Summing up 2007--Sizing and tracking U.S./Global Travel
Sizing and tracking the world travel market has always seemed such an unfriendly and complex task to most of us. And, to what end for individual supplier brands or travel agents, luxury or otherwise?
In the current issue of Luxury Travel 360 newsletter we offer top line data and important insights on The Economic Scorecard in global travel from Oxford Economics
And so…The Scorecard 2007
$740 Billion in direct TRAVEL EXPENDITURES including domestic and international travelers
$1.3 Trillion in direct, indirect and induced TRAVEL EXPENDITURES including international travelers’s spending in the U.S
$109 Billion in TAX REVENUE for local, state, and federal governments
Each U.S. household would pay $994 MORE IN TAXES without the tax revenue generated by travel and tourism in the U.S
Those are the numbers reported by the Travel Industry Association of America for 2007, an all-time high.
On a world scale the World Travel and Tourism Council (WTTC) posted
$7.0 Trillion as the amount of “economic activity generated by travel and tourism in 2007
$2.85 Trillion is the amount the WTTC says was actually spent by consumers on travel and tourism
But what does this economic scorecard really tell those of us who make a living marketing travel? What purpose is served for destinations, developers, leading travel supplier brands?
For insight we turn to Adrian Cooper of Oxford Economics, which compiles WTTC statistics- Here are a few excerpts- from our conversation
“ Figuring out how much the world spends on travel and tourism is a significant challenge. For one thing, tourism is a compilation of many industries—and 100% of none”
“Each country collects its own statistics on inbound and outbound travel spending and methods vary around the world. The challenge is even greater when quantifying the spending of domestic visitors, when no border is crossed. It is the diversity and linkages of the tourism sector that creates the need for surveys and economic models to quantify it.”
“ Despite all the uncertainties, industry leaders agree that it’s important to do the counting—not only the big picture of worldwide spending, but how much is spent on all those segments. It’s important, they say, because it demonstrates to government show how large the industry is, and helps players in the industry itself know how to operate today and plan for tomorrow.
“Tourism companies purchase goods and services from across the entire spectrum of the economy, creating indirect benefits to utility companies, farmers, accountants, and nearly every other sector. These indirect impacts are quantified for WTTC. However, WTTC figures do not include multiplier effects – which are the impacts of incomes as they are spent and re-spent in the economy.”
Travel Industry Association in the U.S. includes a multiplier effect, while WTTC does not. However, the WTTC research includes in the impact of tourism capital investment such as the construction of new hotels.”
Hershel Sarbin -
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Related Recent Stories-Excerpts:
The Elusive Math of Luxury Travel
You can’t manage what you don’t measure, goes the old management maxim and yet, — with new brands, new players, as well as old companies reinventing themselves, all scrambling to capture a piece of the luxury travel market, nobody — truly nobody — seems to be measuring it.
Maybe it simply cannot be done. But how could that be? Read on for our series on The Magical Math of Luxury Marketing--starting now!
Luxury Goods Annual Retail Sales Soar to $220 billion.
Global millionaires reach 9,500,000 in 2006; double a decade ago.
What Insights for Luxury Travel Marketers in U.S. and Beyond?
And Now! The Mighty Math of Luxury Travel—ILTM Survey Cannes
The global luxury travel business now comprises an estimated 25 million annual arrivals (3% of total international arrivals) accounting for 25% of international tourism spend - at least US$180 billion. On average, spend per trip is estimated at between US$10,000 - 20,000.
The luxury travel boom is being fueled by the increase in High Net Worth Individuals (HNWI) - those with at least US$ 1million in net financial assets - and also by the growth in their individual wealth. The number of HNWI grew by 8.3 % in 2006 and their individual wealth grew by 11.4%.* * World Wealth Report (Merrill Lynch and Capgemini)
Wealth is concentrating to an even greater extent amongst Ultra High Net Worth Individuals (Ultra HNWI) - those with financial assets worth at least US $30 million - whose number increased by 11.3 per cent in 2006 with their assets growing by 16.8 per cent
We began our recent report on ‘Family Travel Rising’ with the following:
“All the evidence -- whether you are looking at the Amex-Harrison Group study we reviewed in our last issue, or the Ipsos Mendelsohn Affluence Report completed in September, -- shows Family First when it comes to disposable dollars.
We believe family focus is going to be front of mind for a long time to come, long after the punishing economic climate has subsided. Provider brands will be hard pressed to provide much more than kiddie or junior, or young adult activities. Smart travel agents will have to rise to higher levels of creativity and performance on the family front to sustain customer loyalty and earn the benefits of word of mouth in the neighborhood.”
And last week we caught our favorite global traveler-editor-writer-commentator during a quiet moment at home in England, the home of The Gostelow Report. She shared these thoughts:
• The hotel industry has been very slow to realize that this big expansion in family travel was going to happen. We’ve had “connecting rooms and you can put the kids next door”. They moved on to two swimming pools rather than one. One was kid friendly and one was not. But we really haven’t had anything more than that.
• We are seeing more and more bigger family groups. Operators are having a real challenge coping with such groups because it’s not a group per se, but they form their own groups. They want to be private. They want their own thing. .They tend to do their own excursions. They suddenly want a bus to take them all out. So it’s a real, real challenge. And so far the hotel industry has not realized this is happening. Now, it’s not only families. We’re also seeing more and more groups of friends traveling. And the hotel industry is not incentivizing enough – say a pair of DINKs come- Double-Income-No-Kids. There’s no incentive to them at the moment to bring along two other friends or even four other friends. And there’s big potential on the marketing side there.
Everybody knows her, but her bio is worth repeating.
Mary Gostelow, president of Gostelow Travel: Hottest Hospitality News Worldwide, is an inveterate traveler on the road more than 300 days a year. She owns and publishes the definitive Gostelow Reports, monthly market intelligence briefings to the top levels of the hospitality industry. She is the editor of KIWI's online Wow! Magazine, and also sends out a monthly update to top travel professionals worldwide.
At the same time, she is contributing editor to such publications as Elite Traveler, enRoute, Hotels and Le Magazine.
But Lux 360 Found a Brighter -and we think, Sensible Side-
From Harvey Chipkin’s report in the British online Hotel Report-a paid service from William Reed Business Media- http://www.wr-bi.co.uk/ - Reproduced here with publisher permission
At the first industry wide meeting following the fall financial meltdown and the recent presidential election, the consensus seemed to be that, yes, the industry faces a historically challenging situation that will last for awhile. But there was also a feeling that lodging is in a better position than other industries – and, happily, a few silver linings were perceived as well.
We’ve all heard the bad news over and over: global liquidity drought, drops in rate and occupancy, a dismal outlook for employment, and a possibly extended recession. But some leaders managed to find ways to take – if not a positive view -- at least a more nuanced one. Following are a few comments about why weeping and gnashing may not be the only appropriate attitudes.
Steve Joyce, who recently became CEO of Choice Hotels International, said he has been “the only optimistic person in the room at a number of events over the last few weeks.” I strongly believe,” said Joyce, “that there is a paralysis factor and that you can’t base projections on two weeks of hysteria.”
“Forecasts in this environment,” he continued, “are entertaining but not much use.”
Other ‘smart marketer’ insights from Joyce, Mark Lomanno of Smith Travel Research; Peter Yesawich, CEO of The Y Partnership; Michael Kaufman, Chairman of National Restaurant Association; Patrick Ford, CEO of Lodging Econometrics; and Roger Thomas, Steve Wynn’s design guru for many years.
Nat Ives, in Ad Age Online Sept 6, cites new data from Ipsos MMR which assures that well-off readers read print publications just as much now as they did 5 years ago.
Also, survey respondents making more than $100,000 annually said their average hours online had grown to 22.1 each week from 10.7, while the time they said they spent watching TV sunk to 18.6 hours from 23.7 in the 2003 survey. Read the full Ives story at http://adage.com/mediaworks/article?article_id=130685. Lux 360 attended the client briefing this week and will provide additional perspective in our Sept. 30 issue, interviewing Ipsos MMR President Bob Shullman.
Issues & Insights 
