industry forecast â?–
john kloster
State Tourism Officials Preview 2010 Group Travel Scene Four marketing specialists
Leisure Group Travel organized a panel of veteran state tourism officials to explore the state of the business in 2009 and look into the crystal ball for trends they see shaping the market in 2010. Participants included Celeste Krolak, then the Tour Marketing Specialist at the Ohio Tourism Division; Cheryl Offerman, Travel Trade Marketing Manager of Explore
from diverse sections of the U.S.
Minnesota Tourism; Carol Torricelli,
assess the tourism climate in their
CMP, Director Domestic Sales for Virginia Tourism; Jennifer Sutcliffe,
states and discuss strategies
Travel Industry Marketing Manager
for attracting groups.
of the Arizona Office of Tourism; and Jeff Gayduk and John Kloster of Leisure Group Travel.
Will group travelers be back on the road when 2010 rolls around?
18 December 2009
LeisureGroupTravel.com
John Kloster: A year ago this week we were conducting a similar panel at the same time Lehmann Brothers was imploding, which really hammered home for everyone the financial situation we were actually in. At that time there was a great deal of trepidation about the economy and its impact on 2009. Now we can look back on 2009. How was business this year overall and specifically leisure group business? Cheryl Offerman: Our group business was certainly impacted this year by the economy. The jury is still out as to whether that’s due to people’s fear or that they really didn’t have money, but it seemed that as the year went on, that the group business picked up. We were in a kind of panic mode in the early spring, but the groups did travel. We did notice the often cited trend of groups coming from a closer range than extended tours and therefore more coach tours than air tours into Minnesota. As far as spending, we noticed people want value. They didn’t necessarily shun our resort stays or shopping experiences, but they were asking for value in the package. Carol Torricelli: I agree with Cheryl on all of the above. I believe Virginia experienced the same trends for leisure travel as well as business travel, impacted by the economy, H1N1 and the recent negative impact on business travel that prompted the meetings industry response with “meetings mean business.” So many audiences were impacted, from student groups, government and association meetings to leisure travel. However, many hospitality partners were encouraged to “stay the course” by creating incentives for travelers to buy, partnering with their hospitality communities for cooperative advertising, submitting suggested itineraries on our state tourism website, providing editorial and trip ideas for the media and offering packages to commemorate our anniversaries, such as the 40th anniversary of the Virginia is for Lovers slogan and the Civil War 150th.
JENNIFER SUTCLIFFE
CELESTE KROLAK
Arizona Office of Tourism
Ohio Tourism Division
Jennifer Sutcliffe: I think everything was hit all around. We don’t track leisure business specifically, but do know our business and meeting travel got hit by many issues, more recently Arthur Frommer citing Arizonans for toting guns at a recent Obama rally. We have a lot of Mexican visitors and being a border state, people think they might be at a higher risk for H1N1 here. There’s been a lot of media that people are getting killed here, although it has nothing to do with tourism. We’re a border state and deal with border issues, but they seem to be bigger news elsewhere than they are here. Clients still want to travel, but they’re waiting until closer in to book, they’re doing shorter trips, more value trips. Everybody here has some kind of a deal. It’s hard to say what kind of an impact it’s making incrementally and it seems everybody is just waiting it out. We’ve seen a lot of bankruptcies and hotels taken over by other companies. Everyone is feeling the pain and the CVBs in the Valley have had to struggle with their meeting and incentives business and the whole “meetings mean business” thing. The Social Security Administration had a meeting at the Arizona Biltmore and we got a lot of bad press for that, but it was great because it’s a great place to meet, it was off-season so they were able to take advantage of great rates. So we’re fighting back, but everybody is feeling the pinch. We still don’t have a budget. We went in knowing it was going to be a bad year and went in with a conservative budget, so I don’t think there are going to be any surprises and we’re still doing the big things. We’re still going to NTA, ABA, USTOA, but we’ve cut back on some other things and cooperative opportunities are going to be more closely scrutinized because everyone’s looking for ROI and it’s getting a little tougher, but we’re OK.
CHERYL OFFERMAN
CAROL TORRICELLI
Explore Minnesota Tourism
Virginia Tourism
CO: One of the optimistic changes I see is so many of our hotels and attractions that relied so heavily on the meetings and convention business have now redirected at least a portion of their fundDecember 2009 19
industry forecast ❖
ing, time and activities toward the group market because the meetings market was hit the hardest in Minnesota. The people who pooh-poohed the group market for years now see they need these rooms filled and the group market was still moving and is still moving, so this is a new opportunity.
pricing. We’re working with our vendors in these tough times to hold the rates. So it’s a lot more customer service to maintain the rapport with the groups, so we will continue to work with them when the economy is better and they trust that we have their best interests at hand.
customer service portion has become key. For the customers who are coming to the area I’m trying to stress to make sure their needs are being met and that the rooms are ready, the restaurant is expecting them and that we can get them in and out without our delaying their trip.
Jeff Gayduk: We see a bit of that from the marketing side where we are suddenly getting interest from hotels that are now looking to do group marketing campaigns in print and online, so it’s interesting how the tides have turned. They’re facing the realities of the market, and the bottom line is that they need to fill rooms so that our core mid-market hotel advertisers are now being supplemented by the Hiltons and Hyatts.
One issue we’re dealing with is that a lot of the smaller CVBs are not receiving their bed tax from their hotels because
JG: You mentioned about going back on a smaller group and asking for concessions. Have suppliers agreed or have you encountered resistance?
[
JS: Since our Governor's Conference in July we have been approached by a number of people who are asking how to get into the group market. I just did a seminar in Tempe where they did have leisure business, where they were able to make a higher margin, and shied away from the leisure group market. Now they're saying we really need to rethink this and go for group business. I even got an email from a luxury hotel asking about NTA. I told them this probably isn't for you because you can't go into this market and then in two years say we're done with that. If you're going to do this, you have to make a commitment and you're not where they are staying. Celeste Krolak: We have a lot of automotive plants in our state and really suffered from the automotive downturn here and in neighboring states because a lot of their workers are our group travel customers and with them losing their jobs, it certainly had an impact on our numbers with a decrease in the number of tours from cities like Detroit. But we’ve seen an increase in last- minute travel and groups with smaller numbers that are trying to keep their same 20 December 2009
“Smaller CVBs are not receiving their bed tax from hotels because the money is not there.” —Celeste Krolak
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the money is not there. When the CVBs don’t have dollars available for marketing, it’s impacting our ability to deliver cooperative projects we’re doing together. We have a lot fewer people attending the fall shows and into early 2010. Our budget is being reviewed and by summer 2010 they want our budget to be privately funded and not be a state agency. We have not registered for NTA, ABA, SYTA or OMCA. This is tough because the smaller areas count on us to represent them at these. My budget was cut 50%, and many of the group sales people in the CVBs have lost their jobs and not been replaced. It’s a struggle right now. But the
CK: Most have met the requests because they know it’s tough out there. The Greater Cleveland area missed out on some student business this year because so many of the groups wanted to travel in early May. Because Cedar Point Amusement Park doesn’t open that early, Positively Cleveland and the Rock and Roll Hall of Fame worked closely to accommodate groups in the downtown area. It’s a lot of creative thinking. JK: We’ve seen over the past few years the growth in affinity and niche groups. What are you experiencing on the destination side? What types of these groups are visiting and what are you doing to attract emerging markets, either by product development or marketing?
CO: We have really seen interest by niche groups in Minnesota. For example, groups are coming to our northern resorts for fishing. This is great for the smaller resorts, not the big golf resorts. The other big area for Minnesota is food, like cooking tours and wine-tasting events. Our wineries have been booming because of the tour business that has been coming to sample the wines, do a meal at the vineyard perhaps with entertainment tied in. That’s been a great trend for us. The other side is the cooking classes. The hotels and restaurants that offer cooking classes have been LeisureGroupTravel.com
doing really well. Several of the restaurants in the Mall of America offer classes and their schedules have increased dramatically over the past year. It’s kind of neat to see that people are getting off the coaches from the traditional sightseeing tours and getting their hands dirty with dead fish or with pasta. CT: We too have seen growth in the heritage and cultural niche markets, as evidenced by the growing interest in our Virginia wine industry, culinary tours, the arts and the performing arts. Also green travel is getting a lot of attention, with farm-to-table programs or serving your fresh catch of the day at a green-certified restaurant. If tour operators and meeting planners find the passions of their customers, I know they will find a match in Virginia. I can’t help but believe if you continue to promote opportunities and be more positive about the experiences you have in your towns and with regional
partnerships, you create the emotional connection. People need that. We’re listening to the news too much which can be very depressing. I think tourism for all of us gives us the chance to enhance the quality of our lives. JS: The big driver for us is the weather in the winter. Everyone wants to be in Arizona where it’s dry and warm, and that will continue to be a driver for all types of travelers and not necessarily for groups. In our marketing we know people are looking for nightlife. There’s been a lot of interest in culinary, which is a big umbrella with a lot of things that fit underneath it. Wineries are popping up in the north-central part of the state and people are doing wine tours. We have a guy in the Verde Valley north of Phoenix that’s doing kayak tours to the wineries that are adventure. Biking and hiking and being out in our natural areas to see the Grand Canyon and wide-open spaces.
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industry forecast ❖
Sightseeing, of course, is still big, but they want to be immersed into the local native and western culture. Sustainability is also something we have tackled, so incorporating that into not only our marketing, but into our product in finding authentic and sustainable travel that has led into volunteerism. The national parks here already have programs and Game and Fish have volunteer programs and we are finding more and more people are looking for something to give back while they are here. This is common with girlfriends and families. We’ve not had a lot of student travel, but we’re finding more and more student tour companies inquiring about product in Arizona. We’re finding more and more CVBs focusing on sporting groups, both youth and adult. Sporting events are huge here, from golf to every major sport to two NASCAR races. The bowl games are huge with alumni groups. JK: We have operators telling us that their clients are asking for more options in their trips. We wonder if you are seeing that and what you are doing to facilitate that and to develop more infrastructure to support it. JS: I’m putting a lot less into the itineraries I create because people want a lot more flexible travel and don’t want the traditional trip that’s tightly scheduled from hour to hour. They want more free time with the possibility to visit the spa for a treatment or to go shopping or to the botanical garden. They are shorter trips with smaller groups and I’m hearing that straight from the tour operators. They want more six-day trips and not 12-day trips. They want a lot more golf and outdoor activities. People that come are being more active so they want more flexibility and choice. CT: What we are hearing are more requests for hub-and-spoke tours with a la carte options of activities when they arrive at their destinations. Buyers are customizing their tours to attract new audiences 22 December 2009
and depend upon the DMOs to provide these ideas to lure their tour. CK: One of the great things about having so many options is that when the group gets back together they can compare stories and hear more about what’s available in the area and that word of mouth is free marketing for future trips. Infrastructure can be an obstacle, both in terms of availability and in pricing. CT: If we can just stay solution-oriented, we can overcome just about every obstacle to make the experiences worthwhile. CK: It puts a lot more pressure on our partners to cross-sell and not limit their marketing efforts to their city or county. They have to be marketers for the whole state or region. JS: I totally agree. Hotels go to NTA and try to sell their rooms, but the groups aren’t coming to stay in your hotel. You’ve got to sell your area and even areas conducive for day-trips from your hotel. You’ve got to promote what’s accessible and not just that you can give them great rates and a free breakfast. CK: I tell our hotels, don’t talk about your $5-million renovation and think that’s unique because everyone else is doing that too. You’ve got to make them aware of local festivals and events and act as a destination advisor. I think oftentimes people miss that mark. Knowing the local area can make a hotel stand out, and I don’t think they always see that. CT: That’s also been our focus here too. In working with our DMOs, I have encouraged them to provide itineraries that focus on the experiences first, include hospitality companies and partner regionally with other DMOs. CO: In the current economic environment the hub-and-spoke itinerary with options is so critical. People can afford
to buy the tour and don’t have to pay for inclusions they don’t necessarily want. They’re way more in control of the budget. I know this is contrary to the idea of the traditional group tour where everything is included, but people have gotten way beyond that because they don’t want to pay for what they don’t want to do. This is making the tour more affordable for a broader number of potential tour participants. JK: How will business be for 2010 and how will trips be different going forward? Are hub-and-spoke trips and less inclusions part of that? CT: We’re seeing visitors mostly from our drive markets of neighboring East Coast states. DMOs are getting customer requests for hub-and-spoke trips with a la carte options. We’re also being cautiously optimistic. Between the students, the active boomers, fly-drive programs, the pre- and post- cultural tours from our meetings and the recently new statewide sports marketing efforts, if we just stay the course, I think we’ll see business slowly increase. JS: Operators are going after people they’ve never gone after before, purely out of necessity and doing things that are unconventional. One operator is putting advertising wraps on his coaches for the revenue. There will be more groups, but with less customers, so revenue measurement becomes subjective. We’re seeing shorter trips, but more frequency, and weekend getaways. Accessibility is a bit more of an issue in the West because cities are farther away from each other and we don’t have the rail system that’s in the East. But we’re going to see a lot more regional visitors, from Texas and New Mexico and even Western Canada with new service into Phoenix from Vancouver in January. So Canadians will be a growing market for us. For the group market, more experiential stuff and more of it. The groups will be small and with more affinity. Not your typical sightseeing tour that LeisureGroupTravel.com
visits the Grand Canyon and then is on to Las Vegas. We’re finding groups want to do fewer destinations and spend more time so they can experience more in the ones they do visit. CO: I’m predicting 2010 is going to be the year of the travel bargain. This is the year to stay at the Westin for what they used to pay at the Day’s Inn. The hotels are dealing, the airlines are dealing and as people get comfortable with the fact that we’ve probably reached a new normal, with the economy as it is, housing prices as they are and with a lot of people still working, people are going to be traveling even more. CK: I think more people have their finances in check and know what they’re spending and what their options are, so they’re looking for the affordable getaways, but from the group side fuel costs are now back to normal. If that holds true, we’re going to continue with the group travel, but if it changes all bets are off. We’re seeing operators trying to eat costs, so we’ve got them driving their own coaches where before they would have sent a driver. Many people are doing the work of two people, so they’re more stressed and need more than ever to get away. Whether it’s a two-day or a five-day trip, they’re making sure they’re getting their money’s worth.
JS: And they need to submit good pictures. We at the state level are now working on our 2010 travel planners and we don’t want a picture of a building, but need images of experiential travel. We don’t want a picture of an animal, but we want someone interacting with the animal because that’s what’s going to pull someone in.
[
JS: And they’re waiting until the last minute because they’re comparison shopping. They’re looking around a lot more and are waiting and comparing because they know at the last minute there could be that deal. And that’s where the CVBs need to put together packages for operators with more in them so they’re a better deal than travelers going out and doing it on their own. They have to include the hands-on elements and the behind-thescenes elements that an individual traveler can’t get. LeisureGroupTravel.com
CT: Our statewide DMOs really need to be visible on the web. They need to get their itineraries on the state websites, keep them current and compelling.
“In the current economic environment the hub-and-spoke itinerary with options is so critical.” —Cheryl Offerman
the state person and let us help them create a package they can sell to their customers. JS: It just comes down to basic customer service. It’s that added value that doesn’t cost anything. CT: The buyers have all these tools at their fingertips. They can get the printed planner or they have the website to search for tour product, but it all boils down to the people who make the difference. And that’s why it’s important to continue to work with the DMOs or state office to customize any trip for any size and for any audience. CO: I would tell any operator to go for the deal. JK: Is there anything important we didn’t cover?
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JK: The readers are tour operators and others who organize group travel. You have the chance to speak directly to them. What do you want to tell them about how they can best grow their business for 2010? CK: If they need help, they should let us know. If they don’t see what they’re looking for on our website or in our planner, we don’t want to be excluded from consideration. If they need help with packaging or aren’t getting the response they need from our suppliers, they should go to
CT: I think we all share the fact that we have experienced cuts this year, yet we continue to provide guidance with tour planning and offer customer service. Our DMOs are working together more regionally with more emphasis on partnerships. CO: For us, it’s all about partnering. It doesn’t matter if it’s with cities in your state or with neighboring states or with regions. It doesn’t even stop at the border, since we have a huge partnership with Manitoba.
Leisure Group Travel’s 2008 panel reflected concern that the economy was worsening and therefore tourism and tourism promotion would be negatively impacted. This year’s panel showed that cutbacks were needed and most tourism offices seem to have trimmed somewhat even before the full situation was evident. The result is that most states represented in this discussion were able to continue promotion to their most important markets, although nobody escaped cuts. LGT December 2009 23