2005: A Look Ahead

It’s official. All that pent-up demand fueling the travel industry in 2004 has positively exploded.

By: Andréa R. Vaucher

It’s official. All that pent-up demand fueling the travel industry in 2004 has positively exploded. Whether it’s ASTA president Kathy Sudeikis crossing her fingers and announcing “we’re all cautiously optimistic,” Nancy Novogrod, Travel + Leisure editor-in-chief, saying “the sense of adventure seems to have returned,” or Carnival Cruise Lines V.P., Terry Thornton, proclaiming, “it’ll be a boom year, one of the best ever in the business,” industry voices are raising their glasses and declaring in unison that 2005 is shaping up to be a banner year.

So as 2004 draws to a close, get out the firecrackers and uncork the champagne it looks like our industry has something to celebrate. What follows here and on the pages to come is a general consensus of the experts we interviewed on some issues to watch in 2005.

The Airlines: The big question mark on everyone’s mind for next year? The airlines. According to Joe Brancatelli, a business travel expert, the major carriers are “going to have to commit to an understandable service proposition that gives customers a reason to pay more, because they’ll never get their costs down enough to compete on price with the low-fare guys.”

At least, according to our experts, the sky-high oil prices of 2004 will come back to earth a bit next year.

Consumer Trends: Robert Whitley, USTOA president, believes people will opt to get off the beaten track in 2005, with even older tourists wanting more soft adventure and flexibility in their itineraries. While CrossSphere chairman, Ann Thomas sees clients continuing their post-Sept. 11 pattern of taking several short trips throughout the year instead of one major holiday.

No matter where your clients vacation, or for how long, next year they’ll want to experience a destination rather than just see it. Whitley called this “sight-doing, rather than sightseeing.”

In addition, clients will be looking for simplicity in 2005, Brancatelli predicted, and they’ll be looking for value.

“People are doing things to couch against the exchange rate,” said Audrey Hendley, AMEX Consumer Travel Network marketing vice president, such as booking packages with all-inclusive options and purchasing currency in advance.

In the luxury market, clients will “look to be the first on their block,” said Sudeikis. And solitude is still the most precious commodity for upscale clients, with ownership alternatives from jets to villas more popular.

Emerging Destinations: Travelers are heading to places like South America, according to Virtuoso agent Jerry Greenberg, where “the U.S. dollar will go the furthest in 2005.” Novogrod predicted clients will pick destinations like Chile and, closer to home, colonial Mexican towns. Sudeikis noted people are “talking about India like crazy,” and many others agree.

But don’t count Europe out just yet. Despite the strong euro, many of our experts claimed it will remain a popular destination, especially for cruise customers taking advantage of all-inclusive savings.

Cruising: With only five new ships setting sail in 2005, the cruise business will maintain “close to 100 percent capacity,” predicted CLIA vice president, Robert Sharak, with people cruising to places they might not fly to. Look for ships to once again sail the Red Sea and Persian Gulf. On the other hand, according to Sharak, they will also use the North American home ports more. Hotels: Overall, hotel rooms won’t increase in number, according to Joe MacInerney, president of the American Hotel and Lodging Association, as many stately hotels, such as The Plaza in New York City, convert to condos. As space gets tighter, clients will need to book further in advance. “Hotels in the mid-range will gain because business travelers crave consistency,” noted Brancatelli. “And the luxury brands, if they don’t price themselves out of the market, will further rebound in upscale business travel.”

Technology: In the technology sector, according to Steve Hafner, Kayak CEO and cofounder, 2005 will be the year, “where the dichotomy between search and fulfillment will become evident.” Sites will be faster and offer more packaging and personalization functions.

Quotes from Industry Leaders

“Booking late is not going to fly. People are going to have to plan ahead. Agents need to be proactive, get in touch with their clients and tell them that.”
Kathryn Sudeikis,

“In 2005, the outbound market in Asia will grow. With Visa sponsoring the Beijing Olympics, the amount of Visa cardholders in China is definitely going to increase. Travel agents will need to find ways to work with this two-way tourism.”
James Ferguson,
North American Director,

“In 2005 there will be more diversity in home ports and a lot more products for people to take advantage of in North America. Also, a lot of ships are heading to Europe for 2005 this is the first time Carnival will be sailing in the Mediterranean.”
Terry Thornton,
V.P. Marketing Planning,
Carnival Cruise Lines

“South America is really hot. That’s the place the U.S. dollar will go the farthest in 2005. Buenos Aires. Patagonia. Peru. The Galapagos. At the Llao Llao in Argentina, a round of golf is $25 and massages are $30. It’s like being in the Swiss Alps at one-fifth the price.”
Jerry Greenberg,
Baldwin Travel (a Division of Cassis Travel Services)
Beverly Hills, Calif.

“Over the past few years there has been a lot of cocooning and we’ll definitely see that extending to vacations. People will be traveling with their families and extended families.”
Robert Sharak,
Executive VP and Chief Marketing Officer

“People are looking for access to see something no one else in their circle has seen. For authenticity to experience places that are memorable and real, not just packaged for tourists. For release through relaxation, privacy and fewer hassles which, given the airline issues, may remain elusive.”
Nancy Novogrod,
Travel + Leisure

“What I see most is diversity. Even our most traditional tour operators, those who had done motorcoach tours, will be looking into new markets. Tour operators will be doing what they can to get the special services out to whatever market requests them.”
Ann Thomas, Chairman

“People are looking for simplicity. Simplicity in pricing. Simplicity in security protocols. Simplicity in booking. Simplicity in the entire experience. Both business and leisure travelers know the actual process of getting from one place to another is not the fun part of travel. The journey is not part of the adventure anymore. It’s one of the impediments to having a travel adventure.”
Joe Brancatelli,

“People will be doing sight-doing rather than sightseeing. They’ve done the multi-capital cities of Europe and now want to see countries in depth. They want to experience cultures more, talk a walking tour through an Irish village.”
Robert Whitley,

“Even before Sept. 11, people were redefining travel and looking for more than just basking in the sun or cramming in a week of activities. In 2005, this trend will continue with travelers looking for journeys that give them both an inner experience and an outer one.”
Helen Tomei,
Sacred Earth Journeys

“Travelers want to find out more about the world in which we live, so there’s a greater thirst for knowledge about the places passengers are visiting and less focus on dining and on-board activities.”
Andrew Magowan,
Sales Director
Swan Hellenic Cruise

“One of the things that’s going to happen is the continual evolution of offline behavior marrying with online behavior. People will use the sites to do research and then go out and buy their ticket somewhere else.”
Steve Hafner,
CEO and cofounder

“Health and wellness will continue to influence the more seasoned traveler. For those with unlimited budgets, solitude is the world’s most valuable commodity.”
Ted Carter,
Prof. Hospitality & Tourism
University of Bangkok

“People are traveling. They’re buying up, they’re buying luxury, they’re traveling to expensive destinations.”
David Morris,
Senior V.P.
Silversea Cruises


Emerging Destinations for 2005

South America
Cruising Europe
Colonial Mexico

Nine forces that will influence tourism for the next five years:

- Growing wealth in new markets will drive tourism.
- Demographic shifts will change the nature of travel.
- Travel facilitation will lead to shifts in market share.
- More travel promotions will be based on public-private sector partnerships.
- Communications will stimulate increased travel demand.
- Internet access will place consumers in control.
- Terrorism and its influence on tourism will decline.
- “Life-Enhancement” will grow as a travel motivator.
- Competition will intensify.

William S. Norman, President and CEO Travel Industry Association of America