Marketing/Leisure Travel Trends for 2005

Historical Trends

• Overall U.S. domestic travel volume has grown 9.8 percent since 1994. Household trip volume has increased by 2.9 percent during that time. TIA
• Leisure travel volume of person-trips is up 16.1 percent from 1994, while business/convention travel is down 15.1 percent from 1994. TIA
• U.S. domestic air travel posts a 4.7 percent decrease in volume of person-trips between 1994 and 2003, while auto travel posts 12.4 percent growth. TIA
• Person-trips are most likely to be taken to destinations within the traveler’s state of residence (42%). Destinations that are out of the traveler’s state, yet still within the census division account for one in five (21%) person-trips. The remaining 37 percent of person-trips are taken to destinations even farther away, outside the census division of resident. While the majority of trips include one destination, some include multiple destinations. TIA

Economic Trends

• The U.S. economy is humming, but employers are still finding ways to increase production without adding workers, providing little hope that a sustained pickup in job creation is around the corner. The latest evidence of sluggish job creation came Tuesday, when one report showed the percentage of CEOs who expected to add workers in the next six months fell from a previous survey, while another report showed factory job growth slowed in February. USA Today, March 2005
• The soaring cost of crude oil is pushing gasoline prices higher, even as refiners report ample fuel supplies well ahead of the summer driving season, the Wall Street Journal reported Monday. Analysts at the US Department of Energy's Energy Information Administration (EIA) expect the average price for unleaded gasoline in the US to peak this spring near last year's high of 2.06 dollars a gallon, held in check by stocks that are more than 8 percent above year-ago levels. Nevertheless, officials are concerned prices at the pump could rise higher still on strong demand, with some analysts predicting prices as high as 2.50 dollars a gallon. Wall Street Journal, February 28, 2005
• The ABC News/Washington Post Consumer Comfort Index stands at -9 on its scale of +100 to -100 this week, exactly matching its average in weekly polls since late 1985. It's hovered between -8 and -11 since the start of the year, after a recent high of -5 in mid-December. ABC News, March 2, 2005
• The Conference Board’s Consumer Confidence Index, after improving in January, dipped in February. The Index now stands at 104 (1985=100), down from 105.1 in January. The Present Situation Index increased to 116.4 from 112.1. The Expectations Index, however, declined to 95.7 from 100.4 last month. Consumers’ overall assessment of current conditions continues to improve. Those claiming business conditions are “good” eased to 24.9% from 26.1%, but those claiming conditions are “bad” declined to 15.6% from 18.1%. Consumers’ outlook for the next six months lost ground in February. Those anticipating business conditions to improve declined to 17.8% from 22%, but those expecting business conditions to worsen held steady at 7.8%. The outlook for the labor market was also somewhat less optimistic. Conference Board, February 23, 2005

Travel Growth

• According to TIA's Annual Travel Forecast, overall traveler spending by domestic and international visitors in the U.S. is forecast to increase 6.9 percent by year end to nearly $593 billion up from $555 billion in 2003. An additional 5.3 percent increase in 2005 will bring expenditures to well beyond the $600 billion mark to $624 billion. TIA forecasts leisure travel volume will grow 2.9 percent this year up from a 1.9 percent increase in 2003. It will increase once again in 2005 by nearly 2 percent. www.hotelonline.com November 2004
• TIA's Spring 2005 Travel Forecast indicates strong spring travel volume. Americans plan to take nearly 281 million trips during March, April, and May, representing an increase of 1.2 percent over spring 2004. "Americans are upbeat," said Dr. Suzanne Cook, Senior Vice President of Research. "They feel good about the economy, and they feel positive about their own finances. These key factors point to a record spring travel season." Americans are expected to take nearly 223 million leisure trips in spring 2005, up 1 percent from last spring. Business and convention travel volume continues to recover, increasing 2 percent from 2004 with 47.1 million business/convention trips forecast for spring 2005. TIA March 2005
• Auto travel was up about 3% for 2004, and the industry predicts modest growth (2-3%) in 2005. On average, auto travelers spend US$317 per trip; and 30% of trips include children. (AAA) As reported IACVB Special Report – 2005 Forecast, January - International Association of Convention & Visitor Bureaus
• Orlando and Orange County's tourism rebound continued at a torrid pace in December, with another record month and a record calendar year for the county's resort tax. The 5-cent levy on hotel rooms and other short-term rentals generated $8.6 million in December, up 25% from the same month a year ago. That capped a record year at $114.8 million, county officials said Wednesday. The tax pays for expansion of the massive Orange County Convention Center and tourism promotion through the Orlando/Orange County Convention & Visitors Bureau. Orlando Sentinel.com/Business
• Generation X now spends more per trip than the wealthier baby boomers — and the travel industry is taking note. Last year, Xers — the 60 million Americans from age 25 to 40 — spent an estimated $2,140 per capita on overall travel involving a hotel stay, vs. boomers' $2,016, according to a preliminary estimate from travel researcher D.K. Shifflet & Associates. The larger boomer population still dominates on a total dollar basis — about $157 billion last year, vs. $130 billion for Xers. Vacation spending by Xers has soared 66% per trip in the past five years, vs. 25% among boomers, ages 41 to 59. The generational change has significant implications for the travel industry. Compared with the 78 million boomers, Gen Xers are less brand loyal, less likely to call a travel agent and less likely to plan far in advance. They're more likely to book online and pay for eye-catching extras, such as a Sierra Madre expedition in the Mexican outback. USA Today February 8, 2005

Hotel Trends

• U.S. hotel companies will be booking, cooking and smoking-hot for the next few years, as a stronger economy and an up-tick in business customers driver more travelers into hotel rooms, pushing rates higher. After being paralyzed by a three-year downturn in travel following 9/11, the war in Iraq and the SARS epidemic, U.S. hotels began raising room rates in mid-2004. "Get ready to pay more for a hotel room in 2005," Bear Stearns analyst Joe Greff said in a recent note, adding that room rates will get a boost from expanding corporate travel budgets, large group conference bookings and slow growth in new supply. The three biggest U.S. hotel chains--Marriott International, Hilton Hotels and Starwood Hotels & Resorts Worldwide--expect to raise rates further this year. Reuters; CNN.com
• Manhattan lodging market will have experienced the most spectacular come-back of any hotel market in the nation over the past twenty years if present trends continue through 2005, according to report released last week by Hotel Investment Management LLC, a hospitality consulting firm based in Maplewood, New Jersey.
• Unprecedented growth in demand has helped average daily rate growth, which is expected to grow dramatically by over 14% to about $230 in 2005. This beats the previous high in October 2000. Travel Mole.com February 25, 2004
• A significantly lower proportion of leisure travelers prefer chain hotels to independents. This illustrates the increased emphasis placed by leisure travelers on uniqueness and authenticity. YPBR/Yankelovich Partners, Inc.
• The U.S. lodging industry enjoyed a 3.7% increase in occupancy last year, to 61.3%, according to full-year figures released Thursday by Smith Travel Research. Average room rate increased 4.0% to $86.41 and revenue per available room—the combination of occupancy and average room rate--gained 7.8% to $52.93. Industry room supply increased 1.0% in 2004, while demand gained 4.6%. Industry-wide full year 2004 room revenue increased 8.8% to $86.2 billion, STR said. "We expect another good year in 2005," said Mark Lomanno, president of the Hendersonville, Tenn., research firm. Room rate increases should be the primary driver of RevPAR growth this year. Occupancy improvement should continue, although at a somewhat slower pace," he said. STR special to Travel Advance, January 2005
• The hotel industry will raise its spending on renovations by 37% next year, speeding up improvements now that travel is rebounding, according to a new study. Hoteliers will spend $4.1 billion on upgrades and renovations in 2005, compared with $3 billion this year, according to the study, conducted by Pricewaterhouse-Coopers Hospitality & Leisure Practice in New York. Page B4, Wall Street Journal
• Hotels are courting picky business travelers with amenities like flat-screen televisions and plush bedding, but there is little worry about the cost now that demand is strong and room prices can be raised. "Costs are going up, but as long as rates are rising, it's not a problem," Joe Greff, an analyst at Bear Stearns, said this week at the Reuters Hotels and Casinos Summit. Major hotel chains are projecting high-single-digit gains in room revenue this year, driven in part by growing business and convention travel as well as a flat supply of hotel rooms. Reuters
• One of the hottest trends among luxury resorts has been to develop some kind of ownership program, offering high-end "fractionals" (fancy time-shares), condominiums or even houses. Among the resorts in Florida alone that have condo projects in the works are Cheeca Lodge & Spa in the Florida Keys, Miami Beach's Fontainebleau Hilton, the Venetian Grand Resort in Orlando and Fort Meyers Beach's Pink Shell Beach Resort. The phenomenon has spread to other locales, including Las Vegas and Chicago. Even the 200-year-old Greenbrier, in West Virginia is getting into the ownership game. Page D1, New York Times, January 28, 2005
• One of the big trends in the hotel industry today is the creation of permanent residences within a hotel property with the additional offering of the regular hotel services. Starwood Hotels have created a whole floor of permanent residences at the prestigious St Regis in New York and their W Hotel chain are now provide opportunities to buy into the Wonderland lifestyle. In fact it's happening all over the US from Vegas, to Aspen to Florida. www.psfk.com

Travel Planning

• The destination is the first consideration. Setting a budget remains second, followed by obtaining background trip information and then deciding on mode of transportation, choosing a hotel or resort and selecting activities. YPBR/Yankelovich Partners Inc.
• Because of the order of planning, it is vital for destination marketers to be in the consideration set of places consumers think about when making vacation plans. This observation underscores the value of top-of-mind awareness in the increasingly competitive market place. Furthermore, because of this decision-making pattern, it behooves hoteliers to create strong strategic alliances with their respective local and state tourism promotion organizations and to be linked to their Web sites. YPBR/Yankelovich Partners Inc.
• Leisure travelers begin planning, on average, over two months in advance of the departure for their extended trips. Weekday and weekend trips are typically planned approximately six weeks in advance. YPBR/Yankelovich Partners Inc.

Trip Activities

• There are five clusters that are addressed with respect to what consumers want in a leisure travel experience:
• Experiential/Fantasy/Ambiance. These attributes are clues about the magnitude of interest in experiential dimensions of travel and predispositions toward novelty and change.
• Physical activities. These attributes reflect sporting and adventure activities.
• Other activities. These attributes address dimensions that round the vacation experience.
• Familiarity and control. These attributes create a sense of safety, control and comfort of familiarity while on vacation.
• Pricing.
• Overall, consumers are more interested in experiential vacation attributes this year compared to last. This is consistent with their predisposition toward new experiences and novelty and change. A significantly higher proportion of leisure travelers want to go somewhere they have never been before. And, overall, today’s consumers are likely to be looking for beautiful scenery and beach experiences in the new places they visit. YPBR/Yankelovich Partners, Inc.
• Soft adventure and trips aboard are two of the biggest trends in travel as the tourism industry continues to rebound from its post-9/11 slump. The weak dollar didn't keep Americans from going to Europe. According to the European Travel Commission, "2004 is shaping up as the second-best year ever for travel to Europe," with a projected 12.7 million Americans crossing the pond, 20% more than in 2003 and near 2000's record-setting 13.1 million. Philadelphia Inquirer.com/Travel
• As revealed in our 2004 National Leisure Travel Monitor, “going to a spa” on vacation is now of interest to 34% of active leisure travelers. Not surprisingly, females (41%) express a higher degree of interest in this recreational activity than males, yet fully one out of every four (25%) active male travelers is also interested in going to a spa on vacation. When considered in light of other recreational options, spa-going is not as popular as “getting exercise” on vacation, but is twice as popular as “playing golf” and six times as popular as “playing tennis.” YPBR/Yankelovich Partners, Inc.
• All-inclusive pricing continues to be of great interest to leisure travelers. In fact, a significantly higher proportion of leisure travelers say they prefer and all-inclusive resort price (one that includes accommodations, food, beverages, and recreation) this year compared to last. YPBR/Yankelovich Partners, Inc.

Media Trends

• Readership surveys indicate that the audience for news magazines is holding steady, while the audience for pop culture, entertainment and lifestyle magazines is growing. This fits with the trends in ad pages and revenues and suggests one of two things: Either the market for news magazines is more or less at its capacity or the genre needs to be reinvented. Journalism.org January 2005
• In what may be the biggest effort yet — and the biggest potential threat to The Weather Channel's franchise — the NBC network and its affiliates have launched WeatherPlus, a joint venture that combines national and local weather data, forecasts, graphics and video. By year's end, about 60% of the USA's TV households will be able to watch NBC affiliates' local weather channels — provided they have a TV or cable box that can receive digital signals. USA Today, February 4, 2005

Advertising Trends

• Jupiter Research forecast $7.6 billion will have been spent in the U.S. on all forms of online advertising by the end of 2004 (up 20 percent from 2003). We can expect that this trend will continue in 2005 as the importance of relevancy in online advertising continues to grow. Today’s busy, technologically savvy consumer demands advertisements about products and services they care about; ads that are too general or not contextually relevant will die off as more sophisticated campaigns will prosper. iMediaConnection, January 24, 2005
• Demand for online video ads by Ford Motor, Colgate-Palmolive and others will contribute to a breakout year for online advertising in 2005 — and spell trouble for newspapers and TV, financial analysts say. A surge in text ads on search sites Google and Yahoo — combined with more high-speed Internet users — also will help push online ad spending over $10 billion for the first time, analysts say. It would mark the second-consecutive year that online ad spending in the USA improves 20%. The last medium to grow that fast was cable TV from 1988-90, says analyst David Hallerman of researcher eMarketer. USA Today, January 17, 2005
• Many marketers are legally challenging advertising statements made by the competition. Some marketers avoid truth challenges by building brand identities around aspiration or identification. Practitioners of this school include Nike, with its "Just Do It" slogan; Sprint, with "Business Is Beautiful;" and the United States Army, with "An Army of One." New York Times article Dec. 29, 2004
• Paid search will continue to grow faster than any other sector of online advertising, increasing from $2.6 billion in 2004 to $5.5 billion in 2009. Jupiter Research 2005

Internet Trends

• Consumer utilization of the Internet to plan some aspect of a future trip, whether for business or pleasure, continues to rise, according to new data released today from the YPB&R/Yankelovich Partners 2004 National Leisure Travel Monitor. The rate at which consumers now use the Internet to actually book travel services is growing even faster, however, suggesting that consumers are likely to use the Internet to purchase travel services with even greater frequency in the months ahead. YPBR/Yankelovich Partners
• As consumers rush to the Internet to buy travel, a battle is brewing over whether the industry will look more like search company Google or virtual shopping mall Amazon.com. Travel search providers who see themselves as the next generation of online travel companies said on Thursday they were adding features to lure consumers with the offer of more than rock-bottom prices. Sidestep and Kayak.com, the oldest travel search company and one of the sector’s newest entrants, both see Web travel evolving into a referral service more like Google than an Amazon.com-like Web. http://www.hotelnewsresource.com, March 2005
• A new Harris Poll shows that U.S. adults who are online are using the Internet more often for new and different purposes. While email (66%), research for work or school (46%), checking news and weather (43%), getting information about hobbies or special interests (40%) top the list of online activities which are used "very often" or "often," large numbers of adults are using it for many other purposes. The two largest changes since last year are: Those who go online often, or very often, to make travel plans or reservations, up 11 points, from 15 percent to 26 percent. Those who go online often, or very often, to look for information about health or diseases, up six points from 15 percent to 21 percent. This survey shows that Internet growth continues for two quite different reasons: The proportion of the population who are online continues to grow steadily. Those who use the Internet use it for more purposes than they did in the past. Harris Interactive Inc. November 2004

Top 10 Internet Uses of Adult Online Users (% of respondents)

	Very Often	Often	Sometimes	Rarely	Never
To send or receive e-mail	30%	36%	14%	11%	9%
To do research for work or school	18	28	19	10	24
To check on news updates, weather, etc.	16	27	26	18	14
To get information about a hobby or special interest	15	25	38	15	8
To gather information about products and services	14	24	38	10	15
To surf to explore new and different sites	10	24	34	22	10
To make travel plans and reservations	8	18	25	18	31
To obtain information on local amusements and activities	6	17	36	21	20
To obtain information about health or diseases	8	13	38	26	16
To pay bills	7	9	15	9	60

            Harris Interactive Inc. November 2004

• The number of U.S. at-home broadband users increased 36 percent in 2004, accounting for 55 percent of the total U.S. at-home users by the end of December, according to the latest data from Nielsen/NetRatings. If this robust adoption rate continues, almost 70 percent of all U.S. home users will have broadband connections by the end of 2005, according to forecasts based on Nielsen data in the "January 2005 Bandwidth Report" by WebSiteOptimization.com.
• Internet users between the ages of 25 and 34, with household incomes over $75,000, are more active online than the overall U.S. Web population. Most of these "young affluents online" are male and connected to broadband as well, according to a report by JupiterResearch. "We've isolated a demographic that can be classified as early adopters," said Vikram Sehgal, senior analyst at JupiterResearch. "The are predominantly tech-savvy males, with higher incomes, higher broadband connectivity, with the desire and ability to purchase new products. So to marketers, they constitute an attractive group to target, on- and offline, because they have a lot of purchasing power." The report finds a full 74 percent of this upper-income demographic are male, compare to 49 percent of the overall online population. Some 55 percent are connected to broadband, compared to 33 percent of overall Web users. Jupiter Research/ ClickZ January 6, 2005
• About 65 percent of these young, online affluents are upbeat about the Web. They believe the Internet increases the efficiency of their daily lives, as opposed to the 43 percent of the overall online population who hold that view. ClickZ, January 6, 2005
• Want proof that traditional media are running scared at the sound of encroaching blogs? A heated round table discussion between The New York Times' managing editor, Jill Abramson, and a few of the blogosphere's finest is good evidence that print journals are leaning towards the defensive. The discussion—in which Abramson turned just the least bit snarky when it was suggested that perhaps her newsrooms were about to be rendered obsolete by bloggers—took place at the recent two day "Blogging, Journalism and Credibility" conference at Harvard University. While admitting that blog writers represent a major pool of talent on which the news media might draw, Abramson essentially dismissed the notion of blogs as "competition." But with 27% of adults reading blogs daily, and her own newspaper promoting a blog by its columnist Nicholas Kristoff on their site, how long does Abramson figure she can keep sneering at what's inevitable? adbumbinc.com
• Google is adding TV to its mix with the release of the new test version of Google Video. According to the Washington Post, "users who search for a phrase spoken on a TV program that Google has recorded and indexed since December will see a still image from the show." Click on that image and five more show up, along with other sound bites from the program. So far the deal is limited, allowing search for content only in programs viewed on PBS, C-SPAN, Fox and a few other stations—but Google has serious visions for the near future. Much like TiVo, Google Video plans to give users the ability to replay their favorite TV shows on their computers, and with a forthcoming personalization feature, users will be able to type in their Zip codes to find out when and where shows will next air. adbumbinc.com

Generational Trends

• Sharpen your vision of the future: Generations are on the move.
  • Echo Boomer values are the values of the new crop of adults; 36% have joined the ranks of “head of household.”
  • Xers will start turning 40 in 2005; 60% are now parents.
  • Boomers will start turning 60 in 2006; 34% are already grandparents.
  • Matures are not all out of the work force; 21 % of all Matures work full-time 34% of 558-70-year-olds are employed full-time).
  • Boomer Empty Nesters, currently numbering 16 million, are estimated to reach 31 million by 2010.

Lifestyle Trends

• Family Networks: Major purchases, from autos to vacations, were once mostly adult-only choices. Child-oriented goods were bought on the “kids nag, parents pay” plan. Now there’s often an ongoing dialogue across generations. Shared decision-making is morphing into shared tastes and preferences. YPBR/Yankelovich Partners, Inc.
• "Destination Weddings” are a growing trend, by some estimates accounting for 10% of the nearly $120 billion industry, according to Destination Wedding and Honeymoon Magazine. Even the most affluent couples seek value-priced alternatives to bring scores of family and friends to exotic and sometimes remote locales. Destination Wedding and Honeymoon Magazine
• In the past three years, it turns out, four out of ten Americans have traveled alone on leisure trips that have lasted at least two nights. Driving the lone-travel trend is that increasingly popular demographic: the aging baby boomer. More are finding themselves widowed or divorced; many simply have adopted the single lifestyle by choice. Fodor’s Travel Publications
• For the American family in particular, 2004 was a year of continued evolution. With issues such as gay marriage and civil unions making headlines, people have had to rethink their definition of family. While a substantial number continue to believe in the traditional marriage and family, the world continues to chip away at that institution and change is ever present… What constitutes a family is also changing. Not just the same-sex household but households with adopted or step-members is become more prevalent than before. But, there are a few things that seem to never want to change - teens don't want to become their parents, parents yell at their kids and kids cost a lot to raise (an average of about $178,590 from birth to age 17).
• For those planning family travel packages, these are trends to monitor. As the non-traditional family unit continues to evolve, it will be more and more important to include things in a package that speak to those outside the traditional family unit. One final thought to consider - the information above speaks only to the American point-of-view regarding family. As you begin to market to other cultures, their definitions of family and comfort-level with what many would consider non-traditional family structures will vary based on their culture, religion, etc. The Trend, January 2005 - CrossSphere - Source: Research Alert, Vol. 23, No. 1
• The oldest, leading-edge Boomers are now in their late 50s and rapidly approaching "senior" status - a milestone that is generally thought to start at age 65. As has been typical for the Boomers, they are intent on changing the face of aging as they near this mark. As the first generation of Internet users, Boomers are likely to live very differently from the "seniors" that preceded them. They are less likely to retire and more likely to remain in their homes when they become empty-nesters instead of relocating to southern climes than the generations before them.
• Boomers are also feeling the effects of caring for the needs of their parents on one hand and their children on the other - truly becoming the "sandwich generation." But, as their children are aging, empty-nest Boomers have more time and money to spend on themselves.
• One final trend affecting Boomers is that their children can "boomerang" - a growing phenomenon of adult children returning to the next as KIPPERS or Kids In Parents' Pockets Eating Retirement Savings. The Trend, February 2005 - CrossSphere - Source: Research Alert, Vol. 23, No. 1
• Consumers’ increased frequency of a hotel stay when vacationing and more limited and controlled discretionary spending are driving sales in the bundled, or packaged, travel arena. Given the ability to drive margins, both market leaders and underdog’s will be emphasizing vacation packages – online and off.
• The majority of combination purchasers create their own air, care and/or hotel packages over purchasing ones that are pre-packaged. Given the importance of packages to the profitability of online players, the dynamic package buyer represents a new and important segment in the online leisure arena… As Reported in The PhoCusWright Consumer Travel Trends Survey, Sixth Edition, Page 8.
• The "Experience Economy" Affluent Americans, those with household incomes of $100,000 and above, were surveyed recently by Stevens, Pa.-based luxury marketing consultancy Unity Marketing. One thing that stood out from this study is that the wealthy favor experience over materials when searching for satisfaction.
• Nearly six of 10 survey respondents stated that they get the most satisfaction from their purchase of luxury experiences. Such experiences include upscale restaurants, travel, entertainment and cultural/art events, sports events, personal health and beauty services and home services. The message - when marketing to the affluent, focus on their desire for an experience! Whether that is shopping, eating, seeing a show or touring.
• Most of the affluent consumers surveyed chose to get to their destination inexpensively and splurged on hotels, food and other activities. The trend here is being referred to as the "mass" and "class" phenomenon. "Affluent consumers choose to travel with the masses and sleep and dine with the classes," states Danzinger.
• There is a lesson here for travel packagers who would like to capture this affluent market. Focus on the experiences once the traveler is in the destination and put the dollars there. Fine dining, top hotels, front-row tickets to the opera, a private lesson with a famous chef, one-on-one attention at the finest stores. As these two surveys pointed out - they'll fly coach but, when they get there, they want the finest experiences money can buy. As Reported in The Trend – CrossSphere - Source: Research Alert, Vol. 23, No. 1

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