Simon Pardoe - Marketing & Business Development

The European Travel Commission (ETC) has just published its first quarterly report on European Tourism in 2011 – Trends & Prospects. The following gives a brief overview of the report for the first quarter of 2011.

• Destination and industry data indicate a positive start to 2011. Foreign visitor arrivals were reported higher through the beginning months of the year by most destinations.
• Both airline and hotel industry data confirm the continuation of travel growth to Europe, however at a more measured pace than experienced during the peak growth periods of 2010.
• International passenger traffic to Europe outpaced global growth over the first two months of the year. European airlines also report growth in traffic over the first 14 weeks of 2011, but growth has slowed over recent weeks.
• Hotel occupancy has improved further, but appears to have peaked. Average Daily Rates continue to push up across Europe in response to demand.
• ETC expect the overall growth trend to slow in 2011 as comparisons are made to stronger performance in 2010 and high energy prices affect both disposable income and transportation costs.
• Wage spiral inflation is unlikely in the developed economies as unemployment and spare capacity persist. Capacity utilisation is higher in emerging markets where food and energy prices are also having a bigger impact, thus more monetary tightening is expected. The aftermath of the Tohoku earthquake will affect the Japanese economy and consequently outbound travel considerably in the short run. Japan is likely to briefly re-enter recession in 2011 with a 10% drop in outbound travel. A considerable rebound is expected on both fronts in 2012.
• Capacity of European airlines continues to expand, carrying on the trend from late 2010. Capacity surged between late 2010 and early 2011, averaging a 7.8% increase in Available Seat Kilometres (ASK) over the first 14 weeks of 2011. This should translate into competitive fares and act as a driver to travel demand over the next 6-8 months.

Our specialist tour operator client, The Healthy Holiday Company (THHC), asked me to fly down to Marrakech earlier this week to negotiate terms with a new Ground Handling Agency.  THHC is seeking to expand its product offering in Morocco by offering clients luxury villas as well as Riads and Hotels with spas.  This will allow the company to broaden its product range and enable it to sell packages other than its existing fixed date branded holidays of in:spa, fitscape and destination yoga.  As a point of difference from others that also offer villas and hotels in the locations that THHC wishes to market, the company needs to create a menu of options for clients that relate to health, wellness and adventure.  So the concept is to be able to overlay services on the villa rentals that could include some or all of the following:  specialist chefs, fitness instructors, yoga teachers, massage therapists, tennis coaches, hiking guides etc.  And for family bookings, services such as nannies, baby sitters, swimming coaches, security, drivers etc. As well as, of course, VIP arrivals and departure services at the airport and first class local transport arrangements.

In order for this service overlay to be a success, it’s absolutely vital that the Ground Handling Agency totally understands the required service levels, experience and expertise of all such additional staff that would be needed to execute the customer’s requirements.  And have a 24/7 local support service.  Happily, Simon Pardoe Management Consultancy has managed to source just such an Agency and after 48 hours in Marrakech working with them, meeting their team and many of the service specialists, I am confident that THHC now have an excellent arrangement – with excellent terms!

The objective is to launch this new product in June this year and not just in Marrakech.  Phase One will also include Ibiza, Majorca, Cape Town and Phuket.  I have a feeling that I’ll be getting on a few more planes in the coming weeks to conclude / negotiate the contracts with a few more specialist Ground Handling Agencies.

At the recent International Luxury Travel Market (ILTM) Leaders Forum – 24 thought-leaders from the global luxury travel industry meeting together for the first time – expressed the view that 2012 would probably to be the first year of significant post-recession growth since 2007. Whilst overall the recession showed that luxury travel was not unsusceptible to the global economic climate, both China and India have experienced significant growth in this period.

Highlighting this trend, Small Luxury Hotels of the World (SLH) CEO, Paul Kerr, said bookings out of India last year grew by 129%, albeit on a small base.

“The Indian luxury market comprises regular guests rather than aspirational travellers saving for a one-off luxury holiday,” he commented. “And just like any other luxury traveller, the Indian millionaire wants freedom of choice.”

The Indian luxury market is predicted to grow at a rate of 21% with luxury travel growing at approximately 15% in the next 5 years, representing a fast-emerging, high-spending sector across Asia as a whole.

As the world prepares for 100 million outbound travellers from mainland China and 50 million from India by 2020, the ILTM Leaders Forum stressed that achieving the right balance of a geographically diverse source of business is crucial at all times.

Panellists from the range of sectors represented at the Leaders Forum agreed that individually their definitive goals were to increase profit margins. The lesson learnt from the recession was that discounting is a disservice to luxury and that reducing rates to increase occupancy levels is a short-term fix that creates a larger problem in the long run. One factor the industry is expecting to encourage the recovery is the growth of family/multi-generational travel with 2011 marking the year that the oldest baby boomers turn 65.

Maintaining the highest level of standards of service and satisfaction as well as offering unique and authentic experiences that get under the skin of a destination are essential for the luxury travel industry to continue to grow successfully and sustainably, according to the ‘think tank’.

Tom Marchant, Founder, Black Tomato commented: “Today’s luxury traveller is ultimately seeking a ‘meaningful’ travel experience – and in this context that means the pursuit of something that is authentic, reflects the local landscape and is genuinely real.”

Debbie Joslin, Group Exhibition Director of ILTM commented: “The luxury traveller is constantly evolving: the industry needs to adapt – and remain adaptive in the future. Consumers are more cautious with their travel decisions and the industry must adhere to the promises we make.”

The ILTM Leaders’ Forum was a representation of world renowned luxury hoteliers and hotel representation companies, high end tour operators and travel advisors who gathered to discuss issues impacting their globally valuable sector including sales performance, rate integrity, delivering customised travel experiences and customer satisfaction.

A flood of innovation involving smart phones, social media and local search will soon have a massive impact on what travelers do and how they spend their money while on holiday, according to a new study from a leading travel market research firm.

The report found that U.S. travelers last year spent a total of $26.8 billion on tours, skiing, sports events, amusement parks, spas, museums, zoos, concerts and other cultural and recreational activities.

The study, entitled “When They Get There, and Why They Go,” is soon to be released by PhoCusWright Inc. The firm surveyed 1,283 consumers, 340 suppliers of events and activities and 45 industry executives about the U.S. travel activities marketplace.

“Mobile technologies, social networks and location-based search are already having a huge effect on consumers’ trip planning. But the impact is going to be even more profound going forward as we reach a tipping point in the adoption of smart phones and tablet PCs,” said Jon Schepke, President of SIM Partners.  SIM Partners, a Chicago-based interactive marketing agency, is a sponsor of the PhoCusWright study.

In 2012, shipments of smart phones are expected to exceed PC shipments for the first time.  Additionally, iSuppli forecasts iPad sales at 43.7 million units in 2011 and 63.3 million in 2012, reinforcing the importance of being focused on mobile computing and application development (iPhone/iPad, Android etc.).

“These trends offer travel marketers new and cost-efficient ways of connecting with consumers before, during and after their trips,” Schepke said. “Consumers will be able to access targeted information, promotions and offers when they need them most and are making decisions, so they are more likely to buy.”

He cautioned that destinations, hotels and travel attractions should have a mobile marketing strategy in place now to adapt to the fast-changing digital landscape and ensure that they are well-positioned to take advantage of these opportunities. “Those who move quickly to develop engaging and consumer-friendly mobile applications will gain a significant advantage in a very competitive marketplace,” Schepke said.

The report cited mobile convergence – the explosion of GPS-empowered applications, mapping, search, digital camera, MP3 player and other capabilities available on smart phones – as a key trend that will significantly influence consumers’ future choices of activities in their travel destinations. Social media will continue to expand in importance as travelers increasingly depend on reviews, videos and personal recommendations from friends in making vacation plans and selecting activities.

Among the other findings in the report:

• Three in four active travelers use a mobile device while traveling. Two-thirds say they are likely to research, shop and book travel activities via their mobile devices.
• More than three in four active travelers cite traveler reviews and photos as very or moderately influential in choosing what to do. Nearly six in 10 cite user-generated video as influential and more than one in three cite content and promotions from companies.
• Consumers who spend the most on travel activities are the most influenced by web content such as interactive maps, blogs and social networks.
• One in two active travelers say they are likely to post comments to their social network. Four in 10 say they are likely to solicit advice from their social network.

“This study reveals that consumers are ready to embrace the mobile-social-local digital revolution,” Schepke said. “The travel industry has just scratched the surface of the powerful marketing mojo being created by itinerary tools, location-based networking, interactive mapping and other technologies. The potential is massive for reaching the right travelers with personalized offers and incentives at just the right time and place.”

Social media, web content and mobile will be the areas seeing biggest increases in travel organizations’ digital marketing activity in 2011, according to a new global survey released by digital travel online content specialists Frommer’s Unlimited, the business-to-business division of Frommers.

The survey of 325 travel organisations was undertaken with global digital travel news service Tnooz and respondents included airlines, agents, tour operators and consolidators, hoteliers, tourist boards, car rental, rail, travel insurance, publishing and cruise companies. 70% of the survey said they planned to increase digital marketing budgets for the year ahead compared to 54 % who predicted increases one year ago. Social media will see the greatest increase – 68% said they’d invest additional money, but content will also see a 63% increase in focus and mobile will see a 50% increase in activity.

Although only 7% of digital marketers said their budgets would decrease in 2011 the areas where investment are most likely to decrease is in paid activity. 13% of respondents are planning to decrease display advertising, 12% intend to reduce paid search budgets and 8% will reduce paid SEO.

Giles Longhurst, Frommer’s Unlimited director Europe Middle East and Africa said: “This is the third year we’ve undertaken this survey of digital marketing intentions and it’s clear that marketers are looking at how content creation and new applications can reach wider audiences, over and above traditional advertising. When we then drilled down and asked organizations what content was most important to them this year, search engine optimization was still by far and away the top priority, followed by high quality destination content and unique content to compliment the SEO strategy. We were also impressed to see the rapid shift in interest in mobile web and mobile apps – increasing in importance by 100 % year-on-year. Video is also seen as important by two thirds more respondents this year than last.”

Kevin May, editor of Tnooz, said: “It’s quite apparent that global content and digital marketing is changing rapidly as marketers trial and develop new services and digital solutions to deliver best impact on their bottom line. This survey clearly shows what marketers feel is delivering best return on investment in 2011.”

There is also evidence that companies are looking to more international markets this year with the number planning to invest in multi-lingual content up from 34% to 48%. Only 13% of the poll indicated they currently use Asian languages, but respondents also indicate that this will double to 26% in the future.

For the second year in a row, organisations say the top three priorities for adding content to their websites is to attract search traffic, increase conversions and build the brand. However, the problems organisations face in managing content are also similar year-on-year. The overwhelming problem facing six out of ten respondents is still keeping content up to date. Creating content which is consistent with brand values was highlighted by almost five out of ten of the survey sample and integrating content with products was a problem for four out of ten surveyed.

The company that the Consultancy uses to build and manage the majority of our client sites has recently undertaken some research into online reservations.  Whilst this is for only a handful of travel businesses, selling straight forward packages, the results demonstrate (at least for the companies monitored) that a very high percentage of holiday bookings are convenience bookings.

1.       55% of visitors book on their first visit to the website

2.       73% of visitors book on the first day they visit the website

3.       Wednesdays attract the highest conversion rate at nearly 3%

The analysis was achieved by implementing e-commerce Google Analytics.  This is an extension to the standard Google analytics. These statistics can track the order value from whatever entry point a user has made to the site, thus tracking where your marketing works.

On one of the sites monitored, bookings rose substantially when the website was enhanced to allow online bookings.

“Time is of the essence” is a popular expression, yet one rarely heard in discussions about holiday planning. Despite this, it now appears to be a mantra embraced by the growing percentage of American leisure travelers who take “last minute” trips.  I have not found equivalent information about UK travelers, but I would bet the results would be similar, though the type of holiday may differ.

Given the frenetic pace of contemporary life, it comes as no surprise that more Americans are taking “last minute” vacations. Simply coordinating schedules to get time away from work represents a greater obstacle than the actual cost of the trip for many travelers today. But who would have guessed that three out of every ten (27%) took a last minute trip last year? Equally surprising, who would have surmised they planned those trips an average of just six days prior to their departure?

One of the market forces accelerating this trend is the growing use of “flash sales” by travel service suppliers. These impulsive offers, delivered through unsolicited emails, have become more commonplace during the past 12 months as suppliers have tried to liquidate what would otherwise be unsold inventory. Some of the deals are so irresistible, it’s no wonder they drive impulsive demand (fully one out of seven recipients of these unsolicited emails reports purchasing a travel service as a result). While one might expect the recipients of these offers to book a weekend flight or hotel room on a whim, the booking of a complete vacation package (38%) or a cruise (21%) is unprecedented. Overall, the types of services booked as a result of a flash sale include:

• Airfare: 47%
• Hotel or other lodging: 47%
• Vacation package: 38%
• Cruise: 21%
• Car rental: 20%

Fully one out of four (26%) leisure travelers took a vacation in their local area as an alternative to vacationing in a destination that would have required more extensive travel (aka a “staycation”) during the past year. This type of vacation appears to be yet another manifestation of the trend toward more impulsive vacation behavior on such short notice.

The Ypartnership/Harrison Group 2010 Portrait of American Travelers is national survey of 2,524 U.S. households that was conducted in February 2010. The results provide an in-depth examination of the impact of the current economic environment, social values and media habits on the travel habits of Americans with an annual household income of $50,000 or more. For more information, you can visit the Publications section of http://www.ypartnership.com

One of the brands owned and operated by The Healthy Holiday Company – fitscape – has just launched a new fitness holiday concept to its portfolio:  fitscape ski.  I have recently concluded negotiations, on behalf of THHC, to take exclusive use of Hotel Rosa Alpina in the Italian Dolomites for two weeks at the end of the season.  Fitscape will offer two 7 night ski holidays, commencing on 27 March and 3 April respectively with all inclusive prices (ex flights) from £2,095 per person.  It’s an interesting and innovative concept to combine luxury accommodation and daily guided skiing with afternoon fitness and yoga classes and we expect it to appeal to both couples and individuals.  Afterall, fitscape has already generated a reputation for creating fun fitness holidays, with a relaxed and informal house party atmosphere, that is highly enjoyable for both singles and couples.