All the right reasons

Industry heads see lots of positives — but can those factors overcome consumers’ attitudes?


Robert Whitley
President
United States Tour Operators
Association (USTOA)

Lisa Simon
President
National Tour Association (NTA)

What are the implications of the Travel Promotion Act on your members’ businesses?

Simon: The Travel Promotion Act could benefit NTA’s inbound and receptive operators and all of its U.S. members who are attempting to get more business into the United States from around the world.

The passage of this legislation also may help to strengthen relations between our industry partners. For example, it could aid our work with China under the new MOU [memorandum of understanding]. We also are working with the Indian Tour Operators Association, the African Travel Association and the Caribbean Tourism Organization, and hope that promotion at a national level for travel and tourism would strengthen our collaborative efforts of promoting travel to the United States.

The Travel Promotion Act was one of the seven recommendations identified by 24 travel organizations at the end of last year. These recommendations were presented to President Obama as a way that travel can help boost the economy. Although the legislation is not perfect, Oxford Economics estimates that a program such as the Travel Promotion Act would attract 1.6 million new international visitors annually, create $4 billion in new visitor spending in the United States and generate $321 million in new federal tax revenue.

Whitley: We support the promotion of the United States abroad 110 percent, and we wholeheartedly support the concept [of the act]. It will benefit our members involved in the Visit USA program, and nearly every member that has domestic programs is involved. The only item that bothers us is a clause that says the board [created by the act] has the authority to a

Peter Pantuso ABA "It has been a long time in coming for this country to be represented on a global scale promoting one of its largest industries."

ssess the U.S. travel industry. If the travel industry doesn’t accept, it is a violation of federal law. The corporation may impose an annual assessment on members based on their aggregate share of international travel. You have a board of very big companies charged with getting the private sector to raise the other $100 million. That’s not a problem, but to say you must pay or go to jail is not something that sets well. Tour operators are small businesses.

Pantuso: Implications will be [that] as the tide rises, everybody benefits. While a lot of the focus is to get overseas visitors to come to the United States, a lot of those customers are motorcoach travelers who are very used to traveling by motorcoach in the various parts of the world where they live. It is certainly good for the motorcoach industry. They [foreign travelers] probably take more motorcoaches than anyone else on a percentage basis. During the interim, we have made sure we reach out to those entities who are accepting groups to make sure that when a motorcoach pulls into Kentucky or Ohio, or any other state, they are poised to welcome visitors. We have sent a letter to every governor saying we represent the biggest travel segment in the United States. We move more than 750 million people annually, more than the airlines, and we want you to know how important we feel tourism is to your state. All goes hand in hand.

It has been a long time in coming for this country to be represented on a global scale promoting one of its largest industries. We take our hats off to the entire industry that has been supporting this legislation and wants to see it go through once they have removed some of the tax burdens. The way it is written now, it allows this nonprofit corporation to go out and tax the industry for travel promotion. We think there are other ways to fund it without hitting the travel industry when it has gone through tough times.

Sutton: The act will support a significant increase in international travel to the United States. We have many members who are involved in inbound travel, and they would benefit significantly from the act. SYTA has signed on with a coalition of travel organizations in support of the act.

How has your association helped its members weather the economic slowdown?

Pantuso: We have tried to be a resource for them, not only educational, but a gathering point where they can get information and come together and exchange ideas, whether on an individual basis by calling the association or in a bigger environment at our annual marketplace. We have tried to add more educational opportunities to make sure members’ investments in the organization are returned in multiple ways. We have restructured to make sure every member knows whom to go to. Our next Insider newsletter will identify all staff and what their roles are. We make sure we are out there talking with all members and let them know what resources are available.

Whitley: We have increased our public relations activities. I have been doing a lot of radio talk shows and will be doing TV talk shows, saying now is the best time to travel, the price is right, even with the recession. You almost can’t afford not to, it is such a good deal. I give examples of how the industry is working together to make Americans’ travel dreams come true. It is much cheaper than before. I got a good response from the radio talk shows. They asked for examples. I said you can go for a week to Italy, including air, for $1,049, and for $800 or so, go to Australia. We just sent a press release encouraging Americans to travel.

Sutton: The student travel industry is one of the fastest-growing segments in the travel industry and has not seen the stagnation other market niches have seen. Our organization provides programs that focus on the bottom line and help operators be more strategic and efficient during the slowdown. We also look at additional areas for them to grow business. At our conference in August, we had several speakers from the industry, including Peter Pantuso and Roger Dow [president of the U.S. Travel Association], who talked specifically about the student market segment, how it is growing and how it is managing to continue to grow in a down economy. SYTA University has several sessions to help operators better understand their business and give them tools to manage their business better during recessions and to implement strategies to improve the bottom line.

Bob Whitley USTOA "I have been doing a lot of radio talk shows and will be doing TV talk shows, saying now is the best time to travel, the price is right, even with the recession."

Simon: We know that now more than ever, our members need access to relevant, affordable, quick and easy-to-use business tools. Here is a quick look at some of the things we have done to help members weather the current economic challenges:

    • We’ve taken steps to make Convention ’09 as affordable as possible by offering a number of cost-saving incentives, as well as hotel rates as low as $54 for operators and $58 for suppliers and DMOs. We also kept registration fees at 2008 rates if our members register by our early-bird deadline. Earlier this year, NTA reduced its dues by 15 percent across the board.

    •We created a financial toolkit on our Web site with relevant research and articles, and we created new “How Tos” that are quick resources for members to learn how to use tools that could benefit their business. Guides include how to use social media tools such as Facebook, which is a free way to stretch their marketing dollars. 

     • We offer opportunities for them to talk to each other. That’s one of the primary reasons professionals join an association like NTA — to learn from one another. We have roundtables and table topic discussions at our events, and we offer programs such as our Think Tank, which is NTA’s financial benchmarking group. This program allows tour companies to learn from each other ways to run a more efficient, moneymaking company.

     • NTA’s Corporate Partners offer programs and discounts that can save members money on items such as insurance, credit card processing, shipping and office supplies. We’ve just recently added American Express, ADP and Angstrom Graphics as partners who will help members with credit cards, payroll services, and printing and publishing — three really important areas to businesses.

     • NTA also has been working closely with Dr. Peter Tarlow of Tourism & More, an expert in tourism and economic development. He was at the Spring Meet to give a seminar and meet privately with delegates, and he’ll also be with us in Reno for our upcoming convention. He provides great advice to our members, so we asked him to share his perspective with us in a three-part series that ran in Courier magazine called  “Prospering in Economically Challenging Times.”

     • We also are helping members reach new markets through our strategic partnerships. This year’s convention will give members access to the faith-based market, as NTA will colocate with the World Religious Travel Association Expo. Additionally, NTA has relationships with the following organizations: American Tourism Society, Destination Marketing Association International, International Gay and Lesbian Travel Association, Jordan Inbound Tour Operator Association, National Association of Career Travel Agents, Sister Cities International, Sustainable Travel International, Travel Professionals of Color and the United Motorcoach Association. We’re also in final discussions about our new partnerships with the Africa Travel Association and the Indian Association of Tour Operators.

Will anything about your segment of the industry change permanently as a result of the recession?

Whitley: The biggest change — which has happened in the past, after 2001, for example, but not at the volume it has happened now — is consumers are buying price, not brand. They used to buy brand, but brand loyalty is no longer the major, major factor it was. And they are booking later. They decide two weeks before; it used to be six months. Those are the two big things. They may not be permanent, but they will be long term. It makes it difficult for tour operators, with their inventory, to handle.

Sutton: Student travel is changing more in social media, with more access to and communication with international and domestic groups through Facebook, YouTube and others. Our foundation is exploring the use of these tools. Change is not so much [caused] by the pocketbook. Students still see travel as a rite of passage, even during this economy. It is cost effective, but not necessarily as a result of the recession; it would have been changing anyway. The student industry is very different. Our members have learned to work an evolving, more culturally aware and technologically in-tune student base.

Simon: There are some positive things that have resulted from the recession. It has caused travel professionals to work smarter in many ways. Some are working more efficiently by partnering together, and I expect that trend to continue even after the economy rebounds. And, in fact, it’s really not a trend anymore; it’s a smart way of doing business and effectively meeting your customers’ needs.

We’ve seen travel professionals reaching out to new and different markets, trying new products and making connections with people they’d never considered before. Diversifying their business lines will surely aid some companies in becoming stronger in the end. They’ve realized they really need to diversify their product to attract a diverse audience and not put all their eggs in one basket. That’s dangerous; if the market goes south, you are gone.

Pantuso: In many ways, the challenging economic times bode very well for the motorcoach segment of the industry. One thing we see is people looking for alternative ways to travel. They are looking for value in the travel experience. The last couple of years, we have seen a module shift as airlines get very expensive and are pulling out of some markets. We certainly are seeing an across-the-board downturn in travel, and some of our members are experiencing a lot of challenges. By the same token, group travel, and the motorcoach portion in many locations, remains the mainstay of business. I just got back from the Southeast, where many members said coaches are more important now. With individual travelers holding back, the group piece is a more important segment.

Everyone is adjusting pricing, and when you begin, it has a long-range impact. A customer who comes back next week and it is different wants to know why they didn’t get the same discount. The impact is longer than just a short period of time.

Another thing we are seeing members across the board doing is looking for new and different customers. We are seeing a lot more sports teams as the industry has gone out and cultivated that group. They are being reached out to and touched by operators, travel members, CVBs. Everybody is looking for new customers and how to serve them. We see communities that are focused on soccer, baseball or other sports at the high-school and local level attracting tournaments that are regional or statewide, reaching out there to find these new markets. It is a tremendous new market that may not have existed for a community a few years ago.

How is your association using social networking?

Sutton: The SYTA Youth Foundation has a YouTube channel and collects videos of kids during their travel experiences and will soon begin to post them on our foundation YouTube and Facebook pages. They use it to attract kids who want to travel and apply for scholarships. Some of our members are using blogs, and some Twitter. Some of our members are very technologically savvy and are using a wide array of options. Students are into that stuff, social media and all new things out there, and our members are responding to that.

Claudia Sutton SYTA "The student travel industry is one of the fastest growing segments in the travel industry and has not seen the stagnation other market niches have seen.

Simon: NTA began focusing on social media earlier this year. We have a presence on Facebook and LinkedIn, and a blog written by NTA Convention ’09 chairwoman Suzanne Slavitter. We are using these tools to help build the NTA community and foster conversations, as well as to share association and industry news. Through the interactive communication that social media allows, we are enabling those who are passionate and knowledgeable to talk about the organization and share information that will help all members be better travel professionals.

Many members are like NTA in that they are just getting into the social media arena. We have created “how to” documents to help them learn about these tools and how they can use them in their own business. There also will be a session at our convention in Reno this year.

Pantuso: We are using Facebook, LinkedIn, putting messages out to our members, letting them know new activities going on or new programs available here. The Marketplace team, when housing opened up, put it out to folks on Facebook. Even I have a Facebook account; I couldn’t have imagined that six months ago. Many members use it as a communication vehicle. It’s not uncommon for me to get messages late at night. It really is becoming an additional way of communicating, not necessarily replacing existing methods, but adding to them.

Whitley: We just signed up for Twitter; we are now twittering. I will talk about meetings I attend around the world, what I discover in my travels. The organization will post its meetings and events and functions on there.

What is the single biggest trend affecting your segment of the group travel industry?

Simon: I have certainly noticed what I would call a change in the way members are doing business. The travel industry is more flexible and looking for every possible way to be creative, innovative, and to work efficiently. This can mean different things to different operators — from more flexible schedules, customized itineraries and activities to partnering with other operators to be cost efficient and price competitive. Operators are diversifying their products and seeking out new markets. Many operators are changing their business models to match the way people buy travel and how they want to travel.

Pantuso: I am hearing over and over again, from nine out of 10 operators, that their charter business is up this year and last year. I am hearing from some that their tour business is down or flat, but their charter business is up. They are seeing corporations coming to charter, individuals and groups, families. The biggest trend I see on that segment is that growth in charter travel. It also has implications on the travel side: How do you garner that piece of business? It will have an impact on how travel partners sell and market themselves.

Another trend is making  a trip an individualized experience. You take a group of 55 people and make it feel like individualized trips. My hat’s off to the cruise industry. On a large vessel, you are made to feel like an individual trip: You pick your rooms, meals, what to do at various destinations. We are seeing more and more operators capitalize on that trend. An operator in Indiana recently told me he has a New York trip where rather than having everyone go to the same shows and meals, he gives dining options and a choice of shows. I have even seen operators give a choice of hotels. The more choices you can give, the broader the experience you can offer customers. It’s like fishing with a big net instead of a hook. We are seeing more operators casting a net wider and making customers feel they have choice. Everyone wants to pick and choose. It’s a huge trend.

Lisa Simon NTA "More operators are customizing as compared to having prescheduled departures.

Whitley: Americans have gotten more sophisticated than they used to be. They travel more and prefer to see an area more in depth than just drive by. They want more leisure time to really soak up the atmosphere. They want to be “site doing” instead of “site seeing”; they want to walk through a village and meet the people; instead of riding by Mount Fuji, they want to get off and walk up it.

Sutton: What we are seeing right now and what our members are telling us, there is increased interest in international travel. We have had an international committee for the last three to four years. There is more and more emphasis on that segment. More domestic tour operators are interested in getting involved in outbound. Kids still want to go to Washington, New York, Orlando, etc., but also to different places: Eastern Europe, China, Russia, Canada, Mexico, Central America, South America. The Internet has helped them expand beyond the boundaries of the United States.

What I am told, talking to our members, is kids are also more interested in the environment, in helping other people after something like Hurricane Katrina, more interested in opportunities to do good things and help other people. The locations they want to go to are shifting.

How does your association define a group today versus how it would have defined a group a decade ago?

Pantuso: As I look back, a group was very much homogenous, maybe all seniors or all students, most doing the same things. Now groups are very divergent. We see so many combinations on the same trip — young people with grandparents; multigenerational; seniors, millennials and boomers together — and no connection with one another. It’s amazing. Divergent groups come together, sometimes all interested in the same product, maybe bird watching or soccer. Even though they come together as a group of 55, since all have a unique interest, you have to treat them individually.

The size [of a group] depends on product availability and the ability to offer choice. Last-minute bookings can have an impact on the size of a group and whether a trip runs. Operators say they had to cancel four weeks out, but two days before the trip would have run, they had 40 people who would have gone.

Whitley: A group is a group, but the program is set up differently today than it used to be. It is based on the desires of the participants. It depends on the operators, depends on the costs and the profit margin in it. There are so many variables, but the average size is around 36.

Sutton: A decade ago, it might have been the senior trip and probably the trip to the capital. Today, groups have become more highly specialized, there are more cheerleading camps, dance camps and soccer camps, different-type sports camps, etc.

Simon: It was a decade ago, in 1998, that NTA removed the term “group travel” from its mission statement and changed it to “packaged travel.” This change in terminology signified that NTA recognized traveler trends and how they wanted to travel, and “packaged travel” better characterized the diverse product represented in the NTA membership.

A decade ago was also pre-9/11. Since that time, we’ve seen group sizes shrink. This may be attributed to the popularity of customized trips and tour operators being more flexible with their customers. More operators are customizing as compared to having prescheduled departures.

And related to this, 10 years ago, when a group traveled together, they were together from sunup to sundown. As our society has grown more independent and as new generations are traveling, we’ve become more independent, and we enjoy our flexibility. With that in mind, a group may not always cling together — operators build in opportunities to break from the pack so customers can have the best of both worlds: an individual experience and the camaraderie of a group.

I am not sure a line exists where you go any smaller. It’s your choice as a business. From what I hear, a lot of suppliers say [group] benefits are still only for groups of 20 to 40, but some people are often running groups of 15 and are able to get benefits from the supplier. When you get smaller than that, what operators are having to do, and many [are] choosing to do so, is take those smaller groups, customize the trip and make it somehow profitable.