Spotlight 2011

What you can expect to see in the year ahead from destinations, hotels, cruise lines, Airlines and tour operators
Map and pushpins // © 2010 Adrian Assalve
Map and pushpins // © 2010 Adrian Assalve

2011 Travel Trends

Read the entire issue of Spotlight 2011

Read TravelAge West editors predictions for 2011 travel trends

Despite hair-raising headlines such as "Are Airport Body Scanners Making You Rethink Holiday Travel?" and "Pat Down Leaves Passenger in Tears," more consumers took to the skies and the seas this year than in 2009 to travel to exotic locations and visit some old favorites.

Statistics show that, across the board, the travel industry is having a better year this year than in 2009 and that 2010 predictions mostly panned out. The tour and cruise industries did especially well in 2010, while hard-hit industries such as hotels and airlines saw signs of improvement. And, looking into the future, more growth is predicted.

"Throughout 2010, companies have lifted travel restrictions brought on by red bottom line fears, and this is expected to continue into 2011 as firms look more toward growing the top line," said Christa Degnan Manning, director of Expert Insights and Research, American Express Business Travel.

According to the 2010 YPartnership/Harrison Group survey, The Portrait of the American Traveler, Americans feel that vacations are a birthright, and many travelers plan to travel the same amount or more in 2011. According to the survey, the overwhelming majority of leisure travelers (67 percent) plan to take the same number of trips in 2011.

The survey also found that one of the lasting affects of the Great Recession is the perception of value. Consumers will continue to pinch their pennies when it comes to spending. While 86 percent of households surveyed agreed with the statement: "These difficult times have helped me to focus on the things that matter most in my life," 79 percent of households also agreed with the statement: "I have become a much smarter shopper thanks to today's economic situation."

This means that deals and special offers will continue to be important to clients in the year ahead, as well as added values and all-inclusive amenities.

ASTA president Chris Russo advises agents to keep a watchful eye on business in the coming year.

"I believe that agents are cautiously optimistic for 2011," he said. "Booking trends are starting to move away from the last-minute trend as people are starting to plan further in advance. With economic conditions being unpredictable, agents will have to continue to watch their business plans and budgets very closely."
--Janeen Christoff, Managing Editor


New Places To Visit in 2011

Encouraging statistics mean clients are traveling to new destinations
By Deanna Ting

Although it has been a rather challenging two years for the travel industry as a whole, 2010 showed signs of improvement. According to the United Nation's World Tourism Organization (UNWTO), 2010 will end with an overall 5 to 6 percent increase in international tourist arrival numbers compared to last year's 4.2 percent decrease. This year's number of international tourist arrivals is rather telling; it exceeds the number seen during the same period in 2008, before the worldwide economic crisis officially began, demonstrating that people are traveling once again.

The UNWTO also reported that, while recovery in Europe and the Americas continues to lag, Asia and the Pacific remains resilient, posting a 14 percent growth in international arrivals through August 2010. Strong tourism arrival numbers have also been recorded in the Middle East (up 16 percent) and in Africa (up 9 percent).

Prospects for next year are cautious, yet optimistic. For 2011, the UNWTO projects a growth of 4 to 5 percent in international tourist arrivals. Where those tourists are headed exactly, however, is still up for debate.

Tried and True
While an increasing number of travelers are seeking more exotic and experiential destinations, many are returning to destinations they have already been to, or ones that deliver classic travel experiences, especially with regard to Europe and the Americas.

"Europe continues to be strong," Steve Born, vice president of marketing for Globus Family of Brands told TravelAge West. "We're up more than 20 percent year-to-date versus the same time last year on our overall Europe business across all of our brands."

Born said that demand for travel to Italy was especially strong, a claim that was also supported by travel agent Eric Maryanov, president of Los Angeles-based All-Travel.com.

"Italy is very high in demand, and Tuscany is very popular," Maryanov said. "Also, lesser-known, less-touristic regions such as Puglia are gaining popularity."

Ponza and the Pontine Islands of Italy were listed on Frommer's annual list of the Top Destinations for 2011. Other European destinations included on the list were Kent Coast, England, and Stockholm, Sweden, while Frommer's readers designated Ireland as their favorite destination for 2011. Italy was also ranked seventh on Lonely Planet's list of the Top 10 Countries for 2011, as were Albania (ranked number-one) and Bulgaria (ranked fifth).

Maryanov also noticed strong demand for domestic travel within the U.S.

"This year, we saw a surprising number of bookings for the U.S., especially for family travel," he said.

The most popular trips included journeys across the Midwest and the West, as well as travel to Alaska and New York City.

Extending to Mexico and the Caribbean, Maryanov said that both regions continue to perform well in terms of bookings for this year and next.

"Mexico seems to be holding in the number of bookings, in spite of challenging news," Maryanov said. "The Riviera Maya and Cancun region is still very popular."

He added that Punta Cana in the Dominican Republic remains a favorite destination among his clients.

More Adventurous
The trend for more adventurous and active travel experiences in exotic destinations will continue in 2011, as evidenced by some of the industry's top 10 destination lists. Other destinations listed on Lonely Planetís list of the Top 10 Countries for 2011 included Brazil, Cape Verde, Panama, Vanuatu, Tanzania, Syria and Japan.  

Central and South America, in particular, are seeing an increase in travel demand. Maryanov predicts increased levels of interest for travel to Chile following the miners' rescue earlier this year. Santiago, Chile, was also listed by Frommer's as a top destination for 2011.  

In Asia, many lists suggest increased demand for travel to Japan, despite the conception that traveling to the country is expensive. Another Asia destination seeing increased interest is Taipei, Taiwan.

Maryanov said that his agency is continuing to see strong demand for travel to China, as well as some interest in Tibet, Laos and Vietnam.

Looking at destinations in Africa and the Middle East, industry experts are noticing increasing awareness of travel to Turkey, as well as in Doha, Qatar,  Cape Verde and Tanzania in Africa.

Ultimately, wherever your clients decide to travel to next year, however, agents everywhere face the same challenge: to find unique and memorable travel experiences at a great value.  


Rates on The Rise
As occupancy increases and development slows, hotel pricing gets a boost
By Janeen Christoff

A number of recent surveys indicate that room rates are on the rise and that they will continue to increase into 2011, keeping value-seeking consumers, meeting planners and agents on their toes in the coming year.

In 2010, rates increased from 2009, as occupancy levels rose, according to Smith Travel Research, a company that tracks hotel data. A recent survey by the company found that overall hotel occupancy rose 5 percent for the year through August 2010. And, while room rates slipped about 1 percent on average, the last four months have shown a steady increase in rates over last year. Year-over-year international booked hotel rates decreased just 0.5 percent in comparison with 2009.

HotelPriceIndex.com (HPI), a website that follows hotel pricing, revealed similar findings. Its most recent index indicated that overall hotel prices around the world gradually started to rise for U.S. travelers during the second quarter of this year.

According to the survey, prices paid by travelers for hotel rooms in North America (the U.S. and Canada) rose 3 percent between the second quarter of 2009 and the second quarter 2010. The first quarter of 2010 was the first quarter in which prices in the region rose (year-over-year) since the end of 2007. The survey indicated that stronger demand, both from domestic and business travelers, has given hoteliers the confidence to hold prices and maybe start raising rates.

Prices for hotels in the Caribbean rose by 1 percent year-over-year in 2010, which is again the first signs of increasing rates since the end of 2007. Prices across Latin America rose by 3 percent in the second quarter of 2010 when looked at on a year-over-year basis. Prices paid by travelers for hotel rooms in Europe rose 1 percent between the second quarter of 2009 and the second quarter of 2010, and prices in Asia remained stable during the second quarter of this year.

According to an American Express Business Travel Survey, a slow-down in development and increased occupancy is leading to a boost in prices.

"Pricing power will swing back to air and hotel suppliers for the first time in two years in 2011 as more competition for limited seats on planes and increased occupancy levels at hotels are expected," said Christa Degnan Manning, director of Expert Insights and Research, American Express Business Travel.

The survey also revealed that hotel rates are expected to grow up to high single digits in 2011.

Increased Satisfaction
While rates began to rise, guest satisfaction also began to improve as noted in the J.D. Power and Associates 2010 North America Hotel Guest Satisfaction Index Study.

"Many hotel chains were able to sustain relatively high satisfaction levels during the previous 12 months, despite contending with revenue declines and cost pressures caused by the economic downturn," said Mark Schwartz, director of the global hospitality and travel practice at J.D. Power and Associates.

"As the industry recovers and guest volumes increase, it will be critical for hotel chains to focus on effectively managing and delivering consistently high levels of products and services."

Brands that ranked the highest in the survey included The Ritz-Carlton in the luxury category; Omni Hotels & Resorts in the upscale category; Hilton Garden Inn in the mid-scale full-service category; Drury Inn & Suites mid-scale limited service; Microtel Inns & Suites in the economy/budget category; and Homewood Suites in the extended-stay category.

The J.D. Power and Associates study also revealed the top-five must-have amenities according to hotel guests for a hotel. Ranking at the top this year were wireless Internet access; complimentary breakfast; bedding and pillow choices; pillow-top mattresses; and free parking. The study also showed that hotel properties have increased offerings of wireless Internet access during the past several years with 77 percent of guests in 2010 indicating that they have used Wi-Fi rather than cable Internet connections in their guestroom, compared with 55 percent in 2007.

"Trending indicates that guests are starting to expect wireless Internet access in their hotel rooms," said Schwartz. "In today's digitally connected world, being able to use mobile devices or computers without interruption is considered a comfort of home that should extend to the hotel experience."

Other notable findings in the J.D. Power Survey show that 87 percent of guests prefer a smoke-free environment and that awareness of green programs increased in 2010 with 68 percent of guests stating that they are aware of their hotelís conservation efforts compared with 66 percent in 2009.  


Cruise Lines, Agents Sail Into a Year of Promise
Improved booking volumes and pricing boosts hope for complete recovery
By Marilyn Green

Looking into 2011, we're seeing the best news in a long time: The cruise industry is reporting much stronger bookings, a wider booking window and stabilized higher pricing.

At the end of October, Royal Caribbean International reported a 55 percent earnings increase year over year for the third quarter. Current levels for 2011 indicate that yields are trending positively for all four quarters, and the company will set a new earnings per share record. Carnival Corporation saw earnings per share for the third quarter increase 22 percent over 2009, and the cruise line was just 3 percent shy of record third quarter profits.

Cumulative advance bookings for the remainder of the year and the first half of 2011 are coming in at higher prices. Norwegian Cruise Line's overall earnings for the third quarter of 2010 improved 21.4 percent and net yields rose 9.5 percent, a result of both improved passenger ticket pricing and increased onboard revenue. And Regent Seven Seas Cruises has said this is shaping to be the best year in company history.

Micky Arison, Carnival Corporation chairman and CEO, noted, "The booking environment has remained solid, and we expect revenue yields to continue to improve in 2011 and beyond as the economy regains its footing. Consumers continue to embrace vacations as a much needed escape from the rigors of daily life, while cruising remains an increasingly attractive option for those seeking greater value for their vacation dollars."

Agents agree that bookings and pricing are both up and steadying, but caution that they are not yet seeing a return to pre-recession results.

Cruise Market Watch, which monitors ocean-going cruise lines worldwide, projected that total worldwide passengers carried in 2010 will reach totals of 18.4 million, with 11.8 million coming from North America (CLIA's estimate is 14.3 million overall and 10.7 million from North America for its member lines), with growth around 6.5 percent.

In addition to new ships from familiar lines in the North American market, 2010 saw the entrance of Compagnie du Ponant, which is increasing its fleet again next year, both in numbers and in capacity per ship. According to Cruise Market Watch, in 2011 and 2012, 13 more new cruise ships will debut, adding $1.9 billion dollars in revenue to the cruise industry from an additional 1.3 million passengers. Next yearís new ships will include Carnival Magic (Carnival Cruise Lines), Disney Dream (Disney Cruise Line), Costa Favolosa (Costa Cruises), L'Austral (Ponant), MSC Meraviglia (MSC Cruises), Marina (Oceania), Silhouette (Celebrity) and AidaSol (AIDA, German market) and Seabourn Quest (Yachts of Seabourn).

The new ships are likely to continue the trend toward expanding name entertainment onboard and new stateroom designs, with different takes on spa cabins, lanai staterooms and solo staterooms.

Cruise deployment in 2011 is following high returns, with a record number of ships placed in Europe and the Middle East. Some of the largest increases come from Princess Cruises, with seven vessels sailing on 42 itineraries from Russia to the Greek isles; Carnival, with the new Carnival Magic in the Mediterranean out of Barcelona from May to October; Holland America Line with seven ships in the Baltic, the Mediterranean and Northern Europe, including the line's new Nieuw Amsterdam. Royal Caribbean will add two more ships to make a 10-ship European fleet, including Liberty of the Seas. The Disney Magic is sailing from Barcelona, NCL brings in the new Norwegian Epic to join the Sun and Jade and Oceania Cruises' new Marina will join Nautica and Insignia in Europe.

Analysts tend to be bullish longterm for the cruise industry, estimating that over time, the 45 percent of the target North American market of cruisers will rise to 70-80 percent.  


Airlines Are Optimistic
Integration is key in 2011
By Skye Mayring

While 2010 seemed to be the year for airline consolidation, with Southwest Airlines acquiring AirTran and United Airlines merging with Continental Airlines, next year will be one of integration and transition.

Jefferey A. Smisek, president and CEO of United Airlines, predicted that the full integration of United and Continental would take until the last quarter of 2011 or early 2012 for completion.

"For now, itís business as usual," Smisek wrote in a letter to customers on United's website after the merger closed.  

Nevertheless, it remains to be seen exactly how the mergers will affect the average consumer in 2011.

According to American Express Business Travel, consolidation activity, constrained capacity and higher demand will likely drive up the cost of airfare in 2011. American Express Business Travel, who tracks pricing for actual airfares paid by corporate travelers on the most popular business travel routes for domestic and international travel predicts that domestic or short-haul economy fares will increase by 2 to 8 percent and that international/long-haul business fares will increase by 3 to 10 percent next year.

These price predictions should not come as a surprise, however. Even in the first quarter of 2010, American Express Business Travel found that airfare prices had increased, with international airfare rising by 3 percent and domestic airfare rising by 6 percent.

Despite an increase in fees, overall customer satisfaction with airlines in North America has risen significantly, reversing three consecutive years of declines, according to the J.D. Power and Associates 2010 North America Airline Satisfaction Study. The study measures customer satisfaction based on performance in seven measures (cost and fees; flight crew; in-flight services; aircraft; boarding/deplaning/baggage; check-in; and reservation), ranking carriers in two segments, traditional network and low-cost carriers.

The study showed that 10 out of 12 North America airlines improved in customer satisfaction from 2009. Alaska Airlines ranked the highest in the traditional network segment for a third consecutive year, while JetBlue Airways ranked highest in the low-cost carrier segment for the fifth year in a row.

However, the "Mad As Hell About Hidden Fees" campaign, which drew national attention this fall, would appear to contradict these recent findings. The campaign culminated with a petition backed by 50,000 signatures; a letter signed by more than 300 travel management companies and travel associations; and a letter signed by seven U.S. senators, all of which urged for transparency of airline fees and charges associated with air travel before a ticket is purchased. The Department of Transportation is expected to issue a decision in the rulemaking in the spring of 2011.

"I don't doubt that people are unhappy about extra fees, but what we are seeing in our data is that there is a bit of capitulation but not to the extent that satisfaction has recovered to the level prior to when the extra fees rolled out," said Stuart Greif, vice president and general manager of the global travel and hospitality practice at J.D. Power and Associates. "In 2011, I think that we'll see more third-party players trying to shed light on the cost and fees of air travel. At some point, that transparency will probably create more consistency in the types of fees and the amount that airlines charge."

Greif also predicts that technology enablement, such as user-friendly apps and services through mobile devices, will continue to trend in 2011.

At present, some U.S. carriers allow clients to check in via their PDA or Web-enabled phone and use the mobile device to show their boarding passes to TSA Security agents and agents at the gate for scanning.  

Airlines are also working to meet the demand for in-flight wireless Internet access. Southwest, for one, has vowed to have 60 Wi-Fi-enabled aircraft by the end of 2010 and its entire fleet enabled by the end of 2012. This kind of technology enablement will likely become the new standard for carriers in the next few years, according to Grief.

"Just as flat-screen, high-definition televisions delivered a wow factor for the hotel industry at one time, today's innovation [in the skies] becomes tomorrow's expectation," said Grief.  


Tour Operators Look Forward To 2011
Operators pleased that travel is back and looking ahead to strong growth
By Kenneth Shapiro

At this same time last year, the mood among tour operators could safely be described as "gloomy." This year, responses are far more positive, ranging from relieved to ecstatic.

"I would say 2010 was a year when business came back. Not roaring back, but it came back in a surprisingly strong way," said Nico Zenner, president of Brendan Vacations.

Evan Chan, president of Ritz Tours agreed.

"I'd say that 2010 was a recovery year for all of us in the travel industry," said Chan. "We experienced good growth compared to 2009, which was a welcomed relief, but also a little disappointing in that it wasnít the percentage that I think we were all hoping for."

Marc Kazlauskas, president of Insight Vacations, was more upbeat.

"My headline for 2010 would be: 'Insight Vacations Boasts a Record Breaking Year!'" said Kazlauskas. "This year was nothing short of outstanding. We surpassed our best year ever by 1,000 passengers."

Overall, tour operators seemed simply pleased that travel was back.

"I can think of a few different headlines for 2010, but the one that's most fit to print would probably be 'Elastic Travel: It Always Bounces Back.' Referring to how resilient the packaged-travel market continues to be," said Steve Born, vice president of marketing, for the Globus Family of Brands.

As for what challenges are ahead in 2011, most tour operators agreed that airline issues are among their greatest worries.

"Airline capacity and rates are a big concern for 2011," said Frank Marini, vice president of sales for Collette Vacations. "Although as an industry we look at land and air separately, for a travel agentís customer itís about one total price."

Zenner was also concerned about rates.

"I'm concerned about a continuation of high airfares," he said. "At times, airfares are higher than the tour or land arrangements and that may make potential passengers think twice about going places."

Other tour operators are concerned about hotel capacity as well.

"The biggest challenge for 2011 will be to find space on flights and at hotels in Israel, Jordan and Egypt to meet the demand," said Ronen Paldi of Ya'lla Tours. "If what we see today for 2011 is a reflection of what's to come, we are going to face some problems and more difficulties clearing space for the requests."

Kazlauskas cited consumer perceptions as a concern.

"Our biggest issue has always been overcoming some of the stigmas associated with escorted touring," he said. "Once we are able to educate travel agents and their clients about touring, it becomes a fairly easy sale."

Chan sees increasing consumer confidence and providing value as his goal for 2011.

"Outside of buying a new car, taking a vacation may be the most expensive thing a family does in a calendar year," Chan said. "With our economy the way it is, people are understandably tightening their belts. When they do spend on a vacation, they are absolutely looking for value. It is incumbent upon us as an industry to provide our clients with value."

In terms of destinations to watch, many tour operators said they are expecting exotic countries such as Egypt, Dubai, Jordan, Morocco and Tunisia, to be hot next year.

"I think travelers are interested in these destinations because they offer something different and provide an element of adventure," Kazlauskas said. "Traveling to these more exotic destinations with an escorted tour operator adds another level of security for travelers."

But don't rule out perennial European favorites, including Italy, Ireland, Spain and the U.K., either.

"Already for 2011, we have some early indicators showing that our Europe momentum continues," said Born. "We're ending this year 60 percent over our 2009 Europe sales, and it appears that positive trend is continuing for 2011 bookings."

As for consumer travel trends, small-group travel that emphasizes unique experiences is expected to be a centerpiece of many tour itineraries next year.

"Experience and value, even if they pay more for it," is how Paldi put it.

Another trend will be focusing more attention on younger clients, according to Kazlauskas.

"I think we will see even more younger travelers than we have in the past few years," he said. "Ten years ago our average passenger age range was 60-75; now, our average age range is 45-75. I anticipate seeing even younger passengers due to the increase in multigenerational travel."
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