Germans still coming to U.S., but not as much

by Tom Johansmeyer on

German bookings to the United States were strong through the end of last year, even as overall action from outside the country dipped in the fourth quarter. Data from the U.S. Department of Commerce shows that nearly 1.8 million Germans came across the Atlantic Ocean, an increase of 17 percent from 2007.

Fourth quarter arrivals from German last year reached 420,285, a gain of more than 9 percent from the same period in 2007. In October alone, 177,167 German tourists came to the United States – up 16 percent from October 2007. The pace slowed in November and December, which were up only 5 percent and 2 percent year-over-year.

And, 2009 looks good.

More than 20 percent of tour operators in Germany have reported that bookings to the United States for the first quarter of 2009 are likely to be consistent with the same period in 2008. Another 43 percent expect increases.

Of course, German travel isn’t recession-proof. The second quarter looks less favorable, with bookings down from 2007. Nearly 64 percent of German tour operators expect the pace to slow.

Record foreign travel spending in 2008, unlikely to continue

by Tom Johansmeyer on

Records were broken last year. International visitors to the United States spent $142.1 billion on travel and tourism-related activities (including traveling to and within the country), according to preliminary U.S. Department of Commerce statistics. This is up 16 percent from 2007 – which was a record-setting year, as well.

Visitors spent $110.5 billion on travel and tourism-related goods and services in 2008, a 14 percent increase year-over-year. This includes food, lodging, recreation, gifts and entertainment. They spent another $31.6 billion on travel using U.S. carriers and vessel operators, a 24 percent spike from 2007.

Last year’s success was driven largely by spending early in the year, as international visitors to the United States took advantage of a weak U.S. dollar and generally robust financial conditions. Toward the end of 2008, of course, market conditions turned, setting the tone for 2009. In the fourth quarter, travel and tourism spending by international visitors fell 10 percent, and preliminary data for the beginning of this year indicates a tough market to come (which isn’t exactly a secret).

Travel and tourism spending by visitors from outside the country accounted for 8 percent of all U.S. exports last year – not to mention 26 percent of services exports. This makes travel and tourism the country’s top services export. Travel and tourism exports grew faster than imports y a ratio of 2:1 in 2008 and constituted more than 20 percent of the total U.S. services sector trade surplus.

Spending by visitors from the United Kingdom and Canada grew most in hard dollar terms ($2.5 billion each), followed by Germany ($1.3 billion), France ($1.2 billion) and Italy ($1 billion). In percentage terms, Italy and France led the world, with its visitors spending 38 percent more in 2008 than in 2007. Argentina, the Netherlands and China turned in solid increases, as well – 32 percent, 32 percent and 31 percent, respectively. Of all the countries reported, only Argentina, Hong Kong, Japan, South Africa and Taiwan did not set visitor spending records.

The top five international markets for U.S. travel and tourism exports were: Canada at $18.7 billion, United Kingdom at $17.5 billion, Japan at $15.1 billion and Germany at $6.5 billion.

The trend is likely to come to a close this year, given the pressure of a worldwide financial crisis and the resurgence of the U.S. dollar. The travel industry is expected to shed more than 200,000 jobs in the United States this year, and the many travel deals available tell the rest of the story.

Buckle up; it’s going to be a rough year for the travel industry.

US Airways goal: survival

by Tom Johansmeyer on

US Airways offers a story of aimlessness searching for an identity. Its attempts to go low-cost in 2005 never panned not, nor did its hopes of being a global heavyweight two years later. Now, it sits uncomfortably in the middle and has the unfortunate goal of survival.

The CEO, Doug Parker, of course, has all the answers. He blames the industry analysts for making too much of the company’s woes … particularly as it has been able to squeeze an extra $160 million a year out of passengers – with 10 percent fewer seats – by implementing popular measures such as charging fees for preferred seats and checking luggage. Because of this, US Airways could turn a profit “even with a 15 percent drop in revenue this year.”

Fun!

Reasons for optimism must be balanced against, well, reality. Over the past two years, the airline has amped up its customer service. Why? It had nowhere else to go, ranking rock bottom (or close to it) on such trivial matters as on-time arrivals, customer complaints and mishandled bags. Nonetheless, progress is good!

Unfortunately, Wall Street‘s concerns aren’t dismissed with a $5 voucher for the food court and promises of a first class upgrade. After all, these are the same disgruntled passengers dismayed at having to pay for the “good” seats.

The company raised (and ostensibly burned through) $700 million it raised in credit markets in the fourth quarter of last year. While other airline stocks dropped an average of 70 percent, US Airways’ share price plummeted 93 percent.

If you invested $100 in this airline last year, you’d have $7 today. If you bought $100 in beer last year, you’d have: $100 in beer, a hell of a hangover and probably $7 from the deposits on the cans.

Which way would you go?

Traveler sentiment up … reality not told about it

by Tom Johansmeyer on

In February, the U.S. Traveler Sentiment IndexTM climbed to 90.2 from 78.2 in October 2008. An increased in the perceived “affordability of travel” is the driver of this trend. Since travel companies are desperate to fill seats and guestrooms, potential travelers are showing a bit more optimism.

The index, which is part of the travelhorizonsTM survey conducted by Ypartnership gauges traveler sentiment and is benchmarked at 100 with a starting date of March 2007. It is derived from six statistical measures.

“We are very encouraged that more people are signaling a willingness to travel for leisure purposes,” said Peter C. Yesawich, chairman of Ypartnership. “This is the first increase we have observed in the Index since January 2008, which indicates that the discounts travel providers and destinations are offering are working to attract more travelers, even in this down economy. As it turns out, this is actually a terrific time to travel because some of these great deals are sure to disappear once the industry begins to recover.”

Yet, the outlook is far from positive. The U.S. Travel Association expects a 5.6 percent drop in business travel this year – revised downward from an initial estimate of 3.5 percent. And, the reason for the increase in traveler sentiment – aggressive price-cutting – isn’t sustainable.

Obama listens to travel industry gripes

by Tom Johansmeyer on

Leaders from across the travel industry met with President Barack Obama today to discuss … not a bailout. It’s no secret that luxury suffers when times are tough, and for many, any form of travel is not essential. Delta is cutting capacity, and the industry as a whole is getting ready to shed more than 200,000 jobs this year.

So, what is an industry of “frivolity” worth to our economy? A whopping $740 billion in annual spending … which fuels 7.7 million American jobs.

Travel is more important to us than we may realize. Sure, it provides some recreation and allows face-to-face business meetings. But, it also keeps the goods on grocery store shelves turning over, as each travel industry employee puts food on the table.

Unlike many corners of the economic world, this group of travel executives approached the president with a solution. They believe we need to bring more international visitors to the United States (a tough proposition with the recent turn in the U.S. dollar’s fortune) and do something to stem the downturn in meetings and events.

Roger Dow, President and CEO of the U.S. Travel Association, says, “We are pleased that President Obama recognizes the power of travel to strengthen America’s economy.” He continues, “The travel community has an ally in President Obama and we appreciate the leadership he intends to bring to increasing travel to, and within, the United States.”

Of course, no exec would give up a chance to lobby the man in the Oval Office. The travel industry pushed for the passage of the Travel Promotion Act, which would yield the first U.S. marketing campaign targeted at growing the number of international visitors. Smart idea … as the average foreign visitor drops $4,000 inside our borders per visit.

Okay, it’s kind of a bailout. But, at least it comes with a plan. The executives at the meeting are listed after the jump.

  • Roger Dow, President & CEO, U.S. Travel Association
  • Jonathan M. Tisch, Chairman and CEO, Loews Hotels; Chairman Emeritus, U.S. Travel Association
  • Jim Abrahamson, President, the Americas, IHG
  • Jim Atchison, President and COO, Busch Entertainment Corp.
  • Jeff Clarke, CEO and President, Travelport
  • Howard Frank, Vice Chairman and COO, Carnival Corporation & plc
  • Barney Harford, President and CEO, Orbitz Worldwide
  • W. Stephen Maritz, Chairman and CEO, Maritz Holdings Inc.
  • Bill Marriott, Chairman and CEO, Marriott International, Inc.
  • Jay Rasulo, Chairman, Walt Disney Parks and Resorts
  • Colin Reed, Chairman and CEO, Gaylord Entertainment
  • Frits van Paasschen, President, CEO and Director, Starwood Hotels and Resorts
  • Tom Williams, Chairman and CEO, Universal Parks and Resorts