Bumps in the Road, Higher Spend Characterize First Six Months of 2022by Dori Saltzman /
An Omicron surge may have put a damper on the start of 2022, but it didn’t last long. Bookings have been pouring in for most of the year, with travelers spending more per trip than they ever have before.
These were just some of the talking points discussed when Travel Market Report spoke with five host agency and franchise executives for a six-month check in looking backwards at how the first half of the year went, as well as what’s expected for the next half of the year.
In this piece, we look at the first six months of the year.
Optimistic, Bumpy Start
“We all know the first quarter didn’t happen the way we all wanted it to go,” Michelle Fee, founder and CEO of Cruise Planners said.
She had hoped that January 1 would bring with it a magic bullet that would make all the ills of the previous two years vanish, she said.
“But COVID had another round left in store for us.”
Fee wasn’t the only one feeling optimistic at the start of the year.
“When we turned the year on January 1st, we were poised to be having a great year,” Nexion Travel Group president Jackie Friedman said.
Jeff Anderson, co-CEO of Certares was optimistic, but said they’d anticipated a slowdown at some point in the year.
“We had anticipated that there would be another wave of COVID. We didn’t know when, but we were lucky enough to guess that it was going to happen in the first quarter,” he told TMR.
“Most everyone was expecting that things would be closer to normal in January,” said Debbie Fiorino, COO of World Travel Holdings (the parent company of Dream Vacations and CruiseOne). “As we know that wasn’t the case. There were some bumps in the road. The Omicron variant obviously was a big one. The media coverage about rising COVID cases on cruise ships. The CDC’s announcement raising its COVID warning for cruise travel to the highest level. We were like, what is happening? But despite the headwinds, we were still very optimistic. We knew that they would pass.”
And they did.
“Around the second quarter of the year, things did start to pick up. We started to get on a roll and I’m not going to say things were back to normal – I don’t even know what that means anymore – but we are having really good booking weeks,” Fee said.
“People really did want to travel,” Friedman added. “It seems that every time we face a challenge, the [time to] recovery is shorter each time.”
Since about February and into March business has been flying, the executives said.
“Fortunately, since late February, this came to be strong enough to make up for how severe Omicron was,” Anderson said. “We sit here now, in the back half of the year, pretty happy with the way the first half turned out.”
Based on preliminary numbers, he said Certares will be slightly ahead of what they predicted for the first half of the year. “That always feels good,” he added.
“When I look at the first six months in terms of ales, our ARC sales, our air sales, are back at 2019 and above levels,” Friedman said.
One of the barometers Nexion tracks is their Circle of Excellence program, which is only open to advisors who reach a certain threshold of sales. “The measurement for that is August 1 to July 31 of the next year. Coming into the last month of that measurement period, we’re close to a record pace in terms of the numbers of advisors that hit that,” she said.
Fiorino said World Travel Holdings looks at measurements like the last seven days, last four weeks, last ten weeks, etc. So far, all those measurements are showing things going in a positive direction.
It’s not all rose-colored out there, however. Some destinations and travel products continue to be soft.
“The situation in Ukraine caused some to change where they were traveling to,” Friedman said, emphasizing that people didn’t cancel, they simply moved away from Baltic ocean cruises and Danube river cruises to other destinations.
“I would say the first four and a half months went exceedingly well,” Kathryn Mazza-Burney, president of NEST, told TMR. “Advisors, although they are still extremely busy, were exceedingly busy over the last four and a half months. We were outpacing 2019. We have in the last month and a half seen a bit of a softening in certain areas.”
She pointed to contemporary cruises in particular.
(In future installments of this series, TMR will look more about the headwinds facing travel advisors in the second half of the year and beyond.)
CDC In-Bound Rule Reversal is Game Changer
Though advisors were already doing well for most of the first half of 2022, things got even better when the CDC removed the pre-arrival COVID test for people coming into the United States.
“We pushed on that hard,” Friedman told TMR. “That was big… we’re seeing a really nice rebound there as they relaxed their testing and quarantine requirements, which were a huge barrier for travel.”
Anderson agreed. “We’re starting to see relief signs from travelers that they feel more comfortable in venturing out now,” he said. “There’s a lot of pent-up demand, but there was also a pent-up anxiety about what happens if I get stuck.”
Fiorino echoed Friedman and Anderson. “People were worried about being quarantined in a foreign country,” she said, adding they saw a big uptick in bookings outside of the United States after the CDC rule change.
But that wasn’t the only development that helped. More kids getting vaccinated helped boost family travel. The CDC moving cruise ships out of its highest COVID warning level helped as well.
So did countries loosening their travel restrictions and policies.
“A lot of countries around the world removed their barriers… going to these countries there was no barrier. When that happened, people started to want to travel again,” see Fee.
A flood of travel promotions helped as well.
“A lot of suppliers had great tactical offers,” Friedman said. “Fear has a price.”
Dream Vacations got in on that action as well, Fiorino said, offering their “Spring Ka-Ching” promotion, their longest-running promotion ever, which was available for cruise, resort and villa vacations.
Spend Is Up
Increased bookings aren’t the only signs of progress host and franchise executives are seeing.
Mazza-Burney said they’re seeing more advisors return to their storefronts. NEST has also returned to full marketing, including direct mail.
More importantly, people are spending – a lot.
“The travel spend of the consumer has absolutely increased,” said Mazza-Burney.
“People want to go away and they’re spending more money,” echoed Fee. “The trips that people are buying are more expensive. I looked at our last couple weeks of booking and they are way up from 2019.”
It’s not only pent-up demand that has people spending more. Inflation, which many look at as a headwind, in many ways been a tailwind instead, said Anderson. People want to travel and, at least in the first six months of the year, they’re not letting higher prices stop them.
“If you look at airline tickets, which we don’t sell a lot of, but airline tickets are way ahead of the normal inflation number. And we’re seeing that on the cruise side. We’re seeing that in our resort business… and remember, we’re making commission. We’re able to share in the upside of what’s happening with all that extra pricing based on higher demand.”