Continuing the Climb

The latest travel research and economists' predictions help travel agents in the West set a course for recovery By: Monica Poling
The latest travel research and economists’ predictions help agents set a course for recovery // © 2010 Jakub Cejpek
The latest travel research and economists’ predictions help agents set a course for recovery // © 2010 Jakub Cejpek

Fast Facts

- Despite the recession, travelers who reside in the West have remained positive. More than eight in 10 (85%) agree that these difficult times have helped them focus on the things that matter most in life.

- Seven in 10 (71%) leisure travelers who reside in the West report they hold a valid passport. Among those who never had a passport or whose passport has expired, one-quarter (25%) plan to re-validate their passport or to apply for a new one.

- One-third (35%) of leisure travelers who reside in the West have taken an international leisure trip during the last 12 months. Mexico (30%) and Europe (29%) were the most frequently visited international destinations by these leisure travelers.

- The majority (66%) of leisure travelers who reside in the West are planning to take the same number of leisure trips this year as they did last year. Approximately one-fifth (17%) plan to take more leisure trips.

- Travelers who reside in the West are more likely to have taken a “last-minute” trip in the past 12 months (30% vs. 26%).

- Leisure travelers in the West are more likely to have taken a trip alone (30% vs. 23%) in the past 12 months.

Source: The Portrait of American Travelers, Ypartnership, Harrison Group

Web Exclusive

Click here to read TravelAge West editors predictions for 2011 travel trends

By now, we are all familiar with the back story: The collapse of the housing market in 2007 brought about a recession the likes of which many people have not seen in their lifetimes. The National Bureau of Economic Research, an organization dedicated to promoting a greater understanding of how the economy works, set the official recession at 18 months, starting in December 2007 and officially ending in June 2009, making it the longest — and sharpest — recession since the Great Depression.

To be sure, it’s been a bumpy ride. Now, three years after the U.S. slid into the recession and nearly a year and a half since that recession “officially” ended, clients are wondering if they can finally unfasten their seatbelts.

Leading economists are of little help on the matter. While some are predicting a modest increase for 2011, many others are using adjectives such as “grim,” “bleak” or “stagnant” to describe the coming year. According to CNNMoney, 25 percent of economists surveyed fear that next year will bring a back slide into what is known as a double-dip recession.

Not everyone sees the glass as half empty, however. Jack Kyser, chief economic advisor to the Southern California Association of Governments, is set firmly in the modest recovery camp.

“We are in a recovery, but we are still getting a lot of mixed economic news. The media tends to focus on the bad news stories, like unemployment and real estate, but retail sales and automobile sales are up,” he said. “In terms of travel, Southern California hotels’ average daily rates [ADR] and occupancies are also up. The favorable dollar is attracting a lot of international travelers and, in general, travelers know there are deals out there. Looking forward, 2011 will be slow, but 2012 will start to feel better.”

Better Numbers in 2010
At the end of 2009, as the travel industry watched for early signs of recovery, the term “cautious optimism” became the catch phrase of the moment.

A year later, the numbers suggest that the optimism was warranted.

According to the U.S. Travel Association, total travel expenditures in the U.S. in 2010 are expected to reach $755.6 billion, a healthy 7.3 percent increase over 2009. Although this number is still well below the record $772 billion reached in 2008, travel expenditures should take another 5.2 percent hike by 2011, ending the year at $794.9 billion.

The World Tourism Organization (WTO), a United Nations’ agency, is also reporting positive trends in global travel. While international tourist arrivals declined by 4.27 percent overall in 2009, growth returned at the end of 2009, and the WTO projects a growth in international tourist arrivals of between 5 and 6 percent for 2010. The agency notes that even including the “dismal results” of 2009, tourist arrivals have seen an average annual growth of 3 percent since 2000.

“These results reinforce the message that we have been underscoring since the outbreak of the global crisis at the end of 2008 — that tourism is one of the most dynamic economic sectors and a key driver in creating much needed growth and employment,” said WTO secretary-general, Taleb Rifai, while speaking at the WTO Ministers’ Summit at the World Travel Market in London.

It seems that international travel is indeed a segment particularly worth watching, especially travel to emerging destinations.

Matt Berna, president of Intrepid Travel, an Australian travel company with American headquarters in Northern California, agrees.

“We are finding that early interest among our travelers seems to be with more exotic destinations like Morocco, Egypt, Syria and India,” Berna said.

Certainly, the Middle East has experienced tremendous growth in 2010. According to the November 2010 edition of OAG Frequency and Capacity Travel Statistics, seat capacity grew 6 percent and frequency increased 4 percent worldwide to a total 301.6 million seats and 2.4 million flights during the month of November 2010. Most regions of the world grew in capacity in November, with the Middle East experiencing the largest growth, with an increase of 17 percent to a total of 11.6 million seats.

When it comes to airline departures, however, the message is, once again, mixed.

According to OAG, overall seat capacity for flights originating and terminating at airports in the Western U.S. is anticipated to decline by 4 percent in the first half of 2011 (compared to the same period from last year). Fortunately, international flights are helping stem some of that loss, and the subset of international flights to and from airports in the West is expected to increase by 5 percent.

While seat capacity doesn’t necessarily mean trips taken by Americans, the Department of Commerce is also indicating a rise in international trips taken by U.S. citizens during the first half of 2010. According to the Office of Travel & Tourism Industries, growth has been recorded in all regions, except Europe and Central America, with significant growth occurring in the Middle East, Oceania and Africa.

Western Travelers
While the travel industry continues to look forward to better days, one thing is certain: travel agents in the West have a clear advantage over their counterparts in the rest of the country.

Every year, TravelAge West, in tandem with its sister publication Travel Weekly, conducts the Travel Industry Survey to delve into the minds of agents. Authored by noted researcher Stanley Plog, the report presents important travel agency trends, with a special focus on Western travel agents versus those in the rest of the U.S.

For 2009, the survey found that agents in the 14 Western states represent approximately 30 percent of the total 18,604 travel agencies in the U.S. Based on that 30 percent share, agents in the West would be expected to produce about $78 billion of the total annual travel sales; in fact, however, they produce nearly $92 billion, or 17.5 percent above average compared to the rest of the nation. Furthermore, while the average agency generates $5 million in annual sales, in the West, the average agency sells nearly $5.7 million in travel.

Further good news for agents in the West, according to the Portrait of American Travelers, a survey conducted by Ypartnership and Harrison Group, is that leisure travelers who reside in the West are more likely to find travel agents influential with regard to vacation packages or tours (73% vs. 55%), airlines (62% vs. 47%), destinations (56% vs. 45%), cruise lines (55% vs. 41%), car rental (47% vs. 32%) and trains (34% vs. 19%).

According to Intrepid Travel, travelers in the West, in particular those from California, also tend to be more adventurous than the rest of the country. Intrepid recently completed its own survey of the “intrepidness” of travelers around the world. While questions ran the gamut, when it came to the likelihood of “eating deep-fried tarantula,” highest marks came from Californians and Texans.

“Our definitions of adventure vary,” said Berna. “Some people consider it adventurous to check into a hotel without air conditioning. But it is no secret that people in the West are clearly different. They have a higher number of passports and a greater sensitivity to and awareness of foreign markets. That’s what prompted [Intrepid Travel] to conduct this survey, to get an idea of how people are different when it comes to travel and to target our sales accordingly.”

No matter the location of the agent or the traveler, according to the Portrait of American Travelers survey, agents will find that American travelers are becoming more positive about their personal outlooks, and have “a greater confidence in their own ability to maneuver through the prevailing economy.” More importantly, agents can take advantage of the fact that consumers consider vacations to be a birthright and will continue display a “new resourcefulness” in their pursuit of best fares and rates.

So, while the travel industry as a whole can look forward to a slow, steady climb throughout 2011, agents in the West might get to the top just a little bit faster.

Adventure Travel JDS Africa Middle East JDS Destinations