Beijing will be the most influential global cities.)
Seventy-five countries were reviewed in this year’s ranking process, with 22 meeting the criteria laid out for a “country brand.” The FutureBrand report said that, “to qualify as a ‘country brand, people need to want to consume your products and services and prefer you as a place to live and learn.”
A key finding in the research that led to the ranking reveals that when respondents rank a country highly as a brand, it increases the likelihood that they will “visit, recommend and do business with it” than other countries on the list. Other findings include the following:
- Awareness alone does not make a strong country brand.
- Country brand strength is connected to how many consumer brands you are known for.
- Strong country brands are seen to have expertise across multiple consumer categories.
- Country brands have most momentum in technology, innovation and sustainability.
- An influential city is not enough to make a strong country brand (but it helps).
Top 20 Country Brands
|11. New Zealand
|20. South Korea
Other findings from the FutureBrand Report include:
- Awareness does not make a country brand: For example, Italy enjoys higher awareness levels than Japan (89 percent compared to 84 percent) but is seventeen places lower in the rankings. \
- Country brands are associated with consumer brands: On average, respondents demonstrated awareness of a larger number of consumer brands across more categories for the 22 country brands. For example, Japan elicited associations with Toyota, Nintendo, Honda, Sony, Toshiba and Panasonic.
- Country brands are seen to have expertise across categories: France is most strongly associated with Fashion (65 percent), Germany with Automotive (77 percent) and Japan with Technology (78 percent – the highest score of a country in a category).
- Country brands have most momentum in technology, innovation and sustainability: Top country brands are seen to have more momentum in technology and innovation or environmental friendliness than political, economic or cultural significance.
- New York, London and Beijing will be the most influential global cities: There is often a correlation between perceptions of city influence and country brand strength, but not always. The ranking of the twenty most influential cities does not include any in Norway or Denmark – both top ten country brands. And seven of the most influential cities are not in the top twenty country brands.
Growth Market Travelers Have Money, Will Visit, Will Spend
Giving an up-to-date statistical portrait to the changing profile of the USA’s international visitors to delegates at NAJ’s recent RTO Summit West in Marina del Rey, Calif., Erin Cummings, president and CEO of the San Francisco-based tourism research and marketing company, Destination Analysts, explained that visitors to the U.S. from China, the soon-to-be top overseas source market for the USA, also intend to spend more than any other traveling population has ever spent.
The note on China was just one of a number of data points presented by Cummings; the numbers came from her company’s recent work, The State of the International Traveler Study, whose results were drawn from an online survey of a random, representative sample of likely international travelers in a dozen countries contributing the highest visitor volume to the USA: Canada, Mexico, the UK, Japan, Germany, Brazil, China, India, S. Korea, Australia, France, Italy and Russia. (All the national surveys were conducted in the native language of each country.)
Destination Analysts tables showing the percentage of those showing the intent to travel in the next year, as well as those who expect to spend more show the following:
Perhaps the most reassuring of the data sets presented by Cummings was that which shows the popularity of the U.S. as a travel destination; i.e., the respondents in a solid majority of top international markets pick the United States as the destination they would most like to visit.
At least as encouraging to those who already market to, or plan to market to, the key countries of Brazil, China and India are the numbers showing that about two-thirds of those surveyed in each of the three markets are “very likely” to visit or “will certainly visit” the U.S. in the next two years.
And when it comes to the experiences important to the traveler from the select dozen countries, more than two-thirds consider visits to famous and iconic American landmarks and attractions, as well as sightseeing in U.S. cities “important” or “very important.”
Finally, show that the group tour is still a staple among travelers, especially among the growth markets of Brazil, China and India.
Here is contact information for those who wish to know more about Destination: @DA_Research, @ErinCummings, DestinationAnalysts.com
What is a Receptive Tour Operator (\ri-ˈsep-tiv\ˈtu̇r\ˈä-pə-ˌrā-tər\)?
Here is How to Educate Your Revenue Manager with an Answer: Using NAJ’s RTO Summit West in Marina del Rey as a both a forum and opportunity, NAJ’s founder and CEO, Jake Steinman, launched a day-long series of presentations, seminars and panel discussions with a presentation of his own: “Educating the Clueless Revenue Manager.” Predictably, the target of the lesson was not in attendance, but the message might get through, nonetheless, because of the presence of hotel and DMO sales professionals whose goal is to bring visitors to destinations and its hotel properties year-round.
Steinman’s “RTO 101” offering covered the following points: What RTOs are; The RTO Landscape; RTO Statistics; Pros and Cons of Working with RTOs; and How it Works.
What is a Receptive Tour Operator (RTO)? The straight definition. An RTO is:
- A B2B gateway to international visitors/travelers through the trade
- A wholesaler to wholesalers and travel agents
- A financial intermediary between U.S. suppliers and international wholesalers
- A hotel room aggregator for resale via overseas travel agents
- FIT online booking systems
- Escorted group tours
- Fly-Drive programs
- M.I.C.E. tour programs
- Meet and greet and ground servicesSteinman broke down the types of RTOs into four subsectors—there are: bedbanks; traditional “Legacy” receptive; subsidiaries; and niche or regional businesses. Broken down, the numbers in these subsectors are as follows:
Group business is still what RTOs are about. And a breakdown of that business for 2013—the year for which complete data are available—is as follows
- Their Share of the International Market: Steinman advised RTO Summit delegates that the two numbers that sales and marketing professionals can point to are those showing the share of total room nights sold. Based on NAJ’s proprietary data—the figures that have been provided to NAJ since 2007 from the top receptive tour operators in the USA—receptive tour operators are responsible for about half, plus or minus a few percentage points, of total group nights and total overseas leisure nights sold internationally. (The data are compiled into NAJ’s Trax™ Report, which is developed from reports by 11 receptive tour operators that, collectively, book more than half of the international room nights sold for U.S. hotels.)
Strong and Steady Growth: During the period for which NAJ has gathered data on the room sales registered by RTOs, the destination-by-destination breakdown shows solid improvement. In a sample of 19 destinations comprising small, medium and large-size destination markets, the mean Compounded Annual Growth rate in the sample markets from 2007 to 2013 was 40 percent.
Advantages and Disadvantages of Working With Receptive Tour Operators—Advantages:
- The RTO assumes currency and financial risk of collections
- The RTO delivers business during off-peak times
- The RTO has access to international groups and M.I.C.E.
- The RTO requires issuing relatively few contracts
- The RTO moves distressed inventory at higher yields than OTAs
Advantages and Disadvantages of Working With Receptive Tour Operators—Disadvantages:
- The RTO is just another middleman
- The RTO deeds rates 18 months in advance (in the case of traditional operators/national operators)
- There is the perception of the RTO’s business as low-yield tourism class business (rarely true)
- The RTO ‘s tiered rate discount can seem unnecessary in strong economy
- Sales from traditional brochure wholesalers can take 2-3 years to materialize
Finally—How it All Works as Part of the Distribution System:
In sum, explained Steinman, DMOs and travel suppliers have to think of the receptive tour operator as their international distribution team and consider themselves as the RTO’s travel product resource. “It’s a win-win relationship,” he said, urging sales and marketing executives to make the case for the relationship to their revenue managers, who never seem to spend face-to-face time with their RTO partners.
Top 25 U.S. Beaches for 2015 Named
Top U.S. Beaches 2015
|Beach and Rank
|1. Siesta Beach
|Siesta Key, Fla.
|2.. Saint Pete Beach
|Saint Petersburg, Fla.
|3. Kaanapali Beach
|4. Waianapanapa State Park
|5. Pensacola Beach
|6. La Jolla Cove
|7. Kailua Beach Park
|8. Clearwater Beach
|9. St. Augustine Beach
|St. Augustine, Fla.
|10. Beach at Panama City
|Panama City, Fla.
|11. Hanauma Bay Nature Preserve
|12. Poipu Beach Park
|13. Ogunquit Beach
|14. Hunting Island State Park
|15. Maniniowali Beach (Kua Bay)
|16. Race Point Beach
|17. Newport Beach
|18. Fort Myers Beach
|19. Coronado Municipal Beach
|20. Hollywood Beach
|21. South Beach
|Miami Beach, Fla.
|22. Hanalei Beach
|23. Carlsbad State Beach
|24. Crystal Cove State Park
|Laguna Beach, Calif.
|25. Ocean City Beach
|Ocean City, Md.