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On Site: USTOA Sees Cause for Optimism at Decade’s EndDecember 11, 2009 By: Lark Ellen Gould
Standing: Jerre Fuqua, President of TUI Travel-Expeditions & USTOA secretary; John Hanratty, CMO of Travel Impressions, & USTOA treasurer. Seated: Bob Whitley, USTOA president; John Stachnik, president of Mayflower Tours & USTOA chairperson; Bronwyn Wilson, president of Australian Pacific Touring & USTOA vice-chairperson
As the 2009 U.S. Tour Operators Association (USTOA) conference at the Fairmont Banff Springs Hotel in Canada winds down the mood is “cautiously optimistic.” None of the more than 128 or so tour operator representatives or 500 destination marketers and product suppliers who showed up for the conference conveyed signs of irrational exuberance in their presentations but the buzz, quite uniformly, through the week was “2010 is looking good.”
“With all the challenges we’ve dealt with of late, our growth as an organization gives me cause for optimism,” said Charlie Ball, president of Princess Cruises & Tours and chairman of this year’s conference. “First, most of us here are lucky enough to be heavily invested in the leisure side of travel. According to the Ypartnership survey, domestic leisure travel (through September) has fallen by only 2.7 percent or roughly a third of the 7.5 percent decline in business travel. And in USTOA’s own commissioned survey three out of four Americans said they would travel in 2009, despite the recession.”
According to that survey, optimism for 2010 appears justified. Nearly 70 percent of the respondents predicted a business turnaround for next year and 20 percent maintained that business had already turned a corner. Some 30 percent of those glass half-full members saw business picking up in the first quarter and 25 percent predicted a second quarter recovery. Most of the membership (75 percent) believes sales will rise by an average of 18 percent in international packaged travel next year, and from flat to 10 percent for domestic packaged travel. The outlook marks a sharp contrast to last year’s survey, in which members expected sales to plateau or decline for 2009.
What is driving recovery is value. According to Ypartnership’s 2009 Travel Survey, affluent travelers (households with a minimum income of $150,000) are the ones buying travel these days – 70 percent claiming an intent to travel (and 24 percent of those using the combo of Internet and travel agents to execute those plans); 64 percent noting a desire to go some place they have never been, and 66 percent saying leisure travel decisions are based on value, not price.
This fact could certainly be seen in packaged travel to Australia in recent months and heading into next year. With Qantas and V Australia creating some of the most favorable rates ever in transpacific flights, companies such as Swain Tours and AAT Kings have been able to reap a hefty benefit.
“We’ve seen a sharp recovery since July, especially in the four- and five-star segment,” says Ian Swain, president of Swain Tours. “It’s been a very good value for travelers and as Australia is already a popular destination (Y Partnership puts it as second, right below Western Europe in its research) we expect this to continue. Our bookings for 2010 are already ahead of last year.”
Similarly, Jeff Adam, vice president of sales and marketing for AAT Kings, describes the last several months as “a bounce.”
“It’s been all about the deal and all about the work the specialist has been able to bring. But we’re already seeing a kick for 2010,” says Adam. AAT King added combination tours to its roster this year and has been meeting with success. The packages allow agents to sell a combo FIT tour mixed into an escorted tour of Australia – bookending a hosted trip through Australia’s Red Center, for instance, with independent experiences of Sydney and Cairns— allowing for more flexibility and the ability to interest a larger customer base.
Pacific Delight Tours, meanwhile, is staying the course and focusing on the Yangtze.
“We’re seeing a lot of interest in our Southeast Asia product but we are keeping our focus on China for 2010. There’s the new Victoria Cruises with the Jenna and 2010 is looking brighter for us with these products,” says president Larry Kwan.
Other river cruise companies, such as Viking River Cruises, claim healthy numbers for recent months and strong bookings into 2010 with Europe as its number one seller, Russia as its second and China as its third.
“We think that our value promotions have really helped this along,” says Martha Troncoza, vice president of air operations for the Canoga Park, CA-based company. She points to such specials as two-for-one cruises, complimentary wine onboard, and airline discounts as contributing to the spike, and although many of these values may be expiring this month the company is evaluating extensions and new promotions.
Meanwhile, USTOA, with 47 active corporate members representing 164 brands (and 264 associate members as well as 475 allied members), has managed to hold on to its membership through this turbulence. It lost Certified Vacations but managed to pick up other members.
“We’re going to make it,” says USTOA president Bob Whitley. “The industry is resilient enough and Americans are simply going to continue to take vacations.”