Economy downturn will affect tourism industry
October 17, 2008
As the Dow slipped along its rollercoaster track of economic uncertainty, a Mountain Travel Symposium Wednesday warned destination resort and tourism industry professionals of the volatility of todays travel market.Im looking through the lens of the latest on the Dow dropping 530 odd points since 10 a.m., said Peter Yesawich, chairman and CEO of the Ypartnership, a travel, leisure and entertainment marketing firm, as he began a Web workshop at noon. That is the lens that consumers are looking through to make winter ski vacations in 09.Ralf Garrison, owner and partner of Mountain Travel Symposium, opened the workshop with the sobering fact that advance reservations for this winter are down 9 percent from last year at this time.The storm clouds are a comin, Garrison said, before introducing Yesawich, whose company has been analyzing emerging travel habits, preferences and intentions of Americans for 17 years.Yesawich likened the volatility of the travel market to the stock markets Triple Witching Hour, the last hour of the stock market trading session on the third Friday of each quarter. That is traditionally the time in which three kinds of securities expire, thus increasing the volatility of prices of related securities.For the travel industry, those three volatile influences are consumer anxiety, demographics and technology, Yesawich said.
As the economys capriciousness prevails, the top reason why travelers take fewer trips has switched from couldnt get away from the job to economic conditions, Yesawich said. And, as Americans switch from using their home (equity) as an ATM machine to a pay as you go mentality, they will be taking fewer and shorter vacations, he said.Mountain resorts need to discard the myth that their affluent customers are not affected by the economy, he said. A survey of the top 8 percent of households in net worth and income showed that in 2008, 78 percent were looking for the best prices, compared to 67 percent in 2004.Even the most affluent travelers are going to be far more value conscious in the years ahead, Yesawich said.The affluent travelers are the ones most affected by the time squeeze as well, with the average work week at 48 hours, and the advent of e-mail increasing the work day by an hour, he said. In 2008, 53 percent of active travelers say they will take weekend vacations of less than four days, 28 percent will take more than five days of vacation, and 19 percent will take vacations on weekdays.This means that travelers will be looking for resorts within a four- to six-hour travel radius. This is especially important considering 100 of the 600 airports in American are expected to lose commercial air service in the next year, he said.This is a critical issue for many mountain resorts, he said, adding that resorts need to be looking at the market potential of their backyards.
The Internet has created a travel mindset that puts price and value above name brands and resort loyalty.Fifty-nine percent of active travelers (American households which take at least one overnight trip and stay in a commercial lodging) go to the Internet first to begin planning their vacations. However, in 2008, Ypartnership identified a trend which indicated that statistic might be leveling off. It is down from 66 percent in 2007, with the reason being the value of time.People have begun to place a higher value on the time it takes to pick through six or seven Web sites versus the $35 fee for a travel agent to do that, Yesawich said.Yesawich predicts that online reservations are going to level off, as this technology matures. At the same time, meta search Web sites, such as kayak.com, are growing because those sites search for the best fares regardless of brands.What matter most in airfare is the price, he said, adding that consumers do not care about brand names anymore. They also want to visit new places: 66 percent of active travelers want to visit someplace they have never been before.A marketing director of a mountain resort when they think about this should get nervous, Yesawich said, adding that the overall ski and snowboarding market is not growing.Yesawich offered a couple of clues for mountain tourism officials.This should encourage people in the mountain resort business not to just sell a ski vacation, but a winter vacation, Yesawich said.Vacations are also not just about Randamp;R, he said, because more than 70 percent of travelers are celebrating a special occasion. Those that are celebrating something tend to stay longer, budget more money and include more people in their travels. This prompted The Disney Company to begin its What will you celebrate? promotion for 2009, offering those with a birthday free admission.
The two largest groups for the travel industry to watch are the 75 million Baby Boomers, and the 78 million Millennials. Baby Boomers are healthier and expected to live longer, and Millennials are looking for travel suppliers that are different than their parents. Millennials travel with their children, are tech savvy, and are not brand loyal. And, females are now the primary wage earners in 1 out of 3 households.What is greatly going to affect the travel economy in upcoming years is the wealth transfer tsunami, as $41 trillion in private wealth will change hands in the first half of this century, when Baby Boomers leave their inheritances to their children. Yesawich expects an increase in real estate transactions in resort markets due to this wealth transfer.Another demographic that, so far, Yesawich believes mountain resorts have not acknowledged is the changing diversity of America. There are 50 million Americans who do not speak English as their primary language, and more than half of those speak Spanish. In the past month, the number of surnames of Garcia and Rodriguez surpassed Wilson in the U.S. From 2008 to 2050, the number of white Americans is expected to decrease from 66 percent to 46 percent, while Hispanic Americans will increase from 15 percent to 30 percent.The implications for the mountain resort business is very clear and that is to cultivate diversity, he said.Mountain Travel Symposium offers forums for mountain travel professionals in North American. Wednesdays workshop on Emerging Lifestyles and Travel Trends: Implications for the Future of Mountain Resort Marketing Now and Down the Road is the first of three web workshops to be held this month.
Consumer AnxietyOf 116 million American households, 90 million households own their home34 million households borrowed against the equity of their home in the last four yearsAverage American credit card debt is $9,90051 percent say they have no money left over after they pay their billsTechnology70 percent of U.S. households have Internet access in 2008, compared to just 11 percent in 1996. 59 percent of active travelers go to the Internet first to book their vacations88 percent say the top attribute for a travel Web site is the ability to check low fares53 percent have no preference on airline brands17 percent of households in 2008 only use a cell phone and not a land line35 percent of those ages 25-29 only have cell phones1 of 4 travelers make or change their travel plans on cell phonesDemographics78 million Americans are Baby Boomers, the first of which turn 62 this yearBaby Boomers are healthier and will make up 20 percent of population by 203075 million Americans are Millennials, born between 1977-19989 million people in 2006 have a net worth that exceeds a million dollars more than the number of unemployed todayOrange County, California has the most millionaire households in America