Richard Turen
If the top accounting firm from Mars sent their best number crunchers to the U.S. to evaluate the health of our present travel economy, they might be rather surprised.
If they read our newspapers and listen to our screaming heads on cable news, they would determine that Americans have not only given up the entire wild notion of traveling, they are more likely to be found cowering in fear under their beds.
People want to behead us. There's this kid with nukes and very little to lose by launching them. We've been devastated by storms, and large parts of our population still live below the poverty line. We manage to shoot a few hundred fellow citizens every single day, and tens of thousands of others die in preventable auto accidents. Many of our citizens fear to walk the streets at night, and we have almost no faith that our elected officials can do anything to fix it.
So why would we assume that large and increasing numbers of us would want to be transported by strangers or walk alone in cities all over the globe?
Why would we assume that we are going to want to keep traveling when our leader has never, according to his biographer, taken his family on a vacation outside of North America? In fact, all his vacations to date have been to buildings that bear his name.
So, given all this, shouldn't we assume (and won't our Martian pencil pushers discover) that travel growth and profits are seriously down as we end this far too exciting year? Actually, it hasn't turned out that way. The stock market has just reached another historic high. The Dow is over 24,000, and most of major travel stocks are along for the ride.
To get a sense of where we are and perhaps, where we're going let's look at one factoid: Ferrari sales are soaring, with 2017 shipments likely to top 8,400 vehicles on revenue of 3.3 billion euros. That is the symbolic closure on a year that has seen the desire for luxury products in all categories increase at a record pace.
Following a decade of across-the-board bankruptcies, all sorts of consolidation and our current strong economy (strong for us adults, of course; our kids will be saddled with crippling debt), airlines are seeing continued profits and billions in earnings.
The fact is that we are ending the year, despite the headlines and the desire of most of us for 2017 to just go away, in excellent financial shape, all things considered.
Let's step back and look at the big picture. The travel industry in the U.S. is still the largest in the world. The USTOA says we are spending $2.7 billion per day. That translates to a lot of profit and accounts for some 15.3 million jobs.
Put another way, economists at the analytics firm Prevedere point out that without the revenue we generated in 2017, the average American household would be paying $1,250 more in taxes each year. Perhaps we ought to get just a tiny bit of credit for that.
The big picture for next year is generally positive for four well-documented reasons:
1) International and domestic air travel is on the rise, and profits are up due to low fuel prices and more fuel-efficient aircraft.
2) The hotel sector is growing rapidly, and every indication is that the new capacity, much of it coming from new brands, is creating an environment of growth in both occupancy and revenue per available room.
3) Increased use of optimization software in the business sector is leading to greater, more effective utilization.
4) While the stock market will always see ups and downs, the consensus of most analysts is that the stock market's growth spurts will continue as profits keep surging.
All in all, we will start 2018 with cause for optimism. With new corporate tax breaks, one has to imagine corporate profits growing in the travel sector. But where are we headed longer term as new technologies engulf us even as evidence mounts that tech-savvy consumers are starting to hunger for one-on-one relationships with advisers?
Here is some of what we'll be encountering as we ride into the future or at least into 2018:
A company called TRVL is looking for travel bloggers and those who do planning for family and friends. Headed by a Dutch entrepreneur who designed much of the structure for the news aggregation app Apple News, TRVL is going to try to turn people who do travel searches into online agents who have most of the tools that previously were available exclusively to industry professionals. The goal is to help consumers sift through too much information and reward civilians for helping friends and followers book travel by cutting them in on commissions to websites that bring customers.
There is something going on that I describe as "intense immersion." Some call it living like a local or experiential travel, but I prefer intense immersion because it requires the recognition that there is a new type of traveler who desires a much more intense level of interaction with places visited.
Google has launched aggregator apps that pull in a user's hotel and flight information and adds what-to-do information on arrival. The ways this can be personalized are almost endless, and Google has something that you and I do not have in our databases: a history of what each user likes and dislikes and what interests them. Their recommendations are, for this reason, going to get more and more sophisticated, so that even the best agents won't be able to manage the breadth of knowledge stored about a client's travel preferences, personality and online history.
There is a growing amount of suspicion about the future as online users find themselves working and researching across multiple devices and platforms. More users are now choosing ad blockers and browsers that will not keep records of their online activities. Our clients will be justifiably concerned about privacy, and a one-on-one relationship may help alleviate that concern.
Airbnb is an industry disrupter on its way to achieving a $30 billion valuation, but 2018 will see companies in the wings intent on disrupting Airbnb itself by offering even more of an intense immersion experience. One of these companies is Bemate, which not only services apartments but provides "city mates" who can organize meetings with local friends and contacts, arrange cleaning services and even provide delivery of your favorite takeout foods.
There are going to be a gaggle of online giants trying, somehow, to personalize the guest experience by taking advantage of the latest technologies. They will have big data while the travel agent is still limited to data of the slingshot variety. In fact, data guru Joerg Esser says that, going forward, "classic travel shops" that add their own specific value will thrive. He envisions a travel ecosystem in which the simplicity of the offering might be much more important than data-centric manipulation.
Anyway, predictions are currently out of favor. Pollsters missed Brexit, the U.S. election and the growth of Bitcoin. So who really knows what the future will bring? One thing is for sure: I will still cherish the opportunity to chat with you in this space. To you and yours, warmest wishes for a new year of thrilled clients, magic-carpet-ride suppliers and airlines that smile whenever they hear your voice. Happy, happy New Year.
Senior contributing editor Richard Bruce Turen owns Churchill & Turen, a luxury vacation-planning firm based in Naples, Fla., and is an owner and editor of the Churchill & Turen Media Group. He has been named the top-producing adviser in the Virtuoso Network and a Travel Superstar by Conde Nast Traveler.