The Long and Winding Road: U.S. Travel Trends and Outlook (Dr. Suzanne Cook at 2011 Indiana Tourism Summit)

The Long and Winding Road…
U.S. Travel Trends and Outlook

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2001 – 2011: A Decade of Disasters and Distress

But also a Decade of Rs…….……
Resilience
Renewal
Re-birth
Recovery
Resourcefulness
(Self)-reliance

Today’s Agenda
How far we have come – industry’s current performance
Where we are going in 2011 and beyond
Traveler trends and opportunities
Digital media trends
Staying ahead

On to the Outlook!

Why “uncertainty” for 2011 and 2012…Because this is still what we’re facing

You call this a recovery?

Turning the corner…What corner?
Another “soft patch” – weaker than
expected economic performance
Housing market remains very weak
Americans’ spending plans still on hold –
stuck in 2009/2010 “new normal” range
Labor market has weakened again – unemployment rate up to 9.1%
Inflationary pressures easing but still high in travel
Ongoing debt crisis
Threat of higher taxes

It’s the Consumer, Stupid!

Consumer Confidence Plummets…Just can’t sustain consumer confidence
Lowest since April 2009
44.5 as of August
90.0 is considered healthy
1985 = 100
Source: The Conference Board, August 30, 2011

Consumer Confidence…Heading in the wrong direction
90 considered “healthy”
44.5
25.3
1985 = 100
Source: The Conference Board

August Consumer Confidence Index for Past Five Years…
1985 = 100
Source: The Conference Board

Even upper-income Americans are concerned

Overall Traveler Sentiment IndexTMHas picked up modestly…
Interest in travel
Time for travel
Money available for travel
Affordability of travel
Quality of service
Safety of travel in U.S.
March 2007 = 100
Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, July 2011

Younger Americans the Most Positive about Travel
Source: U.S. Travel Association/YPartnershiptravelhorizons™

And their Positiveness is Gaining
Source: U.S. Travel Association/YPartnership travelhorizons™

Affordability of Travel Index… Regains some ground
March 2007 = 100
Gas price rise

But travel prices still outpacing inflation
Percentage change through July 2011
YTD TPI = +6.7%
YTD CPI = +2.9%
Does not include
various fees
Source: U.S. Travel Association Travel Price Index

The cost of flying…Higher prices, fees, fees and more fees
Carry-on bags
Checked bags
Changed flights
Booking by phone
Preferred seating
Cut-the-line
Curb-side check-in
Change to earlier flight
Lavatory use (Ryan Air)
$9.2 billion in fees to U.S. airlines in 2010 for checked baggage/other services.
TSA estimates there were 59 million more carry-ons in 2010 than in 2009.

Gas prices up $0.93 from last year…Looking good for next few months
Indiana = $3.72
Source: AAA Daily Fuel Gauge Report as of September 13, 2011
www.aaa.org

Gas prices and travel…Right up there with other necessities
After pumping $60 of gas into his Chevy pickup, Chuck says he’s giving up
cigarettes, beer and a vacation.
“I’ll sit at home and cook out and won’t go anywhere.”
Source: USA Today, Friday, March 11, 2001

Interest in Travel Remains Strong
Source: U.S. Travel Association/YPartnership travelhorizons™

Travel PerformanceDigging out of the hole…..

Total Domestic Visitors… Up 3.5% in 2010
Millions of Person-Trips
Ugh!
Source: U.S. Travel Association

2010 Travel Performance
Domestic
Business
Volume
Domestic
Leisure
Volume
Domestic
Volume
Domestic
Spending
3.5%
3.5%
3.7%
(-3.4%)
(-2.5%)
(-6.3%)
7.7%
Note: Numbers in parentheses are 2009 data
Source: U.S. Travel Association and Tourism Economics
(-8.8)

First Half 2011 Travel Performance
Domestic
Business
Volume
Domestic
Leisure
Volume
Domestic
Volume
Domestic
Spending
1.9%
2.6%
2.8%
7.8%

Leisure Travel Trends

Domestic Leisure Visitors…Exceeded the 2007 high last year
Bah!

56% of U.S. adults planning at
least one leisure trip between August and January
7 million more travelers

Leisure Travel Intentions Highest in The West
Plan to take a leisure trip between August 2011 and January 2012

And among Gen Xers and Matures
Plan to take a leisure trip between August 2011 and January 2012

Financial factors influencing leisure travel…Most not really travel related
Q: To what degree is each of the following financial issues currently affecting your leisure vacation plans over the next 12 months? (Somewhat to much less likely to travel)

Reasons for taking more leisure trips…3 Rs -- Rest, Relax, Reconnect
Reconnect with family/fiends (43%)
Relieve stress/need to relax (34%)
Break from home/work routine (26%)
Have put off traveling due to economy – feeling housebound (25%)
Q: Why are you planning on taking more leisure trips during the next 6 months?

Opportunities exist to entice over 42 million “not sures” to take a leisure trip
Not Sure
18%
42 Million
No Plans to Travel
26%
60 Million
Q: Over the next 6 months, do you plan to take any leisure trips of at least 50 miles one way from home or that will include an overnight stay?

Outlook through January 2012
Still willing to travel, but making adjustments in spending
Still traveling close to home
Overnight leisure trips shorter in duration
More day trips
More long weekend getaways
Plans can change, but…..

Vacations Are Needed Now More than Ever!

Business travelers – on the road and in the air again…..

Incidence of Business Travel Down 14 Points Over Past 5 Years, but Stabilizing
Percent taking business trip in past year
Source: U.S. Travel Association/Ypartnership, travelhorizonsTM

Domestic business travel improves…But still well below 1998 record high
Ouch!

Business travel intentions – soft but steady
Percent planning to take a business trip during next six months
Source: U.S. Travel Association/Ypartnership, travelhorizonsTM

Business travel – the province of the young
Plan to take a business trip between August 2011 and January 2012

Lodging Trends

Hotel demand… Stronger than expected
Percent change in room-nights sold over prior year
2010
2011
Source: Smith Travel Research, August 2011

Revenue Per Available Room positive…Driven primarily by rising demand
2011
Percent change over prior year
2010

Top down recovery for lodging% change in RevPAR through July 2011 by tier

% change in RevPAR through July 2011 -Getting better
7.2
11.2%
8.3%
5.6%
8.8%
10.0% or more
7.5% to 9.9%
5.0% to 7.4%
0.0% to 4.9%
Decrease

Indiana Hotel Performance through July 2011Indiana performing somewhat below contiguous states
2011 versus 2010
Source: Smith Travel Research, August, 2011

STR Forecasts for 2011 and 2012ADR drives up RevPAR
Source: Smith Travel Research, July 2011

Air Travel Faces a Bevy of Challenges

Transportation demand “unsettled”

International air enplanements growth outpacing domestic

International Visitors…Welcome back!
Spend more per trip ($4,000 per overseas visitor)
Stay longer (18 nights in U.S.)
$31.7 billion trade surplus
Stay in hotels (78%)
They enjoy seeing the America we take for granted

International arrivals to U.S. sets new record!9 million more visitors than 2000
(in millions)
Source: Office of Travel and Tourism Industries

New record high for overseas arrivals… But, back to where we were in 2000

Nearly all top origin markets posted gains in 2010U.K. only country to see a decline from 2009
Caution: Impressive gains, but small base

2011 Booming! International visitation up 5% and spending up 12% through June
(% change through June 2011)

Percentage Change in International Arrivals Through June, 20118 of 10 top countries showing increases

Overall change masks issues with top marketsU.K. and Japan still in recovery mode
Impressive gains for
largest int’l origins
Troubling declines for
largest overseas origins

U.S. losing share of lucrative international travel market
Long-haul travel around the world
grew by 31% between 2000 and 2009
31%
-9%
But, long-haul travel to the U.S. fell by 9%

The “Lost Decade”
Had the U.S. simply kept pace…
68.3 million more international
visitors
$214 billion in new international
visitor spending
$295 billion additional secondary
spending
441,000 additional jobs
$32 billion more in tax revenue
Source: U.S. Travel Association/Tourism Economics

Promoting the U.S

Forecasts Through 2013

Total domestic visitors
*Forecast
Source: U.S. Travel Association; Tourism Economics

Total Domestic Visitors…Should set new record this year
In billions
* Forecast as of May 20, 2011

Domestic leisure visitors
*Forecast

Domestic Leisure VisitorsWill continue to set new reocrds
In billions

Domestic business travelers
*Forecast

In millions
Domestic business travel improves…But still well below 1998 record high

International and Overseas arrivals continue to recover as well
*Forecast

Sustained, but slow growth expected in 2011
Domestic
Leisure
Volume
Domestic
Business
Volume
Domestic
Spending
International
Visitors
International
Spending*
1.2%
2.4%
(3.7%)
(3.5%)
5.8%
7.3%
(8.7%)
(7.4%)
Note: Numbers is parentheses are 2010 data
10.0%
*Excluding international airfares
Sources: U.S. Travel Association; Oxford Economics/Tourism Economics;
U.S. Department of Commerce-Office of Travel and Tourism Industries
(9.8%)

In this travel environment…“If you’re not at the table, you’ll be on the menu.”

Funding often at the whim of elected officials

Most State Tourism Office funding still tied to the public sector
Source: U.S. Travel Association, Survey of State Tourism Office Budgets

“The Power of Promotion” Travel and Tourism…An economic engine
Question: How can we fund something like tourism promotion when we have to cover essential services like teachers, safety and highways?
Answer: Tax revenue generated by travelers is immediate and are critical to financing essential services.
2010 state/local travel tax revenues more than covered all wages paid to police and firefighters nationally
Almost half of all wages paid to elementary and middle school teachers

The Rise and Fall of State Tourism Office Budgets…Too much uncertainty from year to year
Total State Tourism Office Budgets in Millions
Source: U.S. Travel Association, Survey of State Tourism Office Budgets

“The Power of Destination Marketing”What happens when you stop marketing…The Colorado Case
30% loss in market share of overnight leisure trips
$1.4 billion in lost traveler spending in first year
$2.4 billion lost traveler spending per year within four years of closing
$134 million in lost state and local tax receipts
Tourism office back in game in 2000
Funding increased to $19 million based on ROI of 12:1
“The Rocky Mountains were there long before the Colorado Tourism Board and they’d be there long after. Surely, the tourists will keep on coming.”

Today’s Consumer

2010 Census and Beyond Profound Population Shifts in Past 20 Years
Bigger
Older
More Hispanic and Asian
More cognizant of multiracial identities
More accepting of non-traditional living situations – multi-generational households, unmarried couples, same-sex couples, living solo
Less enamored of kids
Redefined gender roles
More suburban, and less rural
Leaning more to the South and West

Diversity Reigns

Projected Growth in Travel for Ethnic Markets, 2010 – 2020
Sources: Suzanne Cook Consulting, LLC and U.S. Travel Association estimates based on U.S. Travel Association’s travel economic impact data bases; U.S. Travel Association’s/Ypartnership’stravelhorizons™;TNS Travels America; Community Marketing LGBT research; and Bureau of Labor Statistics, Consumer Expenditure Survey, AHLA Report

About the travelhorizonsTM Survey
Looking forward instead of back
Designed to measure travel intentions in the six months following the survey
Quarterly online national survey of U.S. adults since March 2007
Current survey conducted between July 19 – 30th
Total of 2,200 responses from U.S. adults age 18+ and capturing 1,600 past year travelers per survey wave
Respondents representative of the total U.S. population of adults age 18+
Joint program between the U.S. Travel Association and Ypartnership

August 8, 2011
©2011. All rights reserved.
©2010. Ypartnership, LLC./Harrison Group.

Methodology
Adults (>18 years of age)
Reside in the United States
Have an annual household income >$50,000
Active Travelers: Have taken at least one leisure trip of 75 miles or more from home requiring overnight accommodations during the previous 12 months;
Online interviews with 2,539 active leisure travelers conducted during February and March 2011.

Consumer Trends
to Watch
New Culture Of Impatience
Faster Food
Faster Boot Ups
Faster Downloads
Speed Vacations

Present-Tense Reality

Last-Minute travel is in…Must be constantly in the market place
Source: Ypartnership/Harrison Group, 2011

The New Resourcefulness

The Rise of the Resourceful Shopper
Rational Exuberance:
… cutting back is more likely to have made them feel smart and prideful than deprived. And while they see many difficult challenges unfolding for society, remarkably, they have maintained their optimism ... and actually gotten happier.

Smarter Shoppers
48% of leisure travelers feel they are smarter shoppers thanks to the economic situation
Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, February 2011

The New Resourcefulness
Gen Pop

Travelers Demanding More for Their Money
More leg room
Upgraded guest room
More bountiful breakfasts
Free Internet & Wi-Fi

The New Thrift…Generations and marketing implications

The “Great Recession”…Telling it like it is
Percentage of U.S. adults
who agree with the statement:
“Although the recession is technically over, I don’t feel like it is.”
57%

Generations…
Recovery is not equal
Danny—
Have a great day sweetie!
xoxo
Mom

Millennials (Gen Ys)…
I don’t understand a thing they say
Millenials (Gen Ys)
76 million “20 something's”
Line between home and work
doesn’t exist
More than half move back home
with the folks after college
The “boomerang generation”

Gen Xers…
Charlie & Robert – Sensing a trend?
Gen Xers
50 million
Born in 60s to early 80s
Post Vietnam
Moving in and out of the
work force
In high demand in work force

Baby Boomers – the best generation!
Baby Boomers
85 million!
Expected to have time and $$$
Juggling act between work and home
Retiring or thinking about it
10,000 turn 65 every day

Matures
Matures
Born in 1945 or before
Age 65+
Many retired or will be soon
Depression-induced attitudes
values persist
Connected

Positive attitudes about travel decline with age
Positive
Negative
Q: Perceptions of travel compared to year ago

Younger more positive about having money available for travel… Mom & Dad?
Positive
Negative
Q: Perceptions of travel compared to year ago?

Differences in Frame of Mind…Boomers less positive
% agreeing strongly/very strongly with statement
Numbers shown in red are significantly different from one or more other generations

Differences in Buying Behavior…Doing less of than before
Extent to which shopping behavior has changed from a year ago (% less)

Differences in Spending…Doing less of than before
Extent to which your spending has changed compared to a year ago (% less)

Differences in Leisure Travel Behavior…Older Americans lagging behind
More likely to do during next 6 months compared to last year

Experience Based-Traveler

Types of Leisure Trips and Vacations Over the Past Year

One-Third of American Travelers Report Sustainability-Relevant Motivations
Experientials
Enthusiastic travelers interested in exploration and discovery.
22.4 million, 18% of leisure travel market
Quintessential Travelers
Want to do it all.
Trail Blazers
Outdoor enthusiasts; interest in experiences and adventure.

Other Travel Motivation Groups
Family-Focused
Travelers in this segment value family togetherness
16% of leisure traveler market (19.6 million)
Casual Travelers
Not particularly travel-oriented; looking for rest and relaxation
Affluentials
A younger group looking for a mix of relaxation, adventure, and luxury
Reconnectors
Want to spend time with their significantother on vacation trips to reconnect through a slow-pace and a great deal of downtime while on vacation
Back to Basics
Expects little from their vacation, and is satisfied with what they get

Burgeoning of Multi-Generational Travelers
1/3 of grandparents have traveled with grand-kids; 70% of those trips also included grandkids’ parents

The Cultural & Heritage Traveler Study
Lead Sponsor
Study Commissioned by
In Partnership with
Research Conducted by
October 2009

What is Cultural & Heritage Travel?
Travel to experience the places, people, activities, and things that authentically represent the past and present, including cultural, historic, and natural resources.
Source: Mandala Research, LLC
3

118.3 million leisure travelers (or 78% of all leisure travelers) participate at some level in Cultural & Heritage activities while on a leisure trip.
U.S. Adult Total Leisure Traveler Population
(152 million)
Five Cultural & Heritage Traveler Segments
(118.3 million leisure travelers)

Important factors in choosing leisure trip activities.
Base: Cultural & Heritage Leisure Travelers n=815
Q34. How important are each of the following factors when choosing the types of activities you do on a leisure trip?
22

Civil War Sesquicentennial… View from 30,000 feet

72 million U.S. adults “very/extremely” interested in engaging in Civil War sites/trails
72 million
114 million
47 million
Q26. How interested are you in engaging in Civil War sites/trails while traveling on a future leisure trip?
Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, 2010

Interest in Civil War sites/trails…Knows no geographic boundaries
Northeast
30%
Midwest
32%
West
30%
South
33%
Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, 2010

The Power of
Technology and Media

Travelers are Technology Users
* Among users

The Ubiquity of Social Networking
--> Daily Use of Social Networking is Highest Among Millennials
--> Share of Hours Spent Online is at Parity by Generations

Elusive value of social media…Not yet a trusted source for travel information
But can bring about revolutions.

6%
2010
9%
2011
Influence of Social Networking Growing
Have made a travel decision based primarily on research or feedback received on a social networking website
11%
among $125,000+ HHI

Visited a Collective Buying Site for Travel Deals
Source: U.S. Travel Association/Ypartnership

Visited a Collective Buying Site for Travel by Generation

What Purchased on a Collective Buying Site

Hand-Held Mobile Devices…The next big step is already in the hands of consumers
How consumers will purchase travel
Make decisions while on the trip
Adjust their routes to go off the beaten path
Provides more flexibility

To Reiterate: Travelers are Technology Users

There is light at the end of the tunnel

U.S. Travel OutlookTo keep you in the know

2011 U.S. Travel Marketing Outlook Forum
October 26 – 27, 2011
Ft. Worth, Texas

Or, you can rely on the old standby….
“You will meet millions of tall, dark, handsome strangers with lots of money to spend in Indiana"-Suzanne Cook

“Risk comes from not knowing what you're doing.” --Warren Buffet

Better words of advice.
“It’s five o’clock somewhere.” --Jimmy Buffet

Suzanne D. Cook, Ph.D.
President, Suzanne Cook Consulting
scook@suzannecookconsulting.com

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The Long and Winding Road: U.S. Travel Trends and Outlook (Dr. Suzanne Cook at 2011 Indiana Tourism Summit)

by Indiana Office of Tourism Development on Sep 15, 2011

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The Long and Winding Road: U.S. Travel Trends and Outlook (Dr. Suzanne Cook at 2011 Indiana Tourism Summit) — Presentation Transcript