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2010 Travel Trends December 2009

2010 Travel Trends December 2009. 2009 “The Great Recession”. Good Riddance "Hasta la vista, baby“ “Ding Dong, The Witch is Dead…” . 2010 Expectations. “ The sun will come out tomorrow……..” …. or maybe at least soon!!. RTM Projections for Revenues.

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2010 Travel Trends December 2009

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  1. 2010 Travel TrendsDecember2009

  2. 2009“The Great Recession” Good Riddance "Hasta la vista, baby“ “Ding Dong, The Witch is Dead…”

  3. 2010 Expectations “ The sun will come out tomorrow……..” ….or maybe at least soon!!

  4. RTM Projections for Revenues 2009: -10% to -20% Anything less than -10% is the new “flat” 2010: +2%....0%...-5% 2011: Recovery will last into 2012-2013

  5. What to Expect in 2010? • Overall: Return to positive numbers, but small improvements – steadily regaining strength • Slow, steady improvement • Lodging: oversupply + local economy are the issues • Attractions: Still finding their balance • Healthy customer mix makes the difference (business, leisure, sports, meetings, etc.) • Per-visitor expenditures flat to -5% (change in behavior will last at least 3+ years)

  6. Tourism Growth • Medical Tourism (30% annual growth for India) • Sports Tourism • Government • Energy • Academic • Military • GLBT • Girlfriend Getaways

  7. What do they want in 2010? • VALUE, VALUE, VALUE • Time poverty – more so than ever before • Burnout is a big factor • Pent up demand, but with “new normal” behavior • Simple pleasures, good bed, good food • “Feel good” travel • No hassles – or else! • User-friendly technology • Expect more complaints – demand for quality goes UP, while expenditures go DOWN

  8. Question Is your revenue up or down over this time last year (2009)? • Up 1 – 10% • UP 11+% • About the same • Down 1 – 10% • Down 11+%

  9. DOW since 1928(Currently at 10,300)

  10. Source: Federal Reserve Bank of St. Louis includes the 10 recessions starting with the November 1948 business cycle peak. For real income, the average starts with the April 1960 peak. For additional information, see the Federal Reserve Bank of St. Louis Economic Synopses, 2009, No. 4.

  11. U.S. Department of LaborUnemployment -10.2% for 2009-2010

  12. Brookings InstituteUnemployment

  13. GDP by State

  14. U.S. Dept. of Commerce Transportation and lodging made the largest contributions to the decrease in real spending in 2009 despite price declines for both.

  15. U.S. Dept. of Commerce

  16. Brookings Institute

  17. The Recovery Graph Esteemed Harvard economist Martin Feldstein believes that the current (4Q09) improvement is an illusion. He predicts a “W” shaped recession. The first dip is behind us. The second is yet to come - probably early next year.

  18. Other Experts A great deal of uncertainty surrounds the question of the strength and speed of recovery, but the most likely course for the economy seems to be gradual expansion. Consumer spending on goods and services, the largest component of aggregate demand for output, is likely to be held to a modest upward trajectory over the next of couple years by weak income growth, higher saving, and lower borrowing. --Karen Dynan, Vice President and Co-Director, Economic Studies, Brookings Institute ---------------------------------------------------------------------------------------------- U.S. Travel Association, Marketing Outlook Forum 2009 www.ustravel.org - - recommend visiting their website to learn more

  19. Consumer Confidence Index • Americans remain worried • Nov 2009 = 49.5 (1985=100) 144.7 in 2000

  20. Factors for Slow Tourism Recovery -----------Global------------------------------- • Customer behavior (spend less, save more) • Pent up demand / burn-out / time poverty • “Some things I’ll cut, others I won’t” ---------Local Factors------------------------ • Employment • Economic diversity • Lodging supply • Customer mix (business, leisure, sports, meetings, etc.) • Perception of product value • Awareness / ease of trip planning

  21. Trends 2010 Current Economic Issues

  22. Check your local infohttp://www.brookings.edu/metro/MetroMonitor/profiles.aspx

  23. Highest & Lowest Unemployment Destination Unemployment (3Q09) El Centro, CA 30.1% Yuma, AR 24.2% Detroit, MI 17.3% San Bernardino, CA 14.2% Las Vegas, NV 13.9% ------------------------------------------------------------------------- Bismarck, ND 2.9% Fargo, ND 3.7% Lubbock 5.7% Oklahoma City 5.9% Washington, D.C. 6.7%

  24. The Southeast Destination Unemployment (3Q09) Alabama 7% - 11% Arkansas 5.5% - 9% Florida 7% - 16% Georgia 7% - 12.5% Kentucky 8% - 11% Mississippi 7% - 8.5% North Carolina 7% - 14% South Carolina 9% - 14% Tennessee 9% - 12.5% Virginia 5.5% - 11% West Virginia 5.2% - 9.5% Source: U.S. Dept. of Labor

  25. The Southeast Destination Unemployment (3Q09) Atlanta, GA 10.6% Athens, GA 7.2% Birmingham, AL 10.2% Charlotte, NC 12.5% Durham-Chapel Hill, NC 7.7% Houma, LA 5.1% Jackson, MS 7.1% Jacksonville, FL 7.2% Knoxville, TN 8.6% Lexington, KY 8.3% Little Rock, AR 5.9% Miami, FL 10.9% Mobile, AL 11.1% Montgomery, AL 10.2% Morgantown, WV 5.2% Orlando, F 11.5% Virginia Beach, FL 6.7%

  26. Your Local Economy Do you feel your local economy has “bottomed out”? • Yes • No • Unsure

  27. The “New” Normal Working toward a settled economy that is more on a slow, steady increase track that is sustainable.

  28. Lodging Source: Smith Travel Research STR Report • 50,000+ hotels in U.S. 2007 2008 2009(P) 2010(P) 2011(P) Occupancy 63.2% 61.2% 52.4% 52.2% 54.6% ADR $103.64 $107.44 -8.9% -3.4% +5.5% RevPAR $65.50 $65.75 $53.41 -3.6% +5.5%

  29. Top 25 MarketsRevPAR Percent ChangeSeptember 2009 YTD Source: Smith Travel Research STR – Duane Vinson

  30. Location SegmentsOccupancy/ADR Percent ChangeSeptember 2009 YTD Source: Smith Travel Research – STR Report – Duane Vinson

  31. Airlines • 2009: loss =projected at $11 billion(IATA – Sept. 2009) • 2010 (P) losses: $3.8 billion • 24 airlines ceased 2008-2009 - 8 U.S. (Aloha, MAXjet, Big Sky, ATA, Skybus, Eos, Champion, Air Midwest) • Service cuts in over 100 U.S. destinations • Route cuts, capacity cuts, mergers, survival • 16.7% cut in premium travel (first or business class) • Won’t reach 2008 revenue level until 2012 Source: International Air Transport Association

  32. Amtrak • 2008 = 28.7 million / 78,600 per day (best year ever) • 2009 = 27.2 million (reduced business travel in Northeast Corridor) • Issues: cost & convenience • Know your rail status!

  33. Future High Speed Rail Plan

  34. Rail Lines

  35. Business Travel • Typically 1/3 of lodging occupancy • 69% of Businesses expect volume to grow in 2010 • 56% expect increase in cost / 31% expect 2010 costs to be flat • Avg. cost for trip: 2009 2010 Air $299 -2% to -3% Hotel $136 -2% to -8% Car Rental $46 -1% to -3% • "The uptick in business travel in 2010 will take place within the framework of a new corporate culture in terms of travel. In the 'new normal,' we see stronger travel mandates, greater use of pre-trip approval and audits, tighter restrictions on premium class travel, more focus on travel ROI, and enterprise-wide strategic meetings management." (Source: NBTA National Business Travel Association) NOTE: USTA Marketing Outlook Forum 2009 was not quite as optimistic

  36. Business & Meetings State % Business Travel % Meetings Travel Share of all Travel Share of Business Travel Alabama 28.2% 36.0% Arkansas 22.6% 37.8% Florida 22.7% 56.7% Georgia 40.9% 51.0% Kentucky 30.5% 48.4% Louisiana 31.7% 32.8% Mississippi 21.7% 30.4% North Carolina 24.4% 36.8% South Carolina 20.6% 35.8% Tennessee 29.0% 46.0% Virginia 37.0% 28.6% West Virginia 17.3% 43.0% Source: US Travel Association

  37. Conventions/Meetings 2010: • Meetings/events down 35% (Source: Society of Incentive & Travel Executives) • Meetings & events are 15% of all travel • New study by Oxford Economics for U.S. Travel Association (USTA) • Still under siege • Aggressive competition • Demanding customer • All-in-one site – no driving • Air access is a factor

  38. Domestic Leisure • 5% average annual growth for 50 years • 2009 decrease is first EVER annual decline: • 2.7% volume • 10.3% spending • 2010 should increase 1.9% in volume

  39. Attractions • 16,500 museums in U.S. • 9,000 house museums in U.S. • Attractions overall = 4-6% decline in 2009 (USTA 2009 Marketing Outlook Forum) • 7-10% drop in major theme parks • Place info at hotels

  40. Forbes Attractions List - 2008 • Times Square 37.6 million • Las Vegas Strip 30.0 • Washington (National Mall) 20.0 • Disney World Magic Kingdom 17.1 • Disneyland (Anaheim) 14.9 • Fisherman’s Wharf 14.1 • Niagara Falls 12.0 • Great Smokey Mtns. Park 9.0

  41. Cruise Industry Cruise Lines (CLIA): • Out-performed all other travel segments since 2000 - avg. 7.4% annual growth since 1990 • 13 million in 2008, 10.1 million originating from North America • 60% = Caribbean, 20%=Alaska, 20%=northeast/west coast/other • Approximately 6 million (56%) originate out of Florida • 14% out of California/Washington/Hawaii/Alaska • 8% out of Texas • 10% out of Mid-Atlanta (NY, PA, NJ) • 5% out of Massachusetts • 7% out of Louisiana, Maryland, • 2008 = moved ships to closer ports to avoid air costs • 2009 = deals, deals, deals

  42. Group Tour Holding steady • Statistics flat, bank travel down a bit, luxury travel OK, niche travel OK, national park tours up • Affinity, affinity, affinity • Freedom without the hassle, cruise ship on land • Huge growth in student travel – now 25% of international travel (SYTA)

  43. Spas • 18,100 spas in the U.S. in 2009 • 20% growth in 8 years • 80% = day spas • 9% = resort spas • 7% = medical spas • 3% = club spas • .4% = mineral springs spas • .5% = destination spas

  44. National Parks Biggest increases: Washington, Appomattox, Mount Rushmore, Yellowstone, Yosemite, Gulf Islands, Amistad NRA Source: National Park Service http://www.nature.nps.gov/stats/viewReport.cfm

  45. National Parks

  46. National Parks (Rank Order)

  47. Your Local Destination Has your local leisure travel increased or declined in 2009? • Yes • No

  48. The three regions the country is dividing itself into are The New Sunbelt, The Melting Pot, and The Heartland New Sunbelt Melting Pot Source: William H. Frey, Brookings Institute Heartland States

  49. Time Poverty • 1 in 5 workers spends 50 hours/week • Email takes 1 full hour per day • Americans work 9 full weeks more than Europeans - US average holidays = 25 days/yr. - Canada = 19 days/yr. • Children: - Since 1970s have lost 12 hours per week free time - 25% drop in play time / 50% drop in unstructured outdoor play - Spend 8 hours more /week in school than 20 years ago - Homework has doubled in 20 years

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