Six executives from six sectors of the travel industry hotel, cruise, aviation, tours, retail and destination marketing are making assumptions about the year ahead as they plan for 2017. The interviews were conducted by Travel Weekly editor in chief and senior vice president Arnie Weissmann.
Brett Tollman
CEO, The Travel Corporation
It's angry, uncertain times, from the populist vote to some uncertainty around economic issues in many places.
That
said, the U.S. is a remarkable economy, and we project ongoing strength
here. Politically, post our national election, I would hope and expect
that calmer heads will prevail. President-elect Trump has shown, to date
and to some extent, that he is putting a relatively impressive cabinet
together that, I hope, will be approved. He's obviously going to have a
very muscular defense and foreign-policy approach, and that has to help
if it means we sort things out in Syria. That would have impact on the
migrant issues in Europe, as well as in keeping America strong and proud
overall.
We believe interest rates will start going up based on what
president-elect Trump has said. If he changes some economic policies
that he has spoken about, from his investment plans to tax rates, that
should certainly put some pressure on inflation and therefore interest
rates. That'll benefit some and not others, but hopefully, the swings
and roundabouts make the American economy continue to grow at 3% or 4%.
That's important, as it's such a strong outbound market for us.
It's an inbound market, as well, so equally important is the issue of
freedom to travel and visa facilitation. And that's still uncertain.
Likewise, open skies issues, and it's good to see Norwegian Air get its
approval through. The strength and opportunities for travel and tourism
come with open borders and the desire and ability for people to move
between countries.
Canada, I think, will continue to be weak. Canada, Australia and
South Africa outbound travel will continue to see ongoing relative
softness, though South Africa continues to improve post-Ebola.
We don't do a lot of outbound travel from South America, but some of
the salespeople we're hiring in the U.S. will have a focus on
territories there. It's certainly a mixed bag. We do have a good
presence in Brazil, and it's been a tough year there, and it's hard to
know where it will go next year, given what the government's facing. But
we certainly have plans for growth from there, Mexico and a few of the
other markets. Mexico's one of our key opportunities.
In Europe, it's a mixed bag in terms of the pluses and the minuses.
Post-Brexit, we see inbound to the U.K. to be quite strong and we
certainly project that to continue throughout the negotiations [with
Europe] next year, which may have further impact on the pound.
At the same time, outbound from the U.K. is an important market for
many of us. I think it will continue to be fairly robust as it has been
post-Brexit, despite the softening of the pound. It's bounced up and
down a bit, but has been very strong over time, and I think it's still a
reasonable value for the Brits to travel outbound, particularly to
Europe, being that the euro is quite soft. Upcoming elections will
probably create continued weakness and uncertainty, but we don't project
any breakup of the [euro] or anything that precipitous.
We've had a small presence in India for some time, but we're building
a stronger sales presence there for outbound travel. And we've had
offices in China for over 12 years. We've seen some ups and downs, but
there were more than 100 million outbound travelers last year, and I
think the Chinese economy will continue to generate strong demand for
outbound travel. That's phenomenal, and it's for the taking by anyone
who is enterprising and has the opportunity to find a way to do business
in China.
That can be a challenge. Market share there has been plagued over the
last couple of years by the likes of CTrip. It's hard to fathom
companies selling air for less than it costs and incurring millions in
losses on the basis of the market-share play. You wonder where that will
go.
We expect some reasonable growth and some degree of strength and
stability in other key markets in Asia, depending on the economy and the
country, from Indonesia to Malaysia to Taiwan to Thailand. There is
still great uncertainty in North Africa, areas of the Middle East,
Libya, Sudan, Turkey and Tunisia, but at the same time, we're cautiously
optimistic that each of them will rebound.
I was in Paris on Nov. 13 last year. I was in and around Nice,
France, in July this year and was in New York on 9/11. We've seen the
impact of that as regards to people's concerns and desire to travel.
Having been in Paris recently and talking to hotels and operators there,
the business continues to be down significantly. Twelve months on,
you're not seeing a strong demand for Paris yet, but one knows it's
going to come, as it did in New York post-9/11.
The World Travel and Tourism Council and United Nations World Tourism
Organization have reported that it takes about 12 months for a
destination to recover. But as the head of the police force in the U.K.
said, it's not a matter of if [another terrorism event will occur] but
when. They're very much on top of these things, so if the police force
can make that kind of statement, I think it is an informed one.
So, yes, we do expect there will be more events. The interesting
peculiarity is that post-San Bernardino, post-New York, where there was a
bombing a couple of months ago, post-Orlando, there has not been a
terrible backlash about those specific cities nor America in general,
whereas in the psyche of people, France is still a terrible no-no.
We're launching a new river cruise ship in France in March, and we're
certainly seeing soft demand, not just on river cruising but on our
trip series across Trafalgar, Insight and Contiki, as well. So we are
certainly concerned about France having continued softness next year.
But it's one of the most unique and amazing places that one can visit
you can't replicate it anywhere else so one has to expect it's going to
come back at some point, and we're certainly desirous that it comes
back sooner than later.
We're doing all we can, and we decided to stay the course in keeping
the ship there whereas others have pulled out. We believe in committing
to France and being a part of its recovery, as we were after we went to
Sendai and we made the commitment that we were going to help bring
people back to Japan.
And since then, Trafalgar and Contiki are doing sellout programs,
growing at 100% a year since 2012, when we started bringing travelers to
Japan for the first time from those brands. Even now, prices are not
lower in France. We've certainly pushed for that, and the hoteliers in
particular said, "No, we want to hold out. We'd rather sell fewer rooms
and maintain our price integrity," and there's been very little break.
We've been finalizing our contracting, not just for 2017 but for 2018
as well. We've seen our contracting needs go further and further up
because of corporate travel, incentive travel, meetings. The Chinese
traveler certainly soaks up a lot of inventory. We have somewhat been
surprised that we've not been able to get better pricing to pass on to
our travelers, but we certainly tried and asked for it. Still, our
pricing for next year has come out to be slightly less than 2016 as a
result of currency movements but not from contracting improvements,
unfortunately.
Looking at forward bookings, 2017 looks to be our best year ever for
the key brands Trafalgar, Insight, Contiki and Uniworld with all of
them looking at substantial double-digit growth over the same time last
year. I think it's a result of our positive momentum and our
relationships with our travel-trade partners. We believe our products
and experiences are very much oriented to being sold by travel advisers.
Trafalgar and Insight don't have the wherewithal, like a cruise line,
to offer discounts, so the commissions that a travel agent can earn are
very high.
The complexity of our products is hard to convey digitally or in a
printed brochure, and does need support from a trusted adviser or travel
counselor.
It's wonderful to see how strong and vital agents are, and equally,
it's great to see how they are a good match for our drive for innovation
and providing the kinds of experiences we believe are very much in
lockstep with what travelers are looking for today.
We're seeing more and more of our travel-trade partners wanting to
engage with Contiki, and that's why we saw the opportunity to bring out a
new sub-brand of Uniworld U by Uniworld which is a new adventure
youth cruising that we'll be bringing to markets in 2018. We'll have one
ship in France for a start and one ship on the Danube and the Rhine.
We're opening a new office in New York, and we're going to hire 15 to
20 additional salespeople who will all be focused on growing and
building stronger relationships with our travel-trade partners, and
that'll be all the way from New York down to Florida and then across to
Illinois. It all reinforces both our excitement and our optimism for
forward growth for the company.