Tour Trends: The Younger They Are, The Later They Book

The speed and strength of this year’s recovery has caught many tour operators by surprise (see article). By adding capacity to meet the renewed demand all feel the year is shaping up to be better than last (see article), and for some even better than 2008. However, not everything has returned to normal. Booking windows seems to be falling into to two main groups: deal driven advance bookings, and a growing number of last minute bookings, particularly from younger travelers.

Both Trafalgar and Insight Vacations are seeing a lot of last minute bookings, though the both companies have seen some deal-driven longer window bookings.

“We have lengthened, there’s no question about it,” Marc Kazlauskas, president of Insight Vacations said. “But we’re still seeing last minute business because the business that we’re taking in today is all for travel in the summer. It’s still very strong; it’s still coming in.”

But while Trafalgar and Insight are still seeing significant numbers of close in bookings, not all tour operators are experiencing this.

Some See Longer Booking Window

“We had a very strong Q1 and since the majority of our operating season is May through September we saw much more of a return to a longer booking window,” Tauck’s corporate communications manager Tom Armstrong said, adding that as people feel more confident in the economy they feel more comfortable booking further out.

Jennifer Halboth, director of marketing for the Globus family of brands, said Globus’ booking window also is starting to open. The company compared booking patterns of Q1 2009 to Q1 2010.

“In Q1 2009, of everyone who booked almost 30% of them were traveling within less than 90 days, and that has fallen to 22%. And people traveling 120 days-plus out has increased from 51% to 59%. So 8% of people who traveled within 90 days last year are now traveling outside of 120 days.”

Though Trafalgar president Paul Wiseman said about 40% of what Trafalgar is selling are still close-in bookings, he said the year didn’t start off that way, and he doesn’t believe such a large number of close-in bookings will last into next year.

Deals Shift Booking Patterns

Wiseman pointed to a British Airways deal the tour operator offered in the last quarter of 2009. Customers booked their travel around the availability of that offer, thus extending the booking pattern. However, once the deal ended, the booking pattern closed back in again.

“Now we’re seeing what we would consider to be an abnormally short booking pattern. We wouldn’t normally have such a high proportion of our business booking so close to departure.”

Looking forward however, he believes the market is going to reset itself to a certain degree, and revolve around the availability of deals and capacity.

“When there are promotional deals in the market that encourage early booking or provide a substantial market price discount on airfares that will influence the booking pattern dramatically.”

However, currently consumers expect to find these deals by waiting. As prices return to full fare, people will realize that waiting means paying more money.

“And people aren’t used to that,” Wiseman said, adding they’ll begin to book further out in order to save money.

Last Minute May Be New Normal

While the executives TMR spoke with generally believed the booking window would open and move closer to what used to be considered “normal,” several believed a new “normal” will ultimately be in place.

“I think this will be the new norm,” Kazlauskas said. “You’ll have the people who want to take advantage of the best rates, so they’re going to book the farthest out. But then there’s going to be people who wait to the last minute to see if the deals are there. If they are, great they’ll book, but even if the deals are not there, then it’ll be the urgency to get the availability on the date they want.”

Halboth agreed. “I think it’s going to be a permanent shift, but when you have things like capacity on cruise ships or to certain hot destinations, or when you’re trying to put a group together – those kinds of things are always going to ‘cause people to book farther out.”

Gen X Trend: “Instant Consumption”

Part of the new normal will be shorter term bookings driven by younger people who are less prone to book further out.

Halboth said for Gen X’ers in particular the concept of booking far out doesn’t mesh. Many of that generation don’t think anything of deciding to go on a long weekend to London only a few weeks before going.

“I think there is a recognizable trend in the market for virtually instant consumption,” Trafalgar’s Wiseman said. “I don’t think we can ignore that trend. Younger people are more prone to that.”

Wiseman said this was due, in part, to the fact that younger people have more time pressures than older, retired consumers who don’t have to worry about the availability and scheduling of vacation time.

“I know a lot of people who really don’t know when they can take vacation until they see the opportunity fairly close in… the younger demographic is going to trend toward booking late and the older demographic will book earlier.”

Kazlauskas said the trend is already visible. “The older generation tend to plan anywhere from six to eight months out and book it anywhere from four to six months out. The younger generation may plan four to eight months out, but they won’t book it until they’re 100% certain of their date and 100% certain it’s what they want, and they’ll tend to book it within 90 days.”