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Checking in on EuropeSeptember 14, 2009 By: Ruthanne Terrero Travel Agent
|Front row, left to right: Ruthanne Terrero and Christina Rasmussen from The Travel Group; Jennifer Rosen, Hurtigruten; Robin Fox, Pisa Brothers; Jody Bear, Bear and Bear; Susanne Nordenbaek, Visit Denmark; Katherine Johnstone, French Government Tourist Office; Ricarda Lindner, German National Tourist Office; and Joe Byrne, Tourism Ireland. Back Row, left to right: Paul Wiseman, Trafalgar Tours; John McMahon, The Travel Group; Joe Maniscalco, Auto Europe; Steven Eidelberg, Accor Hospitality; Martin Rapp, Altour; Peter Rahaman, Rail Europe; and Carl Walsh, Visit Britain|
The Travel Group’s European Editorial Roundtable was sponsored by Accor Hospitality, which hosted the event at the Sofitel, New York, on 44th Street.
In attendance were Ruthanne Terrero, John McMahon and Christina Rasmussen from The Travel Group; Jennifer Rosen, Hurtigruten; Robin Fox, Pisa Brothers; Jody Bear, Bear and Bear; Susanne Nordenbaek, Visit Denmark; Katherine Johnstone, French Government Tourist Office; Ricarda Lindner, German National Tourist Office; Joe Byrne, Tourism Ireland; Paul Wiseman, Trafalgar Tours; Joe Maniscalco, Auto Europe; Steven Eidelberg, Accor Hospitality; Martin Rapp, Altour; Peter Rahaman, Rail Europe and Carl Walsh, Visit Britain.
Following is a synopsis of the discussion. For the full broadcast, check out the videos.
Ruthanne Terrero, The Travel Group: Let’s start out by having each of the panelists give us an update on what’s happening with their businesses.
Updates from Tourist Boards and Suppliers
Katherine Johnstone, French Government Tourist Office (Atout France): We have officially decided to do a five-star rating system and all of the hotels are being reviewed. We’ve also lowered our VAT on restaurants; it’s gone from 20.6 percent to 5 percent so it’s a really big saving on a restaurant bill.
France is seeing a growth in well-being, spa and sustainable eco-tourism travel. Visitors this year are going to Paris, of course, and to Provence, because it’s the Year of Picasso. They’re also going to Normandy, it’s the 65th anniversary of D Day. We have seen a slight bump since April in bookings. People do seem to be waiting for deals.
Steven Eidelberg, Accor Hospitality: With Normandy, we’ve seen an incredible spike from individual travelers and through operators. Paris, of course, is Paris. We are looking forward to the re-starring of the hotels.
Jennifer Rosen, Hurtigruten: We are seeing a lot of close-in bookings, even for Spitzberg in the Arctic Circle and that isn’t usually a snap decision. In Norway, we’re down quite a bit; it’s an expensive country. We’ve created a payment plan for people who think they may lose their jobs. We’re coming up with ways to get the phones ringing.
Susanne Nordenbaek, Visit Denmark: We’re not doing too badly. As we go into cruise season, which is major for Copenhagen because it’s the biggest cruise port in Northern Europe, we are expecting more than 300 cruises to stop there. Copenhagen is hosting the United Nations Climate Conference (December 7-18). Danish food is becoming extremely popular…we have 13 Michelin stars for our restaurants.
Top Travel Agents Check In
Joe Maniscalco, Auto Europe: We’ve seen a nice increase since April, in the single digits. We’re also seeing a lot of chauffeur drives, and FIT packages are growing. Overall, we are seeing a bit of an increase.
Paul Wiseman, Trafalgar Tours: We saw a significant kick in bookings in May and it took off in the double digits. The last-minute booking trend has been a real kick. We have begun reforcasting for the rest of this year in an upward direction. That does give us a lot of hope that 2010 will be quite positive. We’ve released some of our 2010 product now and seen a significant boost in the last eight to 10 weeks. Q3 and Q4 are looking much stronger.
From what I can see, the length of stay decreased 10-15 percent in 2009 and I’m not seeing that change too dramatically. We’re getting a boost from the more cost-effective destinations— Spain and Greece— where the dollar is strong. We are seeing a general resurgence. For us it’s been important to have a global reach; a lot of markets didn’t have as big of a decline as U.S.
Carl Walsh, Visit Britain: A new operating body was added this year on April 1 called the House of Britain, for which Visit Britain is the umbrella over four brands: Visit London, Visit England, Visit Scotland and Visit Wales. Our marketing will be driven to particular audiences with a particular message…For the first-time traveler we would lead with the Visit Britain overall marketing message. For a repeat traveler we would lead in with a strategic message, since their knowledge of London would be strong.
We are moving toward winning successful sports tournaments. We have the Ryder Cup in Wales in 2010 and the Paralympics Games in 2012. We are also one of the bidding nations for the 2018 World Cup.
Trends that we’ve seen include value-adds and discounting. We’ve been seeing shorter lead times with our airline and tour operator partners. We did see that business started picking up from April onward. We have seen “staycations” as our competition in the U.S. so we have a staycation strategy [in Britain] as well.
Joe Byrne, Tourism Ireland: We launched a new brand this year—Go Where Ireland Takes You. We have based our brand on research that shows the number of people who wish to go to Ireland over the next three to five years has increased. The brand is built around the character and the characters of Ireland, the fun, engagement and spontaneity of Ireland. That is for the leisure market and also the golf market, which has been dependent on the financial services sector.
We are all competing against a cultural malaise. So many people have pulled a blanket up over their heads. We and other leading destinations did have price difficulties, but we’ve found that bringing down the prices doesn’t restore confidence. As for discretionary business travel, even if they have the funds to travel [companies] can’t be perceived as traveling right now.
As for airfares and on the ground, the value that is available to travelers this year is extraordinary. We’ve also noticed that a lot of hoteliers who said, “we’re not into escorted coach business,” are now into it.
New products coming on line include Lough Eerne in Northern Ireland, which will be a five-star resort with five restaurants. Kileen Castle is a great new golf course and castle hotel. Also, over the year there has been an explosion of world-class spas. The Irish government is also developing walking tours.
This is also the 250th anniversary of Guinness...the reason that it’s such a great Irish asset is it fits in with the character—and characters—of Ireland.
Peter Rahaman, Rail Europe: We had a very soft first quarter. Our group business was severely impacted. What we saw in Q2 was very last-minute business generated by people within Europe going to our website. The whole booking pattern has changed. People were worrying about not having a job first quarter, then realizing they still had one, were saying, “Okay, what do we do?”
The new U.S. president has given us the best public relations we’ve ever had, especially for the North American customer who is not inclined to travel by train. The high-speed rail has brought tremendous notice here. The Madrid-Barcelona line has been cut, so has France-Germany and France-Holland. We are shaving a large amount of time off the travel between major cities. We are very confident that after starting very slowly, we should finish the year relatively strong.
Ricarda Lindner, German National Tourist Office: In 2008, we had already started to focus on value to be found in the low end and on the high end. In 2008, we came out with the $100-a-day campaign. On the high end it’s very affordable as opposed to other European cities. In Berlin, five-star hotels are so much cheaper right now.
This year, we have the 20th anniversary of the “Fall of the Wall,” which has been very good for us. We also have the [90th] Bauhaus anniversary, so we’ve had exciting events we can focus on. However, we know in 2010, we’ll have the Oberammergau Passion Play [in Bavaria] and we know travelers will go there. I think there are good indications for pent-up demand. However, we are also seeing a decline in lift. It will be interesting to find out what will happen in 2010.
The Client as Negotiator
Martin Rapp, Altour: What is extraordinary to me is that clients who never once questioned what things cost, now ask, “What can you get me?” I had a client who was paying $2,500 a night for a room for seven nights, but the only nonstop flight left at 9 a.m. in the morning. His wife doesn’t get up that early, so he booked a private plane for her. He called me and said, “My friends tell me I’m an idiot to pay $2,500, what can you get me?” I said, “You’ve got a guaranteed upgrade, spa treatments and breakfast!” He didn’t say anything about the extra $20,000 he was paying because his wife didn’t want to get up two hours earlier.
This is what they’re taught now and that’s the reason for the last-minute travel. They feel if they wait a little longer they’ll get a better deal, then they’re amazed that the airline has not gone down in price and the deal they could have gotten two months ago is only a little better.
Value is something we’ll be seeing from now on. The days of “money is no object” are long gone. It may ease up a little bit but it’s certainly going to be value-added from the hotels for a long time.
Jody Bear, Bear and Bear: People over the past few months have been inquiring about trips, and they are actually going. Clients, however, are confused and skeptical because there are so many mixed messages from the hotels and tour operators, so it’s an uphill battle. They hear that there are so many value-added amenities and that rates are going down so they will call us and will automatically want a deal, not realizing not all of the hotels have deals or that it’s based on seasonality. They don’t want to accept it. What they hear is the media telling them that the world is their oyster and it’s not so. Then they call us and they get angry. They think we’re telling them “no” and that the hotels are telling them “no” as well. The hotels, tourist boards and car rental companies want to promote value, but the message has to stay on track.
I can’t predict what the rest of 2009 or 2010 will bring. Sales are up now for leisure and corporate but that could change on a dime. I’m skeptical of people saying things are looking up because unemployment in New York is rampant. I hear the mixed messages and I’m confused.
Martin Rapp, Altour: The other thing is we’re doing triple amount of the work for half the money. We get deals, but on this one you get breakfast and a transfer, with this you get a fourth night free. Most of the time the client will come back with a better rate, but we’d gotten them an upgrade and they’d gotten a standard room.
Corporate Travel and Baby Boomers
Robin Fox, Pisa Brothers: Certainly as Martin said, there are a lot of deals out there and clients don’t want to feel stupid. It is almost embarrassing trying to play one property against another. I’m going to people I have worked with for years, saying, “Okay, what are you going to do for me now?” It’s embarrassing but then I remind myself that I’m acting on behalf of the client. Recently I had an experience where the hotel threw in one lunch or dinner per day, which I thought was terrific. We negotiated everything and the client signed on but then he said to me, “instead of the meals I’d rather have the money.” These are people who appear to have the means. It’s embarrassing.
One of the huge boons to Europe travel has been the cruise lines and that has brought a tremendous amount to my business, particularly Greece and Italy, which seem to be the hottest places and it means a good pre- and a post. Everyone always has money for Italy. Travel to France has been one of my greatest sellers this year and a lot of people are saying they want to go back. Everyone is going to Paris, long weekends, and if they’re adding a destination everyone wants to go back to the south of France.
How Tourism Offices Can Help Agents
Martin Rapp, Altour: In the last 10 years, younger travelers have been going just to cities, with the exception of Provence or Tuscany. Now for the first time, I have families going to the Loire. I have families going to the Cotswolds or the Lake District. Years ago, everyone was going to those two places or the Cinque Terre. That is something I really hope will come back. That’s something the tourism bureaus can really help us with.
Switzerland is missing the boat by not promoting all of the active vacations that are available. It’s good to show the mountains, but show photos of white water rafting and biking. France is doing a great job of that.
The other thing I’d like to see is the smaller hotels making bikes available or to at least have the knowledge of where to rent them. People want to be active, including the parents and grandparents. You have to make it easier for us to sell because it’s very difficult to call up a hotel and say, “How many bikes do you have?” They’re not sure what you’re talking about.
Robin Fox, Pisa Brothers: People want to be busy, they want to be part of the destination, and they want to be behind the scenes more.
Peter Rahaman, Rail Europe: This year is very different because the client wants value and wants to meet the locals. For Americans, vacation time is very short and they want to make the most of it. In past years people would say, “I had this wonderful vacation and I paid such and such.” This year people might be living next door to someone who lost their job so maybe they don’t want to say what they did. They might want to maximize what they do in Europe but they don’t want to gloat and boast about it. Unemployment is still hard on consumer confidence, especially in California. We have this dichotomy of things starting to improve and people wanting to spend money but they don’t want to talk about it except to say, “we had a fantastic time.”
Katherine Johnstone, French Government Tourist Office: We do see city travel to France; they go to Paris, Bordeaux, Lyon, they do their city breaks. Americans prefer to go to one country. If they go to France, they go to one destination. City breaks are a great thing but I do feel travelers can get an excellent value in a small village in France, even if it’s just for a day; it’s a matter of finding out about it and getting to it. Sometimes you just have to rent a car to get there.
Robin Fox, Pisa Brothers: That is why you use a travel agent because you get people to think out of the box. Going to Paris? Take a day trip or an overnight in Versailles.
The Brazen Customer
Joe Byrne, Tourism Ireland: On the issue of value: the question is, when will things get back to normal? Well, they won’t. There is a new normal and it will be a long time before anyone will pay full price again. This uncertainty and this constant looking for better deals and value will be engrained in the psyche of consumers. People not only don’t want to pay for it, they don’t want to say that they’ve paid it. I think “normal” is a relative term now.
Jody Bear, Bear and Bear: Oddly, everyone has a different sense of value and they’re very bold about letting you know what they want and what they don’t want. As Robin said, you would think in years past, if they got a meal included they would be gracious enough to say, “thank you.” But that’s not the case now. They’ll say, “I don’t want this, can you substitute this.” They’ve gotten very brazen about what they like. They are very savvy now. Not only do they know which countries accept the euro, they know what the ratios to the dollar are each given day.
Steven Eidelberg, Accor Hospitality: Do you find there is a lag? When the pound hit $2.10 last year at the highest, then it dropped and the euro and the pound were almost one to one. People were still thinking the dollar was weak and we saw an increase in Poland and Hungary and river cruising on the Danube. Now, people are thinking the dollar is strong when in fact it’s lagging behind because the euro is $1.45.
Martin Rapp, Altour: But we’re getting dollar rates. I think what happened is a year- and-a-half ago, England got hurt the most. What we were hearing wasn’t about the hotels; we were getting information that a cup of coffee at Starbucks cost $5 [in London]. I recall myself, going to the theater in a cab was $40.
Ruthanne Terrero, The Travel Group: How is the currency flucation impacting the tour operator business?
Paul Wiseman, Trafalgar Tours: We hedge currency so we don’t see great fluctuations in the U.S. dollar selling price; we also have transportation, accommodations and meals all wrapped into the selling price. We did work on promoting value to Britain because the customer had no clue the dollar was strong. How could it be? People were losing their jobs. That’s not as big of an issue as housing and the stock market. As soon as the stock market started inching up our phones started to ring more.
What we’re dealing with here are mega trends. If you go to a shoe store, department store or a travel agency, do you expect to pay full price? Stores are closing; everything is on sale because supply is greater than demand. We’ll see those mega trends start to change in the next year. There is no one more keen to change the price of products than the supplier of those products. What you have seen in 2009 across the board is a disconnect between supply and demand.
I do think it’s going to level out. We’ve been promoting $99 companion airfares all year; we don’t expect the airlines to come to the party with that next year because of the lift. The real issue is that companies have fixed capacity and how are they going to deal with that? When you do the cruise line analysis, they have more capacity coming on, their forward bookings are lousy, so there is going to be one more year where a lot of companies are going to have to hustle for capacity. Hopefully, we’ll gently maneuver our way out of it.
Carl Walsh, Visit Britain: What’s important is the spend from the American market. The pound-to-dollar exchange has changed dramatically, we’ve been much cheaper. We want to get the message out that there’s been a change. We want to get the message out that it’s more affordable. We did a lot of cost comparison of what a trip would cost in New York as opposed to London. In some cases it’s cheaper for people in California to visit the UK than to spend the same duration in the East Coast.
Ricarda Lindner, German National Tourist Office: It’s an interesting development for us as destinations, where our communication in the past has been the country and now it’s become tactical and we don’t have the product. We’re all government tourist offices. We’re not used to having a price tag to our communication and now we do.
Martin Rapp, Altour: One of the great communications we got was from the Lanesborough, and what Geoffrey Gelardi did was show us the price compared to other top hotels in London. His room rate was higher, but what he gave for free—telephone calls, one-way transfer— increased. By the time you got to the bottom it was so easy to sell that hotel to someone who was looking for a five-star deluxe in London.
Ruthanne Terrero, The Travel Group: Baby boomers have lost a lot of their retirement income; are there enough travelers to make up for this loss?
Robin Fox, Pisa Brothers: Absolutely. Family travel is huge and older kids are traveling more independently right now because so many of them have studied abroad and traveled extensively.
Paul Wiseman, Trafalgar Tours: Family travel for us is the number-one sector. Multi-generational travel started three years ago, grandparents decided to start taking the kids on vacation. It’s been significant enough for us to align our strategy for family travel. All of our family tours sold out this year; the forwards for family travel to Europe look great.
Gen-X and Gen-Y
Joe Maniscalco, Auto Europe: We’re seeing the baby boomers traveling on their own without family, but don’t forget this has to do with cars. And the demographics show that not all of them have lost their jobs. Anyone who has the money to do the Ferrari and the Lamborghini is going to come back and talk about it.
Jody Bear, Bear and Bear: However, with Gen-X and Gen-Y it’s all about booking online. They do their banking and shopping and travel online and they will not go to a travel consultant.
Martin Rapp, Altour: That is true until they get burned, until they go to a hotel or call us and say, “I got stuck at the airport,” even if we didn’t do their air.
Steven Eidelberg, Accor Hospitality: People will always want an agent more for the long haul than if they’re going to the Caribbean for the weekend.
Ricarda Lindner, German National Tourist Office: The younger generation enjoys being in front of a computer. The more savvy you are with a destination, the more comfortable you are—escorted, FIT travel agent, Internet, that is a correlation of age. The research is very clear about this.
Robin Fox, Pisa Brothers: When it comes to a trip of a lifetime or a honeymoon, I don’t think they’ll book that on their own.
Martin Rapp, Altour: I’m happy when they go online and then come to us for help. Then we can show our value. It’s about getting them to come to you. I can say, “That hotel looks great but it’s opposite a disco or I know the general manager there and I can get you an upgrade.”