EXECUTIVE ROUNDTABLE DISCUSSION
Travel Industry
Association Marketing Outlook Forum
“What have we learned in the past year and how do we apply it to the future? What are the best business prospects and which markets continue to lag?” Four travel and tourism industry leaders candidly discussed these questions in a lively “Executive Roundtable” General Session at the Travel Industry Association (TIA) Marketing Outlook Forum in Austin, Texas, October 20-22.
John A. Marks, President & CEO, San Francisco Convention & Visitors Bureau, and 2003 National Chair, TIA
Robert E. Dirks, Senior Vice President, Brand Management & Marketing, Hilton Hotels
Vickie Escarra, Executive Vice President & CEO, Delta Airlines
Patrick Moscaritolo, President & CEO, Greater Boston CVB
Robin Tauck, President, Tack World Discovery
Q) What has 2003 looked like?
· Delta has had a strong summer. Latin America has been gangbusters. Europe and Domestic are also up. Now looking at 9 percent increase in traffic, system wide, in 2004.
o On an eight percent reduction in capacity, bookings have been better than last year.
· Tauck saw a big shift away from international and back to Domestic and “south of the border”.
o Canada had a big drop related to SARS.
o Family did well, including multi-generational trips
o Special interest travel is hot – cultural, heritage, event, wine, etc.
o “Travel in America” is the word for Tauck in 2004
· Boston’s experience mirrors the industry’s overall
o Strong leisure, but business travel has dropped off the map
o International ground to a halt; slowly coming back
o Shift from a heavy air market to a very strong drive market since 9/11; it’s a more price sensitive market
o When asked, “Is there a light at the end of the tunnel,” Moscaritolo replies, “We gotta create our own light.”
· Hilton observes that business travel has changed completely – it will never go back to the way it was.
o Dirks hypothesized that business travel may be back more than we think because it does look so different.
o Example: Hilton’s airport hotels are generally sold out Monday, Tuesday, and Wednesday nights which is a business travel pattern, but the rooms are booked at leisure rates.
o Yes, distribution has changed with the Internet, but there’s also the challenge of maintaining pricing integrity internally in the face of last minute booking trends. Individually properties panic and slash prices or unloading to Hotwire to fill beds.
o Hilton is optimistic for the overall industry for 2004 and beyond for the first time in two years
o And keep in mind that the hotel industry is still profitable. Not as big a profit, but still profitable.
Q) So, let’s talk more about business travel.
· Delta on the relationship between low cost carriers and business travel
o Low cost carriers are growing 20 percent faster than mainline carriers.
o Customers want low fares
o In terms of why people book a particular airline, more and more customers are trading off “go where I want, when I want” for “I’ll wait till noon if you give me a cheaper fare.”
o 75 percent of customers (including corporate clients) say they will use more low cost airlines in the future.
· A lucrative segment is what Tauck calls “WOOPies” – Well-off Older People. They are living longer and are more active, seeking more active vacations, than previous older folks did.
· Tauck has also identified special events as another lucrative market. Example: Tauck, for the first time, offered a Rose Bowl package -- Four-day weekend including attendance at the football game, priced at $1,800 per person. They sold 1,100 packages over one weekend.
Q) What have you done differently and successfully this
year?
· Tauck partnered more in putting together products and programs and that has worked well for them.
· Boston has been putting together partnerships and alliances with non-traditional partners to extend marketing dollars:
o Kellogg’s cereal
o Rockport, a subsidiary of Reebok is a logical partner for “Boston, the Walking City”
o Retailers
o Moscaritolo says, “There are no crazy ideas anymore.”
· San Francisco is looking to do the same and do more with non-traditional partners because of the ongoing budget challenges. As Marks said, how many times can you ask the same friends (in the travel industry) to fund destination promotion? Expanding to non-traditional partnerships and alliances goes beyond that limited scope.
Q) The booking window has shortened. People have come to expect good deals for last minute bookings. How is that showing up for you?
· Delta is seeing bookings two weeks out, even for longer trips. Exception is the Caribbean which is “on fire for us”.
· Hilton is seeing bookings seven days or less. Friday nights sell out but not until Friday noon. That triggers the panic and the unloading to Hotwire. Hotels need to learn to resist that urge. Ultimately, Hilton wants to own the desktop booker – the individual at this/her computer. So does Expedia. Who’s going to get there first?
Q) What one thing can we do to market the USA effectively in international markets especially in light of the $50 million Congressional appropriation for a national tourism marketing program?
· Hilton pointed out that $50 million isn’t much money. Dirks felt that television was the best vehicle to convey the emotional connection. Focus on key markets and have a strong public relations component.
· Boston echoed the importance of public relations. Fam trips, editorial coverage. And new product is needed, too.
· Tauck pointed to public/private partnership. Focus on key markets with messaging for key areas of the US, rather than at the state level. Internet is a tremendous vehicle for cost-effective marketing.
· Delta raised the visa issue as crucial to rebuilding international business. And the U.S. has to respond to the particular needs and wants of each target market.