Travel to Spain suffering

by Tom Johansmeyer on

It really is a shame: summer travel to Spain is off 6.1 percent this year, as the global economic decline is making the decision to travel tougher for everyone. The country’s Tourism Ministry puts the number of July arrivals at just over 6.6 million. For the entire year (through the end of July), arrivals fell 10.3 percent to 30.2 million visitors. This follows a record 33.6 million for the same period in 2008.

Spain has historically been one of the world’s top three tourist destination in terms of both the number of people arriving and income earned from them; France and the United States are the other two. So, a substantial year-over-year decline is likely to be felt.

Every part of Spain saw arrivals fell except Madrid, where arrivals increased by 6.6 percent. Andalucia saw visits drop by 11 percent, though Valencia had an easier time. Of the regions with falling arrivals, it had the lowest at only 0.4 percent.

Most of Spain’s tourist traffic came from Britain, which sent 1.6 million visitors to the country. France is second, overtaking Germany this year. British share of travel to Spain, 24.5 percent, fell 16.1 percent this year because of economic conditions. Meanwhile, French tourism to Spain increased this year, with visits to Valencia surging 35 percent and Madrid up 23.4 percent.

Seven trends that will change business travel

by Tom Johansmeyer on

Obviously, the recession is changing the travel business. You’ve heard it all before – and if you’ve flow or stayed in a hotel lately, you’ve undoubtedly seen it. Sometimes, the big issue of the day can mask others that will be important down the road. Travel industry research firm PhoCusWright has identified seven trends in the travel business that you’ll want to keep an eye on. These are the factors that will have a long and profound effect on the business of getting suit-clad travelers from Point A to Point B. And, let’s face it: these are the people who matter most to travel and hospitality businesses.

“We have identified seven essential trends with the potential to shake corporate travel management to its core,” said Susan Steinbrink, PhoCusWright‘s senior research and corporate market analyst. “Ranging from the environment to videoconferencing, supply chain management, mobile services and more, these trends are poised to impact the amount spent on travel, alter corporate purchasing priorities and touch every player in the corporate travel landscape, including suppliers, TMCs, technology providers, credit card companies, and of course the corporate traveler.”

1. Managing the “Triple Bottom Line”
The “bottom line” is easy enough to understand: that’s the profit a company earns for all its hard work. But, two more bottom lines have entered the corporate lexicon, involving the environmental and social implications of how they operate. With more businesses committing to corporate social responsibility – and even hiring professionals to plan and manage these efforts – expect to see businesses that send their employees on the road to start considering the environmental effects of doing so. After payroll, travel and expense (T&E) is the second largest controllable expense in the business world, and air travel is responsible for 7 percent of the world’s carbon emissions. This is an area ripe for corporate action.

2. Integrated travel booking and expense management
Webs of partnerships have arisen, making it difficult for corporate travel buyers to get a single view of where and how travel dollars are being spent. Acquisitions and alliances are reshaping the booking business and will ultimately deliver a seamless solution for tracking and managing pre-trip spending through post-trip reconciliation and evaluation. With every budget dollar being watched closely, this is a natural result in an expense-sensitive business climate.

3. Tracking the travel supply chain
Businesses investing in travel for their employees are watching the data more closely, a trend that will only gain momentum, according to PhoCusWright. Buyers will start to watch every aspect of supplier relationships, looking for ways to increase collaboration and reduce costs. Metrics will reign supreme, as decisions that can be quantified can make a company’s cash more productive. And, incentives and penalties for expense management can be brought to bear on employees.

4. Switch from the trip to the traveler
An abundance of data will cause travel companies to look past the transaction, which has been their major focus to date. A wealth of information available now enables travel suppliers to examine consumer behavior more closely, providing insights that can lead to future opportunities to maximize revenue (a situation that these companies need desperately right now). As airlines, hotels and other travel companies learn more about you, they can do a better job of selling to you, ultimately leading to better financial performance (and possibly increased traveler satisfaction).

5. On your devices
Seventy percent of business travelers are using internet-enabled handheld devices, making mobile a promising channel for both sales and customer interaction. Enhanced technology will improve multimedia over the device-driven internet and improve payment systems. These developments will reshape how the traveler interacts with the service provider, challenging existing habits, loyalties and tolerances.

6. Skip the trip
Expense management has pushed travel spending downward this year, and memories of this recession won’t fade easily. Alternatives to travel – including conference calls and video conferencing – are increasing in popularity and should continue to erode travel spending.

7. Little guys become big players
Smaller and medium-sized businesses spend plenty of money on travel, but they tend to lack the resources to centralize the purchasing and management process. As they seek to control travel expenses, many will turn to hosted and integrated travel booking and reporting systems to help them find inefficiencies and save some cash. As this happens, the opacity of this sector will melt away, giving travel companies a better view of how to service this high-value segment of the market.

Peace brings tourists back to Lebanon

by Sean McLachlan on

Even by the standards of the Middle East, Lebanon has had a rough time of it. A bitter civil war and periodic Israeli invasions have left much of the country in ruins, but now that order appears to be restored, the country’s tourism ministry is wooing visitors back.

Lebanon has a lot going for it–beautiful beaches, good skiing, fine dining, fantastic historical sights, and cheap accommodation. There are World Heritage Sites such as Qadisha Valley (pictured here), a lush region sheltering ancient Christian communities. Unlike much of the Middle East, alcohol is legal and there’s good nightlife. There once was a time when Beirut was the party town of the Mediterranean. Of course that was before Ford was president, but there’s always hope that it can be so again. Hey, why not?

According to a BBC report, hundreds of thousands of tourists have visited Lebanon this year and officials are hoping for two million tourists before the end of the summer. Not bad for a country with a population of only four million.

The country has been relatively stable recently, and if they can keep Hezbollah in line and avoid getting attacked by Israel again, travelers looking for a bargain will have another stop on their agenda.

I’ve seen Lebanon, but only from across the border in Syria! Have you been to Lebanon? Post your experiences in the Comments section.

Corporate travel off 15%: ouch!

by Tom Johansmeyer on

This sucks: corporate travel is expected to fall 15 percent this year. As much as you like to think you’re doing your part by buying a heavily discounted ticket and going on vacation, the individual traveler’s contribution to the industry pales when compared to that of the corporate road warrior. If the airline industry is going to recover, it will come on the backs – and corporate cards – of those suited crusaders who wield laptops, demand pill water and pay full fare.

Hotels and airlines – and rental agencies and restaurants and just about everyone else – relies on corporate travel. In addition to spending more, this segment of the traveling population tends to hit the road more frequently, so they spend more per trip and per year than the rest of the world. Without their full “commitment,” the tourism and travel industry will have a hell of a time recovering.

A new report from travel industry research firm PhoCusWright dives into the 15 percent plunge for the $85 billion sector, which involves budget-cutting measures by the businesses on which travel service providers have typically relied. Meanwhile, the U.S. travel industry as a whole is only expected to drop 11 percent, making it smaller than it was in 2006.

How important is business travel? Historically, it’s accounted for around 40 percent of the travel market, but shrinking demand brought it down to 39 percent of the travel business in 2007 and could push it all the way to 35 percent by the end of 2010.

“Current economic challenges and public scrutiny of travel and entertainment spending has placed corporate travel on the chopping block. Sharply curtailed corporate travel budgets will mean not only less travel in 2009, but stricter policies and tougher policing when spending does occur,” said Susan Steinbrink, PhoCusWright‘s senior research and corporate market analyst. “However, the recession will positively affect innovation, as corporations and travel management companies intensify efforts to optimize travel programs. This means bringing more spend under management, accelerating integration efforts across the corporate travel value chain, and leveraging new technologies-from mobile to video conferencing-to bolster the bottom line.”

Airlines run out of services to cut, eye flights

by Tom Johansmeyer on

Cuts aren’t limited to airline employees and passenger amenities. In the next few months, capacity – the number of asses that can be accommodated – will be sliced. Having fewer flights will lower costs and boost the all-important revenue per available seat-mile (RASM) metric. For passengers, the drop in supply is likely to push fares higher and convenience lower (if you’re looking for non-stop flights, you’ll have to look harder).

It’s earnings season – and what happens down on Wall Street will ripple through every airport in the country. Six of the nine top airlines in the United States posted profits for the year – fun! – but they did it on falling sales. What’s that mean for the average traveler? It means airlines have had to cut their way to profits, because they aren’t growing. If passengers aren’t spending as much, all the airlines can do is take away services that cost money. And, with RASM down 19 percent year-over-year for seven U.S. airlines, they have little choice.

If you’ve been on a flight recently, you’ve seen there isn’t much left to cut, which is why airlines are going to be cutting the flights themselves. For the fourth quarter of 2009, total available seat-miles (one person flying one mile on one flight) is expected to fall to 12.4 billion – which is close to post-9/11 levels. Two years earlier (Q4 2007), it was 14.2 billion.

I hope you believe that “getting there is half the fun.” If you do, the decline in non-stop flights won’t bother you as much. Prepare for layovers – lots of ’em. This will help airlines consolidate flights, fill vacancies and boost RASM. But, it also means that you’ll spend a bit more cash at Auntie Anne’s (get some cheese with those pretzels!).

Cutting costs could actually lead to higher prices, which the airlines desperately need – but it means a smaller base of seat-miles on which to make money. Competition will fall on some routes, and overall supply drops – both of which give airlines the power to increase fares. Of course, these really are minor forces compared to broader economic conditions. The ability of customers to pay is ultimately what drives the cost of a ticket, and absent an economic recovery, fares will stay low, as will airline earnings.