7 Trends That Will Shape Travel in 2017

1. 7 TRENDS THAT WILL SHAPE TRAVEL IN 2017

2. Many people around the world breathed a sigh of relief with the close of 2016. It was a tumultuous year, marked with surprising celebrity breakups, hard-fought political battles, and sadly, horrifying acts of violence. The travel industry also had its share of tumult, with major mergers (Marriott & Starwood; Alaska Airlines & Virgin America; Vail Resorts & Whistler Blackcomb), major events (Rio Olympics) and a major outbreak (Zika). As we kick off 2017, Edelman looked at the various factors that will impact the ways consumers think about and plan travel in the next year. It will be a year of change – with new policies from the White House that may affect tourism, evolving worldviews as travelers come to terms with new leadership, and a host of new technology innovations available for major travel brands and small businesses. We hope you find this snapshot of 7 Trends That Will Shape Travel in 2017 informative and inspiring – and that you will join us in watching how the industry adapts in the coming months. 7 TRENDS THAT WILL SHAPE TRAVEL IN 2017 PRESIDENT TRUMP DEVELOPMENT + CLIMATE CHANGE AUGMENTED + VIRTUAL REALITY AIRBNB’S AMBITION LOCAL OBSESSION TERRORISM + WAR MILLENNIAL RELATIONSHIPS 1 76 4 5 32 Edelman Seattle West Coast Tourism Lead

3. President Trump America’s first hotelier-in-chief may mean a boon for business, but will protectionist policies repel international visitors? 1

4. President Trump With Donald J. Trump now in office, the U.S. has its first president who is also a hotelier. The travel industry has never before had one of its own in the White House, but like many issues surrounding President Trump, experts have varying views on whether the Trump presidency will have a positive or negative impact on U.S. inbound tourism. On one hand, the industry can expect pro-business policies and loosening of regulations that may encourage hospitality real estate development and further airline consolidation. Trump has also mentioned that he plans to fix America’s infrastructure, including its airports, which as the potential to improve the traveler experience. On the other hand, Trump’s protectionist rhetoric from the campaign trail and early days in office – including talk of mass deportation and the new executive order banning travelers from seven countries – may dissuade some international visitors from spending their vacations and their money in the U.S. Of course, in the wake of Brexit and other referendum votes in Europe, the U.S. isn’t the only country seeing a rise in populism. But a number of countries including Canada, France, Germany, the UK and the United Arab Emirates have issued warnings toward U.S.-bound travelers, citing concerns such as anti-Muslim and anti-LGBT sentiment. Also, according to Skift, Brand USA, which is tasked with marketing America as a destination, is reporting that travelers from Mexico and Germany are already rethinking trips to the U.S. as a result of the election. This is significant considering international visitors spent $246.2 billion in the U.S. in 2015 – and the tourism industry supports 7.6 million jobs. WHAT TO WATCH: For U.S. travelers, 2017 could see the “staycation” evolve to be the “Americation,” with some hotels and tour operators creating packages encouraging residents to stay within American borders. Also, with such deep political divisions between “red” and “blue,” travelers may increasingly seek out experiences and destinations where their views are shared. Regardless, in this political climate there is a clear opportunity for the private sector of the tourism industry to lead with the message that all of the U.S. is open for tourism, and all travelers are welcome. From an outbound tourism perspective, with U.S. and Russia relations rapidly thawing, look for more interest in Russia as a hot spot for international travel – Lonely Planet and National Geographic have already named Moscow as a top destination for 2017.

5. Development + Climate Change More attention than ever will be on Sustainable Tourism as the world adapts to a changing climate and increasingly mobile population 2

6. Development + Climate Change The United Nations has declared 2017 the International Year of Sustainable Tourism, recognizing the importance of “responsible” travel – and how travelers who are mindful of the destinations they visit can have a real impact on local economies and job creation, as well as facilitate cultural exchanges. But when travelers – and travel companies – aren’t mindful, tourists can essentially love a destination to death. Santorini, Venice and the Galapagos Islands are seeing environmental and physical damage from over-tourism, and officials are even debating ways to limit the number of visitors in order to stave off further negative effects. Climate change is also threatening some popular destinations – including Venice, the Alps, the Maldives and the Amazon rainforest – with some experts advising travelers to visit these susceptible sights before they disappear. A variety of media outlets, including Condé Nast Traveler and Business Insider have recently published lists of destinations to see before they’re claimed by climate change. It’s not all doom and gloom, though; climate change is also creating new opportunities for tourism in places once out of reach for even the most intrepid explorers – visits to Antarctica are on the rise, and luxury cruise lines are now marketing summer sailings through the Northwest Passage, once an impossible journey. WHAT TO WATCH: As Richard Edelman has said, sustainability will be led by business and global environmental policy will move to the household. So look for progressive travel companies to embrace clearer environmental policies, asking their guests to do more than reusing towels and instead offering local cultural experiences or the opportunity to participate in activism surrounding an environmental issue. Also expect to hear more about travelers participating in “Dark Sky Tourism” and “Silent Tourism” – the promotion of destinations where visitors can escape light and noise pollution.

7. Augmented + Virtual Reality Mass accessibility of immersive technology will create new world of opportunities for travel marketers 3

8. Augmented + Virtual Reality Much attention is paid to augmented reality and virtual reality (VR) gaming – after all 2016 saw the summer of Pokémon Go – but regardless of whether or not one game is a fad, the technology itself is here to stay. Snapchat-augmented selfies are now ubiquitous – with local filters serving as the new “check in.” VR devices, like the Samsung* Gear VR and Oculus Rift, were some of the top gifts of the 2016 holiday season, and new VR technology was front and center at the 2017 Consumer Electronics Show. There are applications for VR technology in nearly every industry, but for the travel industry, the virtual sky is the limit. Perhaps that’s why Saveur Magazine has dubbed VR “the new frontier of travel,” and Edelman has also named Out of Home VR as a top Digital Trend for 2017. Forget the guidebook photos and clunky digital slideshows of yesteryear’s armchair tourism; VR means that consumers will now be able to virtually place themselves in a destination before booking the trip; virtually sit in sit in their airline seat before choosing it; virtually lay on their hotel room’s bed making the reservation. WHAT TO WATCH: Some travel brands are already experimenting with the technology – including Destination BC, Marriott and Lufthansa – but expect an onslaught of new and different VR experiences from hotels, airlines, theme parks and destinations marketing to millennials and early adaptors. Look for immersive pop-up VR events at trade shows and in high-traffic public areas. (For example, picture an event in Bryant Park, hosted by the Hawaii Convention & Visitors Bureau* where New York commuters can strap on a VR headset and be instantly transported to Waikiki Beach.) And beyond simple 360-degree virtual tours, look for more brands to embrace immersive storytelling, like The North Face’s Nepal documentary and the National Parks Service’s tour of Yosemite with President Obama.

9. Airbnb’s Ambition New Trips platform allows any individual or small business to create a tourism product 4

10. Airbnb’s Ambition The trend of Airbnb disrupting the hospitality industry is not new for 2017. What is new is Airbnb’s ambitious plans to expand into new segments of the travel industry. The Silicon Valley darling, which is now valued at as much as $30 billion, is setting its sights well beyond vacation rentals. Concur*, the travel and expenses company, recently issued a report showing that Airbnb rentals are quickly growing in the business travel space, with bookings from corporate travelers up 44 percent year over year in the second quarter of 2016. In November 2016, Airbnb launched a new service to allow guests to book more than just a room – Airbnb Trips now lets users search and book from a selection of 500 curated experiences in 12 cities. These local experiences – things like a Samurai Swordplay workshop or a classic car class – are a new offering that will help satisfy travelers’ obsession with all things local (see trend #5). And at the Airbnb Open conference in November, CEO Brian Chesky hinted that soon add flights, car rentals and other services. WHAT TO WATCH: Airbnb seemingly has ambitions to be a master integrator of travel experiences – for the guest and host. Look for new and unique partnerships with tour operators and transportation providers. With the new Trips platform, expect opportunities for restaurants, food and beverage companies, and arts & cultural organizations to play the role of host for new tourism experiences. But don’t expect the hotel industry to sit idly by while Airbnb’s ambition takes over. Look for hotel brands to evolve their own local partnerships in an effort to compete with Trips. And as Airbnb continues its lightning-fast expansion, there will be hiccups – the company is currently battling a list of cities on regulatory issues – but some experts are holding up the deal Airbnb struck with the city of New Orleans as an ideal template. Other cities will follow. Why? As one Travel Weekly headline put it, “Airbnb says resistance is futile.”

11. Local Obsession Plain old experiential travel is out; transformative travel is in 5

12. Local Obsession It is no secret that social media has changed the way travelers experience destinations. Gone are the days of relying solely on a concierge or guidebook – as global citizens, travelers today can crowdsource local suggestions for anything from the best brunch in Bali to the perfect Instagram posts in Paris. It’s that ability to go directly to the source that is fueling travelers’ obsessive pursuit of local experiences – so much so that in October 2016 Facebook launched its “Recommendations” feature to better enable friends to share local knowledge. Some travel brands have jumped on this trend, with Sweden’s Tourism Association offering a phone hotline for travelers to talk to random Swedes about anything – and Icelandair offering guests a program where its own crew members serve as “Stopover Buddy” personal tour guides. Hilton* has launched a new locally-focused brand with its new Canopy hotels that are designed to showcase the food, culture and local products of the neighborhoods in which properties are located. Alaska Airlines serves food from its home town of Seattle – Tom Douglas meals, Beecher’s Cheese, Sun Liquor spirits and yes, Starbucks* coffee. Authentic, local experiences are also evolving, with tour operators offering transformative travel, such as hero’s journeys, that allow travelers to return home with the skills and mindset to implement positive steps to change their lives or the lives of those around them. WHAT TO WATCH: Richard Edelman has predicted that in 2017, local will prevail over global and that brands should underline their local roots. Look for more big travel brands to move away from mass market products in favor of local goods served onboard or in-room. And expect like- minded leaders and organizations to band together for a shared purpose, like the newly- formed Transformational Travel Collective.

13. Terrorism + War Cold is the new hot in attracting tourists during tumultuous times 6

14. Terrorism + War Beyond the immediate and horrifying effects of terror attacks and war, there are potentially long-term and equally devastating effects on the tourism industry in destinations where traumatic violence has occurred. Some of the most popular destinations in Europe – including Brussels, Berlin, Istanbul and Nice – saw terror attacks in 2016, and The New York Times reported in July that tourism business was down across Europe as a result. Separately, the war in Syria has displaced 11 million residents, with 4.8 million seeking refuge in neighboring countries and in Europe – dramatically reshaping many destinations in the last year. The irony is travel and tourism may actually be a key to fostering peace. In 2016 the World Travel & Tourism Council (WTTC) partnered with the Institute of Economics and Peace (IEP) to explore the links between tourism and peace, and the resulting report showed that “countries with a more open and sustainable tourism sector tend to be more peaceful.” WHAT TO WATCH: Expect major cities, tourist attractions, hotels and cruise lines to offer greater transparency about safety and security measures to help allay traveler concerns. Destinations with a long history of peace will be big in 2017. Canada, bolstered by its vivacious new Prime Minister, Justin Trudeau – as well as its sesquicentennial celebration – has been named #1 on the New York Times’ “52 Places to Go in 2017” and was named as the #1 top country in Lonely Planet’s “Best in Travel 2017.” Quiet and cold destinations seem to be a theme for 2017, with Alaska (National Geographic), Finland (Lonely Planet, National Geographic, Travel + Leisure), Ireland (Travel + Leisure, Lonely Planet), Norway (New York Times), Sweden (New York Times) and Switzerland (Lonely Planet, Travel + Leisure, New York Times) all finding spots on “Best of” 2017 travel lists. Also, as some popular destinations may struggle to regain momentum in the wake of terror attacks, look for a spotlight on destinations that have been typically been under the radar for many Western travelers. For example, the Balkans appeared on “Best of” 2017 travel lists from Lonely Planet, Travel + Leisure, AFAR and National Geographic.

15. Millennial Relationships The key to a Millennial’s heart is travel 7

16. Millennial Relationships No trend report would be complete without something related to Millennials! The sheer spending power of this group means that they will shape every industry where they make purchases – fortunately for the travel industry, Millennials love to purchase travel. In fact, travel spending by Millennials has now crossed $2 billion each year, making them second only to Baby Boomers (many of whom have saved their entire lives and are now retired). The difference is that Millennials are willing to postpone other major life purchases in order to pursue travel now. Also, Edelman’s Earned Brand Study revealed that Millennials, out of all demographics surveyed, have the strongest relationships with the brands from which they make purchases and are most willing to extend those relationships into loyalty and activism. It could be these insights that are inspiring some retail and lifestyle brands to pursue consumers through travel experiences. In 2016, home décor retailers West Elm and Restoration Hardware – as well as uber-hip fitness chain Equinox – all announced they are launching new hotel divisions, bringing an entirely new dimension to “try before you buy.” Also, Seattle-based Recreational Equipment, Inc.* has continued to expand its REI Adventures program with new National Parks camping experiences, geared toward like- minded outdoor enthusiasts. After all, the key for brands to successfully lead Millennials on their customer journey may just be to take them on an actual journey. WHAT TO WATCH: Look for more consumer and lifestyle brands to dip into the travel industry as a new way to reach Millennials. Beyond themed hotels and niche experiences, expect contests and promotions with prizing that taps into Millennials’ desire to travel – Filson luggage, Pendleton blankets, tickets to festivals like Coachella and Upstream*, or even grants for programs like Remote Year.

17. Sources President Trump • https://skift.com/2016/11/17/survey-one-third-of-uk-tourists-to-u-s-less-likely-to-visit-because-of-trump/ • http://www.nytimes.com/2016/11/10/travel/trump-travel-tourism.html • http://www.travelandleisure.com/travel-tips/american-tourism-donald-trump • http://www.foxnews.com/travel/2016/11/10/slovenias-tourism-industry-could-win-big-after-trump-victory.html • http://www.economist.com/blogs/gulliver/2016/11/raising-drawbridge-0 • http://www.travelweekly.com/Travel-News/Government/Industry-voices-cautious-optimism-about-Trump-presidency • http://www.usatoday.com/story/news/world/2016/08/11/travel-warnings-united-states/88458238/ • http://tinet.ita.doc.gov/outreachpages/inbound.general_information.inbound_overview.asp • https://skift.com/2016/03/30/international-visitor-spending-in-the-u-s-took-a-4-billion-tumble-in-2015/ • http://www.usnews.com/news/economy/articles/2016-11-10/donald-trumps-first-economic-promise-to-fix- americas-roads-bridges-and-airports • http://www.newsweek.com/counting-cost-banning-muslims-visiting-us-507983?amp=1 • http://time.com/time-person-of-the-year-populism/ Development + Climate Change • http://ftnnews.com/other-news/31352-2017-is-the-international-year-of-sustainable-tourism-for-development.html • http://www.cntraveler.com/gallery/10-places-to-visit-before-theyre-lost-to-climate-change • http://www.cntraveler.com/story/venice-locals-to-tourists-go-away Augmented + Virtual Reality • http://www.saveur.com/virtual-reality-travel • http://www.cntraveler.com/story/a-virtual-reality-vacation-lets-you-travel-from-your-couch • http://www.cnbc.com/2016/01/08/virtual-reality-devices-could-transform-the-tourism-experience.html • http://fortune.com/2016/09/20/t-mobile-5g-vr-rock-concert/ • https://skift.com/2016/09/06/the-10-best-travel-experiences-right-now-using-virtual-reality/ • http://edelmandigital.com/wp-content/uploads/2016/12/2017-Edelman-Digital-Trends-Report.pdf Airbnb’s Ambition • New flight search: http://www.travelandleisure.com/travel-tips/travel-agents/airbnb-new-flight-booking-service • Airbnb Trips: http://www.theverge.com/2016/11/17/13665454/airbnb-trips-travel-agency-tour-guides • Capturing business travelers: https://www.concur.com/newsroom/article/new-concur-data-shows-airbnb-business-is- growing-quickly-among • Progress with cities: http://www.nytimes.com/2016/12/07/technology/new-orleans-airbnb-model.html?_r=0 • http://www.travelweekly.com/Travel-News/Hotel-News/Airbnb-says-resistance-is-futile Local Obsession • https://www.linkedin.com/pulse/way-ahead-2017-richard-edelman?trk=prof-post • http://www.vogue.com/13516612/transformative-travel-trend-2017/ • http://newsroom.fb.com/news/2016/10/getting-things-done-with-the-help-of-your-friends/ Terrorism + War • https://www.bloomberg.com/news/articles/2016-08-07/french-tourism-slumps-as-terror-attacks-spook-foreign- travelers • https://www.mercycorps.org/articles/iraq-jordan-lebanon-syria-turkey/quick-facts-what-you-need-know-about- syria-crisis • http://www.nytimes.com/2016/07/30/business/international/europe-economy-gdp-terrorism.html • http://www.wttc.org/research/other-research/tourism-as-a-driver-of-peace/#undefined • https://www.lonelyplanet.com/best-in-travel/countries • http://www.nytimes.com/interactive/2017/travel/places-to-visit.html • http://www.travelandleisure.com/trip-ideas/best-places-to-travel-in-2017 Millennial Relationships • http://www.travelpulse.com/news/features/millennial-travel-spending-surpasses-200-billion-annually.html • http://www.edelman.com/insights/intellectual-property/earned-brand-2016/2016-earned-brand-executive- summary/ • http://www.remoteyear.com/ *Edelman U.S. Client