Marketing Groups Bullish on 2010
by Nick Verrastro /Like Federal Reserve chief Ben Bernanke and the U.S. Travel Association, retail travel marketing executives are bullish about a rebound in 2010.
“The sales picture has improved significantly since May,” Signature Network vice president of sales Filomena Andre, CTC, told TravelMarketReport.com.
“Future cruise sales for 2010 have shown significant increases as compared to the same period a year ago, especially in the luxury segment. The driver of this change is the unprecedented value proposition associated with early booking – especially free economy and business class air.”
Roger Block, CTC, president of the Travel Leaders Franchise Group, said “We are finally seeing light at the end of the long tunnel this country and our entire industry have been in for the past year. For Travel Leaders, we are seeing growth in our sales heading into 2010, which is positive news.
“We still have a long way to go before we’re back to record levels we enjoyed in 2008, but we’re optimistic, and that is borne out in the comments we’re hearing throughout our system.”
At CruiseOne and Cruises Inc., VP marketing Steven M. Hattem said, "We are very optimistic because consumers appear more interested in cruising than ever before, are planning further ahead and are booking products like Alaska and Europe now as opposed to waiting until the last minute."
CruiseOne Franchise Owners and Cruises Inc. Independent Agents report that the average booking window has expanded to 2008 levels and the number of transactions is robust.
The challenge, Hattem added, is that the average selling price is still lower than 2008, though there are some slight pricing increases for 2010 -- a good sign.
The short booking window, said Ellen Bettridge, vice president of the American Express Retail Travel Network, is driven by the economy and "plethora of discounts" on the market. "People were holding off to see that they got the best deal as prices kept falling. As we move into the holidays and 2010, we are seeing an increase in reward point redemptions to offset the cost of travel."
"Since travel is still important to consumers," she told TravelMarketReport.com, "it hasn't been cut altogether, but consumers are making changes in the way they book travel. For most of '09, we saw short lead times, with folks booking for trips a few weeks out and that continues to be the case."
Like Bettridge, Ensemble Travel president and CEO Jack Mannix said, “I think we're finally seeing some more serious movement and activity versus same time last year or even versus, say, the third quarter. I do not expect 2010 to return to the sales levels of the past few years, but I do expect it will be at least incrementally better than 2009.”
That’s the outlook from Travelsavers president and CEO Jim Mazza. He said that both leisure and corporate business has been trending back up – leisure since summer and corporate since last month.
He polled home based agency owners at the NEST FEST in Ft. Lauderdale this week and they overwhelmingly indicated that business is rebounding.
NEST members, who are mostly leisure agencies, said that cruise sales especially are coming back much stronger than package sales, though they are turning around as well.
Caribbean cruises, sun destinations, all-inclusives and Italy are popular options for clients of these travel sellers.
Mazza said, “We are bullish about 2010 and we expect things to trend positively through 2010” not at blockbuster levels but, at long last, trending positively on both sides of the business.
That dovetails with the U.S. Travel Association’s forecast of 2% growth in leisure travel next year.
Andre added that sales for premium and mass market cruises are improving but lagging by comparison with the luxury segment.
“This may be largely due to the lack of compelling deals in the marketplace at this time.”
Indeed, marketing group executives said suppliers can help travel sellers push momentum into the new year not only with compelling offers – but more so with compelling offers that have deadlines.
Ensemble’s Mannix said that in many respects, suppliers are already helping travel sellers spur sales.
“They have depressed pricing to the point that people will buy; they are spending marketing dollars directly (to market to the consumer) and with travel sellers to drive more business; and they're coming out with new promotions all the time,” Mannix told TravelMarketReport.com.
However, he noted, “One of the byproducts is that agents are sometimes having to sell the customer multiple times as the pricing goes down. My perception is that some of the ‘rules’ make it even more challenging for the agents and I don't sense there's much sympathy for the hassle factor travel sellers have to deal with -- but at least there is some business happening.”
Block said, “I have been on the record stating that suppliers must realize we all need to make money in this business. They need our distribution channel and our expertise. Lower commission levels and increased non-commissionable fees are challenging agencies’ profitability. There is a cost to doing business. Those suppliers who truly appreciate that, and act on it, will see a move in market share. We look forward to furthering our relationships with suppliers who grasp and understand that we can accomplish great things together.”
Hattem made the same point. He noted that CruiseOne's and Cruises Inc.'s parent company World Travel Holdings invests significant capital each year to make sure its travel sellers are well-educated on the products and have cutting edge technology along with professionally crafted marketing tools to drive sales.
"Now is the time for suppliers to work closer than ever with reputable, qualified agency groups, focusing on their most profitable partners," said Hattem. "Those suppliers who truly partner with us on joint marketing programs and those who invest time to ensure our agents are the most knowledgeable and experienced cruise sellers will see definite results."
Bettridge added that suppliers should continue to emphasize increased value vs. deep discounts to attract and retain customers. "This will allow us to increase passenger counts and stop revenues from eroding in the future."
Like Signature's Andre, Hattem said that luxury cruise sales are making positive gains, with luxury bookings increasing on Azamara, Regent and Silversea. He added that consumers are also spending a bit more for a balcony or suite vs. an inside or oceanview cabin.
Andre added that consumers continue to shop for the best deal, in all market segments. “With some exceptions they are delaying purchases, as they have been conditioned to wait to ensure they get the best deal – this results in a far more compressed window in some trades/market segments. Cruise yields continue to decline in trades with significant inventory and diminished demand (a recent email from NCL advertised a 7-night Caribbean cruise for $299, for example).”
Hattem noted that while the average selling price is not at the level CruiseOne and Cruises Inc. would like, lower pricing is enticing many new consumers to travel -- on land and at sea. Amex's Bettridge made the same point. Aggressive cruise pricing this year introduced many new customers to cruises and introduced others to higher luxury levels.
"As booking levels rebound and pricing begins to return to previous levels, vendors can focus on programs to retain these new customers, maintain customers at the higher luxury level they may have been able to sample and keep them traveling."
There is opportunity on the corporate side as well. Block said, “In terms of business travel, many companies are re-evaluating their needs and their TMCs. Travel Leaders (both wholly-owned and franchise locations) has attracted over $240 million in new corporate and small business accounts in 2009. There is business ‘up for grabs’ in this new economic climate. On the leisure side, we’re seeing many suppliers hedging their bets with pricing that appears poised to once again rebound.”
However, Block said that consumer perceptions of travel as a right are driving sales more than their yen for deals.
He cited Travel Leaders’ first nationwide consumer survey in late summer that found that “couldn’t pass up the deals/discounts” only ranked seventh among the key reasons consumers took a vacation this year -- with 23.3% of consumers saying deals drove their vacation decisions.
Rather, Block said, “In this country, vacations are considered a right and the results of this survey help bolster that notion. Consumers will not give up traveling for their vacations.
“An overwhelming majority indicated they’ve traveled at least once this year and even more are planning trips for next year. Given the economy, we are tremendously encouraged by these findings.”
Among the Travel Leaders trends:
Nearly 84% (83.8%) of survey respondents have taken (at least) one leisure trip in 2009.
•The average spending on leisure trips in 2009 was the same or more for nearly 75% of consumers responding to the survey.
•As to where consumers are going on their leisure trips – 65% indicated their trip(s) were within the United States and further than a bordering state.
•The key reason for taking a leisure trip in 2009 was “rest and relaxation” – cited by 70.5% of participants. Second was “I/we take one every year” (53.8%) and third was “I/we needed to get away” (48.9%).
Signature’s Andre noted these consumer trends:
· Discerning travelers continue to favor “personalized” experiences and are willing to pay for the customized arrangements.
· Multi-generational travel continues to grow, as families value quality time together.
· Savvy travelers seek to visit new and exciting destinations while focusing on the cultural/learning aspects of travel.
· Popular destinations include China, Thailand, Egypt, Morocco, Vietnam (Mekong River cruises are very popular, for example), Eastern Europe (especially the Dalmatian Coast) South Africa, and others.
· There is also a growing trend/interest in culinary and/or food/wine experiences abroad, as travelers seek to combine their passions with travel.
She added that sales for land vacations are also improving, although they are much harder to predict at this time. The shorter booking window continues in a lot of markets, especially the sun destinations.
Trends noted by Ensemble’s Mannix include low cruise per diems; consumers buying close to departure because it is a buyer’s market; and a little more solid pricing for land vacations.
American Express' customers, said Bettridge, are now focused on booking for 2010 -- almost bypassing the holidays to get a jump on their 2010 plans. "As consumers book new destinations being driven by price or a place closer to home, there is a tremendous opportunity for suppliers and travel sellers to work together at getting that customer to return in the future."