The rumblings began in 2007, when large national banks began to feel the impact of bad mortgages on their bottom lines. By fall of 2008, the banking industry found itself in a freefall, dragging the stock market, the job market and the rest of the global economy along for the ride.
The following years, which have come to be known as the Great Recession, challenged most every sector of American business, including travel and tourism.
Today, things seem to be looking up for the tourism industry. After sluggish sales in 2009 and 2010, tour operators are reporting increased bookings for this year and next. Hotel and cruise rates are on the rise again, and airlines have found a way to fill seats and offset volatile fuel price fluctuations.
As the smoke clears and economic recovery picks up steam, travel and tourism professionals are beginning to see the long-term impact of the recession.
We talked with a number of tour operators and destination marketers to find out about the lasting legacy of the economy’s troubles. It may be impossible to narrowly identify causes and effects, since the economic events took place alongside technological shifts and demographic changes that also affected the way people travel.
But taken as a whole, the events of the past few years have created a number of new phenomena that are influencing the group travel business.
Value is more valuable
Although the recession didn’t bring leisure travel to a grinding halt, it did change how American travelers perceive and shop for value.
“Americans are amazingly resilient, and they continued to travel all the way through the recession,” said Brian Hall, chief marketing officer for the St. Louis Convention and Visitors Commission. “What we saw was segment shifting: When business travel fell, leisure travelers were able to buy a lot more hotel for their dollar. People were buying a more luxurious vacation for the same amount of money or spending less money for a comparable vacation.”
In destinations that serve predominantly leisure travelers, hotels, cruise lines and tour operators had to lower their rates during the recession in order to attract visitors. As a result, travelers began to search for discounts and value, not just in the basic package components such as hotel rooms and transportation, but also in sightseeing and activities.
Dee Dee Kay is sales manager for CIRI Alaska, a company whose tourism products include lodges, sightseeing cruises and Alaska Heritage Tours. She saw a value-conscious attitude affect how people booked their Alaskan vacations in recent years.
“Since 2008, it’s all about value and specials,” she said. “People started buying much differently. They wanted to feel like they got a good deal, even if they’re paying the same rate. We had group leaders calling the ‘flightseeing’ companies in Talkeetna and saying, ‘I’ve got six people, and this is what I’ll pay you to take us up on a flight.’ Now, people have gotten used to getting a value.”
Travelers grew accustomed to getting discounts on lodging or cruise berths, Kay said, and are now more willing to shop different providers instead of buying a package at a single price.
Travelers who had money but were nervous about the state of the economy also found value by looking to destinations closer to home.
“In the recession, when people had money, they were afraid to spend it,” said Alisa Bailey, president and CEO of Virginia Tourism Corp. “They were watching the news every day and didn’t know what would happen.
“So people started getting away for weekends. It’s not very expensive to travel to most places in Virginia, and we’re so close to so much of the U.S. population, so we’ll probably benefit in the long run.”
World at their fingertips
On the hunt for value, American travelers are taking advantage of new technologies and social networks to help make their vacation decisions. Having abundant destination information available at the click of a mouse changes how destinations and tour operators market themselves.
“The way that people receive information has been an obvious shift in tourism,” Bailey said. “Communication channels have continued to rapidly increase. People are using social media and all these other devices. Social media is something that every DMO [destination marketing organization] struggles to keep up with.”
Because of the fast-paced growth of social networks, consumers can read reviews on destinations and products written by their peers. Websites such as Trip Advisor make it easy to find positive and negative reviews on most any hotel or tour company; and in recent years, these sites became an essential stop on most travelers’ research rounds.
“People are doing a lot of research on the Internet before they pick up a phone or go to a group leader,” Kay said. “People go to those sites, and they look at what people blog about. They don’t want to make their decision just from a glossy ad; they want to hear what other people are saying.”
With so much information and buying power available online, consumers have a new level of power and independence in travel transactions that aids them in their quest for value.
“We’re in the decade of ‘in me I trust,’” Hall said. “People are shoppers, and they have information like they’ve never had before, presented to them in a way that allows them to compare, negotiate and make the best decision. It’s a major transformation that’s been brought about through the Internet.”
‘Groups are being redefined’
At the same time that the recession began changing economic aspects of travel, demographic trends began reworking the traditional idea of what constitutes a group and what those groups do when they’re on the road.
Susan Damon, president of Nomad Adventures, said the smaller groups and more personalized travel experiences that came with the economic downturn are likely here to stay.
“I think the biggest lasting change is that the days of having coaches between 40 and 50 people filled by one preformed group are gone,” she said. “A lot of us are basing our prices on 15 people now. It’s a smaller, more intimate experience and a different type of touring.
“Part of it is the economy, but I also think it’s just the way people like to travel. Instead of wanting to travel in packs and driving through a national park, they want to get off the bus, feel the rocks and really see the trees.
“They want to help paint picnic tables in the national parks. They want to be a part of travel, to wake up and know where they are each morning.”
As groups are getting smaller, Damon is encouraging her group leaders to consider combining trips with groups from other parts of the country so that they can fill a coach at an economical price. Familiarization tours, she said, help group leaders form relationships and get used to the idea of traveling together.
In Alaska, Kay has seen group sizes shrink, and the makeup of groups has changed.
“The size of tours is changing,” she said. “Boomers don’t mind getting on a motorcoach, but now I see a lot more 15- or 30-passenger vehicles. And we’re seeing many more groups travel as families. We see many more kids in all of our products. I think that intergenerational travel has become much more dominant.”
Families are also working their way into the group tourism mix in Virginia.
“People used to save up for two to three years, then go on a big vacation,” Bailey said. “We’re seeing that now; with people being very time poor, they’re using travel to reconnect with family and friends. Groups are being redefined — it’s no longer just seniors getting on a motorcoach.”
Customer service is king
In some ways, tourism has always been a service-driven industry. But now, with price competition and information availability at an all-time high, travel providers are finding ways to differentiate themselves through communication and customer service.
“There are more levels of communication and different channels that we have to keep up after,” Bailey said. “The customer service has to be much greater because people can immediately tell millions of others whether they had a good or bad time.
“We need to empower all levels of tourism employees in customer service because word of mouth is more powerful than it’s ever been.”
Once they reach customers and convince them to buy a product, travel providers also need to provide an experience that matches or exceeds expectations. Kay said that despite everything that has happened in the economy, CIRI Alaska has been able to market expensive products based on the consistency of customer experiences.
“What drives people coming to these products is their quality and consistency,” she said. “People want to feel like they’re getting a good product, but consistency of service is huge, and it has to be a real experience.
“People are looking at what other people write because they want to figure out what the real experience is.”