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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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2009 the great recession
2009“The Great Recession”

Good Riddance

"Hasta la vista, baby“

“Ding Dong, The Witch is Dead…”

2010 expectations
2010 Expectations

“ The sun will come out tomorrow……..”

….or maybe at least soon!!

rtm projections for revenues
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

what to expect in 2010
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)
tourism growth
Tourism Growth
  • Medical Tourism (30% annual growth for India)
  • Sports Tourism
  • Government
  • Energy
  • Academic
  • Military
  • GLBT
  • Girlfriend Getaways
what do they want in 2010
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
question
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+%
slide10

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.

u s dept of commerce
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.

slide17

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.

other experts
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

consumer confidence index
Consumer Confidence Index
  • Americans remain worried
  • Nov 2009 = 49.5 (1985=100)

144.7 in 2000

factors for slow tourism recovery
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
trends 2010
Trends 2010

Current Economic Issues

check your local info http www brookings edu metro metromonitor profiles aspx
Check your local infohttp://www.brookings.edu/metro/MetroMonitor/profiles.aspx
highest lowest unemployment
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%

the southeast
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

the southeast25
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%

your local economy
Your Local Economy

Do you feel your local economy has “bottomed out”?

  • Yes
  • No
  • Unsure
the new normal
The “New” Normal

Working toward a settled economy that is more on a slow, steady increase track that is sustainable.

lodging
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%

top 25 markets revpar percent change september 2009 ytd
Top 25 MarketsRevPAR Percent ChangeSeptember 2009 YTD

Source: Smith Travel Research STR – Duane Vinson

location segments occupancy adr percent change september 2009 ytd
Location SegmentsOccupancy/ADR Percent ChangeSeptember 2009 YTD

Source: Smith Travel Research – STR Report – Duane Vinson

airlines
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

amtrak
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!
business travel
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

business meetings
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

conventions meetings
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
domestic leisure
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
attractions
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
forbes attractions list 2008
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
cruise industry
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
group tour
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)
slide43
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
national parks
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

your local destination
Your Local Destination

Has your local leisure travel increased or declined in 2009?

  • Yes
  • No
slide48
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

time poverty
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

green sustainable
Green & Sustainable

- Lots of talk, beginnings of action, recession hinders change

- People are interested, but majority not willing to pay more

- 47% willing to pay higher fees / 53% were not

YPartnership 2008 Travel Monitor

top 10 trends
Top 10 Trends
  • 2010 = Light at the end of the tunnel (4th quarter) - Slight decline or flat for most sectors (airlines, hotels, attractions, meetings, etc.)
  • 2011 = Slow, steady gain through 2013
  • New consumer behavior – long term modest spending, greater demands
  • Corporations = vigilant cost cuts remain (affects business and meetings)
  • Leisure returns to positive growth (slight) on 2010
  • Impact of social media growing – consumers trusting each other to find values
  • Search for value
  • Time poverty remains
  • Continually growing reliance on user-friendly technology
  • Settling into “the new normal”
recommendations for southeast destinations
Recommendations for Southeast Destinations
  • Know YOUR local tourism economic factors (dollars & jobs)

Understand YOUR lodging and current customer mix

2. Focus on segments you can grow in 2010

(sports, reunions, weddings, SMERF, etc.)

3. Get sharp: Make it easy & user-friendly – itineraries, orientation, facilitation, technology

  • Make every penny count - Focus on core geographic markets – partner with others to reach further

5. Diversify for the long run

thank you
Thank You

Judy L. Randall

Randall Travel Marketing

PH: 704-799-6512

Email: judy@RTMnet.com

Sign up at www.RTMnet.com for research updates & tidbits