Tour Operator Roundtable: A Roaring Start to 2018

Ryan Doncsecz from VIP Vacations with David Hu, president of Classic Vacations.(Travel Agent)

Travel Agent magazine hosted a roundtable in New York earlier this year. We invited top tour operators and travel advisors in to get a pulse on how 2018 was faring thus far. We found out very quickly that business is booming, with consumers willing to spend more. They’re also putting money down now and committing to the trip immediately; that indicates confidence in the economy as well as a pent-up desire to travel. 

The tour operators in attendance were David Hu, president, Classic Vacations; Tim Mullen, president, Apple Vacations; Jack Richards, CEO, Pleasant Holidays and Scott Wiseman, president, Travel Impressions.

Our travel advisors at the table were Ryan Doncsecz, VIP Vacations; Fernando Gonzalez, president, First in Service Travel; Kate Murphy, president, Wings Travel; Helen Papa, owner, TBH Travel; Stephen Scott, founder, Travel Hub 365 and Camille Sperrazza, The World Awaits Travel.

Ruthanne Terrero and Joe Pike of Travel Agent magazine and Travel Agent Central moderated the conversation.

Following is a condensed version of the discussion.

Ruthanne Terrero, Travel Agent: How has your year begun?

Fernando Gonzalez, First in Service Travel: It was our strongest January, year over year. We had 30 percent growth in January. It was consistent across the board, from corporate to entertainment to leisure. So we are really excited about that.

Jack Richards, Pleasant Holidays: 2017 was very, very strong and we are continuing that through this year. The economic fundamentals are solid; consumer confidence is high and there’s low unemployment. We see a very strong year for 2018. We might see a few hiccups here and there for Mexico and the Caribbean, but otherwise we’re starting off very strongly.

Helen Papa, TBH Travel: January is usually one of our strongest months and this year we’re seeing people being more aggressive about spending more and making faster decisions; they’re not just pricing out the trip. We are definitely doing more business quickly. 

David Hu, Classic Vacations: Last year, people were saying, “We want to go but we’re not confident enough to say we’re going to take it.” This year, to Helen’s point, they’re booking it, they’re not waiting. This year, the confidence level that Jack alluded to is much higher, and hence they’re able to make large purchase decisions early on.

Camille Sperrazza, The World Awaits: I do a lot of destination weddings and people are already booking into 2019. They’re getting into those cruise cabins, making those deposits, and they’re finding out, if you’re a family of four and you want connecting rooms, that there’s not that much left for summer. It’s been going very well.

Ryan Doncsecz, VIP Vacations: I do a lot of groups and 2019 is filling up really quickly, especially for weddings. The brides are getting their spaces way ahead of time. However, FIT travelers are walking in very last minute. 

Another interesting thing, generational travel is always popular but we are getting a lot of grandparents booking way far out for touring the national parks. River cruises are also popular right now. So we’re focusing a lot on generational travel right now.

Stephen Scott, Travel Hub 365: We’re seeing that those clients we exposed to the Caribbean on cruises last year want to go back. This year, people are saying, “We want to go back, we’re going to bring our friends, we’re going to bring family with us.” From the entertainment standpoint, it goes back to people feeling more confident. I got a call last week from a guy from a music studio saying that their ticket sales are higher. People are more confident about their ticket sales, which has now grown their ability to seal those deals and seal those concerts. The entertainment side of our business has actually jumped, which is great all around.

Scott Wiseman, Travel Impressions: I can’t disagree. What’s great, though, is it’s up across the board, which is really healthy instead of just saying one destination is leading the way. It’s spread, which I think is really important today, because of volatility in all parts of the world. It’s nice to have a base of business covering so many different destinations. The patterns are no longer patterns. We’re seeing long-term bookings and short-term bookings. We’ve probably disappointed more people for spring break this year than we’ve done in previous years, because everyone expected the best suites and the best hotels to be available. It’s been an interesting lesson, because I think that’ll teach them to book a little bit farther out, but they’re flexible, which is great. It’s not just like, “Never mind. I’m not going,” which we would’ve heard in previous years. It’s like, “Where else can I go?” 

The sales team has done a great job of having tons of backup for where to go and following that. Airline pricing and availability, of course, dictates a lot of where people can go, and the affordability that’s linked to it as well. That’s been something that agents have told us, that that’s a big deal in helping drive some of the decisions as well.  The booking side is really healthy too. Consumer confidence is definitely playing a big role in people just wanting to go.

Kate Murphy, Wings Travel: I’d like to agree with practically what everyone else said. I think it is confidence in the economy. I don’t want to make this a political statement, but people feel more secure in their jobs, so those who are booking are taking owner’s suites on the cruises. At hotels, they want suites. It’s like they’re thinking, “I’ve waited this long, and I’m going to go for it,” and this is what it feels like they’re doing because everyone seems to be booking bigger trips and longer trips. As Scott said, the timing is that some are really close in, and then others are, “Oh, I want to go to Africa in April of ’19. We have 14 people,” that kind of thing. It’s all over the place. I don’t see a wave season anymore. It seems like it’s all the time. That’s different.

Tim Mullen, Apple Vacations; Kate Murphy, Wings Travel; Scott Wiseman, Travel Impressions and Stephen Scott, Travel Hub 365.

David Hu, Classic Vacations: I think an understated piece of all this is what Scott said earlier, the airline piece. If you look at airline prices across all the various different destinations, I don’t want to say it’s cheap, but it’s very moderate compared to years ago, when Hawaii was $1,000 per airline ticket. Now, it’s in the $600-$700 range. You can get $300, you can get $800, but it’s moderate. I think all of us know airline is the barrier of entry. When people hear it’s not so costly to go, it starts inspiring an interest, and the momentum keeps going. They start looking at the hotels, and say, “I didn’t have to spend on the airline, I can spend here.”  That’s fueling an increase this year.

Camille Sperrazza, The World Awaits Travel: Regarding cruises too, we have a number of new ships coming in to the New York area. New Yorkers don’t want to fly. They will spend it on cruises, and they’re saving money on flights, so they just go. I was stunned. There are ships already that are sold out for this summer. If you are a family of four, you can’t even get on, it’s amazing. 

It’s been very good for business. I have a number of good groups on the cruises out of New York and New Jersey area this summer already booked. Everybody’s going.

Kate Murphy, Wings Travel: It’s the same for corporate business. We planned a meeting for the end of January; they expected 50 people, they added on, and we ended up with 78 people because they felt comfortable with the airfares. I think corporate feels that same comfort level right now, and are traveling.

Tim Mullen, Apple Vacations: Sales are turning around with year-over-year gains across the board in the past few weeks. After the negative press hit in late summer, we put a lot of effort into helping agents sell Mexico. We equipped agents with information to help them combat it. January was the late curve, but it came, and it came in a big way. For us, wave season is January 2nd. It was two or three weeks delayed, but we made up a lot of ground and demand is strong.
To David’s point earlier about Hawaii, it’s the same in Mexico. Believe it or not, there’s more airlift going into Mexico. That brings the overall price down in the package.

Ruthanne Terrero: Let’s talk about new destinations that are emerging or that are new to you. Are you seeing any surprises, any new places popping up? Or, noting the nature of your business, because some of the Caribbean isn’t open for business, are you seeing things shift around?

Tim Mullen, Apple Vacations: We’re seeing more of a shift. For instance, Costa Rica is up 50 percent, Jamaica is benefiting, and the few islands that weren’t damaged by the hurricane are benefitting. Central America, Panama and Costa Rica are doing very well this year. 

We’re also seeing a shift in destinations within destinations. For instance, we’re seeing a lot of travelers going to the north side of Cancun. The Playa Mujeres area and Costa Mujeres.

In the Dominican Republic, we’re seeing a lot more business into the north coast — Puerto Plata, Saona, Cabarete. Also, in Punta Cana, we’re seeing the Cap Cana area really grow. They’re building five new hotels there within the next 18 months, and a lot more people are going. They’re gated communities with golf. It’s secure and people like it. We’re seeing a lot more of movement within destinations, but overall on the wholesale side, we’re seeing more shift into Central America and Jamaica.

Joe Pike, Travel Agent: I want to know how much the sharing economy has affected your business this year. The whole Airbnb thing is another storm that agents seem to have weathered.

Tim Mullen, Apple Vacations: We don’t see Airbnb eroding our business; the hotel suppliers are doing really well. The AVRs are up but they’re getting it from several countries. Just look at the U.S., I don’t know how much of it’s eroding our source of business in Mexico and the Caribbean. I would guess it probably is eroding the domestic U.S. business. People are more secure and safe in making that decision. 

Scott Wiseman, Travel Impressions: I would expect it to impact our villa business more than anything, and it’s not down. Villa business is still up around 10 percent. It’s still moving in a positive direction, so we consider that a win. That would probably be mostly impacted by the sharing economy. I agree with what Tim said. There were a lot of new hotels that opened last year that had introductory pricing. They’ve been full enough that they don’t need to do that again this year. That’s another good sign because, just because a hotel opened, doesn’t necessarily mean that it’s going to be full the second year, after you have promotional rates and incentives. They haven’t had to do that and they continue to fill. 

David Hu, Classic Vacations: There are folks who will go to hotels, and then there are special occasions where they want that villa, or certain occasions where they want to spend four weeks in Paris. I think what it does is, if you have inventory, it becomes additive to your complete portfolio of vacations. It doesn’t take away, it just adds to it. As everybody knows, our parent company [Expedia] is very much involved in this. It’s been completely additive to their entire portfolio of business as well. 

To your earlier question about Mexico and the Caribbean, we’ve seen that our Mexico business hasn’t been that impacted. And all of that Caribbean business has just been shifting around. Hopefully, that will continue as the inventory comes back online.

One of the things we did [following the hurricanes] was we immediately put a full map with countries that were impacted in red, those that were minimally impacted in yellow, and those not impacted were put in green. We put that on our social media, on our web pages and I’m sure all of you guys did too. People were like, “Oh, this is helpful. That’s all the way over there, so I can go over here and it’s not a problem.” I think that’s a great tool for advisors to have.

Kate Murphy from Wings Travel and Scott Wiseman from Travel Impressions both agreed that 2018 is off to a great start.

Scott Wiseman, Travel Impressions: The travel advisor community helped the recovery because consumers had no idea what was really going on. They didn’t know the difference between Dominica and the Dominican Republic. It created a lot of problems. Travel advisors were so quick to get the facts, and to get people moving and that particularly helped the turn around.

Joe Pike: Kudos to a lot of the tour operators too. You guys didn’t waste any time teaming up with the CHTA and the CTO, and doing dual marketing campaigns to get the word out. It was literally two weeks after everything happened, so it was a perfect time to hit the ground running with that. 

Another question: Was a lot of that Caribbean business shifted outside of the Caribbean?  You mentioned Costa Rica and Panama were hot and I’m wondering if that was any kind of result of hurricane business being re-shifted.

Tim Mullen, Apple Vacations: Mexico business shifted to Central America. The Caribbean islands just shifted to what was available.

Fernando Gonzalez, First in Service Travel: I was just in Miami and I spoke to many hoteliers there. Miami is off the charts as far as availability is concerned. I think a lot of Americans just did an easy, “I want to go away, I’m just going to go to South Florida.”

Helen Papa, TBH Travel: We’re finding, as you said, that people think the entire Caribbean was wiped out. People were calling us and saying, “We can’t go to the Caribbean.” We were directing them by saying, “You can’t go here, but you can go here, or here.” We were trying to find comparable properties, especially from the higher end islands. We were relocating people who wanted to go to St. Bart’s, and saying, “You can get a five-star-plus experience with these options.” They just assumed everything was devastated.

Stephen Scott, Travel Hub 365: Right after the hurricane, I was down in Jamaica at the Jamaica Inn. I have to give those hoteliers credit, because they were not sitting there telling us, “Send us all your clients, don’t send them there.” They were saying, “We are a community of the Caribbean here. We are going to support our partners in our family across the Caribbean.” That they were saying, “We love our property, but please make sure we are supporting everyone else, because it could easily happen to us at some point.” 

I definitely want to give them that credit, each of them, they all said that same message, and made me feel good. Like, “We’re in this together, and it’s not about stealing business because of natural disasters.”

Kate Murphy, Wings Travel: We saw the same thing. Back to Airbnb, I’ve often heard some of our staff say, “Did you ever walk into a cabin on a ship and then look at the picture of what you thought that cabin was going to look like? Airbnb can be the same thing. Maybe it looks wonderful, but how do you know the neighborhood is safe? We can’t guarantee that.” We’ve had no problems switching people. 

Camille Sperrazza, The World Awaits Travel: I would rather stay home, than go to an Airbnb, but I find that young people especially love the Airbnb concept. They all want to stay together. There’s this whole thing about them all staying in the same room. They bring all their friends, and they all want to be together all the time, which is another concept I can’t quite grasp either. 

Airbnb allows that, because they all chip in, and they’re all sharing the same room basically, or villa or apartment, or whatever you want to call it. They don’t care about the services; if you say, “You’ve got to do your own cooking.” They’ll say, “Oh, we like that because we’re saving money. We go to the grocery store and we have cereal for breakfast.”

There are still a lot of young people who are looking at it that way. Personally, I don’t focus on that group, but it is something that I hear from young people all the time, because I have children that are this age.

Stephen Scott, Travel Hub 365: That continues to be an issue I have, even with my music groups. They feel like that living room area is where they can connect. They all have their own rooms, but their living room is that connection point. I have to overcome those types of barriers. 

The main concern I get from consumers that are coming to me with Airbnb having to put a security deposit down for a hotel room. Just simple things like that. Having to put down $100 or $250 per room, if you’ve got 12 people traveling together, and they’re on a limited budget, they then start adding that into the cost of what they have to have available for the trip. Airbnb strips that out of the process completely. Their entry point to taking that trip is less with Airbnb.

David Hu, Classic Vacations: You need to think about this as an opportunity. Ten or 15 years ago, I was the same guy hanging out with 20 friends crammed into a four-bedroom place. Really, Airbnb is nothing new, we used to call it renting out a house. Now, would I ever spend four days with 20 friends in a house? No. I have three kids, I want my own house.

But those travelers evolve, so I would not want to ever discard them. They’re the ones who are going to start thinking about going to the four-star, five-star hotel because they won’t want to spend time with those friends anymore, as they have their own families and stuff. 

Again, just those travelers evolve, so keep an eye on them.

Stephen Scott, Travel Hub 365: I can imagine they would grow up into villa customers.

Ryan Doncsecz, VIP Vacations: I was going to steer this back into where the business is shifting. Millennials are spending a lot more money, and they’re doing crazier things: “We’re going to go hike Machu Picchu; we’re going to take a South African safari.” They’re trending away from the Caribbean, the cheap sun and fun, and they’re going somewhere on a higher budget that’s a little bit more experiential. 

Camille Sperrazza from The World Awaits Travel says cruises out of New York are filling up fast for summer.

The product that I’ve seen a growth in is Disney. That could be because they had five years of not building anything new, and now they’re finally starting to do it, and that can be a big thing.

Star Wars is coming. All these big products are probably coming back. Disney’s numbers just came out and they’re off the charts right now. 

Other resort brands that we are getting asked a lot about, the Hard Rock hotels are very popular. The Royalton properties — we didn’t actively sell them for a while, and now our brides are asking specifically for them. The Hyatt Zivas are extremely popular, and all the brides are asking for these. There are a lot more people fighting for the same business. 

Camille Sperrazza, The World Awaits Travel: Interestingly, a lot of the hotels now are requiring certain minimums for weddings. It used to be a three- night minimum. There are a few of them that are so confident now, they’re requiring five-night minimums, which really impacts, because not everybody can get away for five days, if you’re going to a destination wedding.

Ruthanne Terrero: I’d like to give the tour operators in the room an opportunity to talk about new destinations or products you’ve launched and why.

Scott Wiseman, Travel Impressions: Europe saw the biggest growth this past year. We are up 48 percent. A lot of it had to do with expanding the product. Most of you heard from the travel advisors that they were looking for more and different ways to stay in Italy, and in Scandinavia and Iceland, and it was tough to get space. We rolled out a ton of Europe product this past year that proved really successful. We wanted to carve out areas that were perceived to be more safe than areas that had some issues with terroristic activities.

Scandinavia would fit that mold. We followed what travel advisors told us they needed. We put together product where you could get independent touring, which a lot of people like, but also guaranteed inventory in tough-to-reach spots. That fueled a lot of growth.

Going back to what Stephen and Ryan brought up about the Millennials and about putting down a deposit. That’s really important. One of the things that we launched last year that turned out to be successful was a flex groups concept, which allows people to put together small groups for bachelor parties, golf weekends and spa getaways...the younger people that didn’t want to be beholden to a traditional group contract. It’s contract free, where they get an upfront discount, and they’re getting group benefits, but no one’s on the hook. No single person in the group has to say, “I’m going to be responsible for the group, I can put it together.” It’s proven to be incremental.

A lot of travel advisors have told us that it’s generating new business for them. They can say, “Here’s your group code, put it in. By doing that, you get a discount.” That way, the advisor keeps the booking; it doesn’t go to an OTA. 

Tim Mullen, Apple Vacations: We have three new escorted tour packages to Cuba; all offer educational, people-to-people itineraries. They work for travelers who aren’t looking for a beach vacation. They can really immerse themselves in the Cuban culture and meet the people, and bring home things like Cuban cigars and rum.

In Cancun, there’s a Secrets and Dreams Resort in Playa Mujeres, and Riu Dunamar just opened in Costa Mujeres. Twenty minutes via ferry from Cancun, there’s a new Zoetry and Palace Resorts on Isla Mujeres, where you can swim with whale sharks from mid-May September. And about 15 minutes from the Punta Cana airport, the Cap Cana resort area has four beaches and Punta Espana golf course. There are also several upscale all-inclusive resorts, including Secrets Cap Cana and three Alsol properties.

Jack Richards, Pleasant Holidays: Europe by far was number one for 2017-2018. In December, we went back into Asia for the first time. We used to own a company called Japan and Orient Tours. We operated it for 12-and-a-half years. We’re back in Japan. It’s still too early to tell yet. We think it’ll do very, very well. We’ll continue to build out Asia through Hong Kong, Japan, Vietnam and Thailand.

Number one for us going forward will be Europe. We launched Scotland in March, and then we’ll continue to build out Scandinavia and Eastern Europe. 

Helen Papa, TBH Travel; Jack Richards, Pleasant Vacations; Fernando Gonzalez, First in Service Travel and Tim Mullen, Apple Vacations.

David Hu, Classic Vacations: We’ve been in Europe for 20 to 30 years now. We’ve got a very strong foothold in the major destinations. We’ve been adding on so there are a lot of tertiary destinations, and we’re seeing great results because now you’re able to do multi-hops throughout the entire continent. People can do two nights in London, hop over to France and keep going. Having that complete inventory base allows people to explore on a more comprehensive basis. 

We’ve also added a lot of port cities to be able to deal with big post-cruises. In Europe, we’ve done a lot to fortify the product portfolio.

We’re seeing a lot of desire for experiential travel beyond the core beach destinations. People are saying, “I want to be able to come back and say I did something different.” 

The key thing that we’re looking at is where else would they want to go? 

We launched Asia about a year ago as a trial balloon. We found significant enough demand that we’re going full board, especially for Southeast Asia; there are a lot of different destinations there, where if you don’t go soon, they won’t be the same in the future. There are a lot of other places within Asia that we’re looking at to complete the entire portfolio. 

We would also love to look at Africa, but the problem is that it’s a much different product to sell from our perspective. Asia is the next foray in terms of product for us.  

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