2008MOF_Suzanne

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Travel-Nature

Published on December 2, 2008

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MOF 2008 : MOF 2008 2009 Outlook for U.S. Travel and Tourism Dr. Suzanne D. Cook Travel Industry Association Current Environment: : Current Environment: We’re in a recession, Not a depression! Economic Trends : Economic Trends Even before financial crisis intensified in mid-September, economy already showing signs of strain. Erosion of household wealth; 760,000 jobs shed in last nine months. Quarterly consumer spending fell for first time since 1991 in Q3 and pushed GDP into negative growth. Gas Prices Begin to Fall : Gas Prices Begin to Fall Slide 5: U.S. Future Inflation Gauge Shaded areas represent U.S. inflation cycle downturns. Sep. U.S. Economic Outlook : U.S. Economic Outlook 2008F 2009F Unemployment Rate 5.6% 6.9% CPI +4.6% +2.6% Real Personal Disp Income +0.9% -0.3% Real Consumer Spending +0.6% -0.3% Real GDP +1.5% +0.4% Total Profits -7.6% -4.9% Source: Oxford Economics Consumer Confidence Remains at a 15 Year low : Consumer Confidence Remains at a 15 Year low 1985 = 100 Source: The Conference Board Traveler Sentiment Index (TSI) : March 2007 = 100 Source: TIA/Partnership TravelHorizons™ Traveler Sentiment Index (TSI) TSI Affordability Index : March 2007 = 100 Source: TIA/YParternship TravelHorizons™ TSI Affordability Index Leisure Travel: : Leisure Travel: Proves Its Resilience Once Again 2008: -0.2% 2009: -1.3% 2010: +3% Source: Travel Industry Association Leisure Travel Intentions* Among U.S. Adults Stable : Leisure Travel Intentions* Among U.S. Adults Stable * Intend to take leisure trip in next six months Source: TIA/YParternship TravelHorizons™ Financial Issues Affecting Leisure Travel, October 2008 : Financial Issues Affecting Leisure Travel, October 2008 Source: TIA/YParternship TravelHorizons™ Slide 13: Cruise Passengers Forecast Millions Not Bad through 2007 and Modest Growth in 2008… Estimated Attendance at theAll U.S. Theme Parks2000-2012 : Estimated Attendance at theAll U.S. Theme Parks2000-2012 2002-2007 CAGR = +1.3% 2008-2012 CAGR = +1.8% C H A R T 8 SOURCE: PricewaterhouseCoopers, Global Outlook for Media and Entertainment, 2008 Special Interest Travel on the Rise Change in Tours Offered by NTA Operators - 2008/2007 : Special Interest Travel on the Rise Change in Tours Offered by NTA Operators - 2008/2007 Source: National Tour Association Percent Change in NTA Operators Offering Tours Nature-Based Travel a Mixed Bag : Nature-Based Travel a Mixed Bag National parks hosted 277.7 million visitors in 2008 – up 0.3% and expects another 0.4% gain in 2009 Private camper-nights down and expect to be flat in 2009 2008 RV shipments down 24% and another 4.5% decline expected in 2009 RVers say they are traveling closer to home; traveling fewer miles; and staying longer at one destination. U.S. ski resorts had best year ever in 2007/08; optimism high for 2009 but rising airfares are a concern Source: National Park Service, American Recreation Coalition, Recreation Vehicle Industry Association Business Travel: : Business Travel: Short term rocky, longer term brighter for business travel volume 2008: -3.6% decline 2009: -2.7% decline 2010: +2% growth Source: Travel Industry Association Purpose of Business Travel : Purpose of Business Travel Source: TNS Business Travel Outlook : Business Travel Outlook National Business Travel Association expects 2009 will bring more of what was seen in 2008: More upheaval Fewer travelers Higher costs Among their members: 50% expect business travel to grow 49% are pessimistic about business travel growth 55% expect an adjustment in the new supply and demand of business travel Source: National Business National Association Travel Alternatives : Travel Alternatives Teleconferencing: usage increase reported by 75% of survey respondents 31% reporting an increase of up to 5% 21% indicating an increase of 5-10% Video Teleconferencing: also increasing according to 57% of respondents 32% indicate an increase of up to 5 % Telepresence: the most robust and most costly conferencing technology, is only used by about 14% of respondent companies 9% note increased use of Telepresence by up to 5% 5% of users report a 5-10% increase Technology Replacing Trips? 81% of travel buyers think so, but An additional 20% said that this technology complements trips rather than replace it Source: NBTA’s Impact of Economic Downturn Survey 2008 Number of Meetings2008 vs. 2009 : Number of Meetings2008 vs. 2009 Source: M & C Research Survey- June 2008 Meeting Spend2008 vs. 2009 : Meeting Spend2008 vs. 2009 Source: M & C Research Survey- June 2008 Meeting Alternatives : Meeting Alternatives Webcast’s Impact on Total Meeting Attendance Source: FutureWatch - 2008 Breakdown by Sector : Breakdown by Sector The State of the Airline Industry : The State of the Airline Industry Not so good… Airline Travel (Enplanements) on U.S. Carriers : Airline Travel (Enplanements) on U.S. Carriers 2007/2006 +1.4% Domestic Passengers +1.0% International Passengers +4.4% 2008/2007 (Jan – July) -2.7% Domestic Passengers -3.9% International Passengers +5.4% Source: Air Transport Association Slide 27: Air Capacity Cuts in the U.S. Capacity Reduction: 10% reduction year over year expected through 2011 7% drop in number of flights worldwide in Q4 2008 vs. 2007 Sources: USAToday.com (http://www.usatoday.com/travel/ flights/airline-capacity-map.htm). Data from the Official Airline Guide NBTA’s Impact of Economic Downturn Survey 2008 Air Travel Scenario A: Bleak : Air Travel Scenario A: Bleak Fuel prices continue run up Economy slips into recession Consequences pax drops by 10% over 2 years 2000-02: -9.3% recovery 4 years 1979-81: -9.8% recovery 4 years some carriers read chapter 11 or 7 Hard Landing Source: InterVISTAS Consulting, Inc. Air Travel Scenario B: Rapid Recovery : Air Travel Scenario B: Rapid Recovery Fuel price bubble bursts return to $80-100 Economy avoids recession Carriers cut domestic capacity 8% yields rise - seat management systems respond to reduced capacity & increase yields costs reduced (fuel, operations, capacity) some capacity restored SOFT LANDING Source: InterVISTAS Consulting, Inc. Many Have Had Problems With The Air Travel System : 30 Q.12a Many Have Had Problems With The Air Travel System This has happened to me at least once in the past year All travelers Waited in airport an hour/more because of delayed flight Sat in airplane on tarmac 30+ minutes Had a flight cancelled Considered flying but ended up traveling another way Missed a flight due to delays in pre-flight processing/screening When Travelers Avoid Trips,It Harms The Economy : 31 Q.12c,d When Travelers Avoid Trips,It Harms The Economy In the past year, have you chosen not to take a personal/leisure trip or a business trip because problems with the air travel system made the trip seem like too much trouble? All travelers 3+ trips/year 5+ trips/year Estimated annual cost of cancellation and delays is $26.5 billion. Alternative Transportation Modes Excel in 2008 : Alternative Transportation Modes Excel in 2008 Significant rebirth in bus/motor coach travel In the 200–400 mile “sweet spot”, motor coaches are competitive on time, cost, convenience and amenities Charter and tour – many experiencing effects of downturn in discretionary leisure travel spending; but growth from international visitors Amtrak ridership up nearly 12 percent this year Source: American Bus Association; Amtrak Hotels Begin to Feel the ImpactTotal US Industry - Key StatisticsSeptember 2008 YTD : Hotels Begin to Feel the ImpactTotal US Industry - Key StatisticsSeptember 2008 YTD % Change Room Supply 1.2 bn 2.5% Room Demand 785 mm - 0.6% Occupancy 62.9% - 3.1% Average Daily Rate $107.41 3.7% RevPAR $67.58 .6% Room Revenue $84 bn 3.1% 2008 Smith Travel Research, Inc. United States RegionsSupply & Demand Percent Change – September 2008 YTD : United States RegionsSupply & Demand Percent Change – September 2008 YTD Supply: ▲1.4% Demand: ▼1.5% Supply: ▲3.0% Demand: ▼2.7% Supply: ▲2.5% Demand: ▲1.1% Supply: ▲3.7% Demand: ▲4.3% Supply: ▲2.2% Demand: ▼0.2% Supply: ▲3.1% Demand: ▼1.5% Supply: ▲2.5% Demand: ▼2.4% Supply: ▲2.0% Demand: ▲0.8% Supply: ▲2.0% Demand: ▲0.5% 2008 Smith Travel Research, Inc. Total United StatesLodging Industry Forecast : Total United StatesLodging Industry Forecast 2008 Smith Travel Research, Inc. Slide 36: U.S. Sales Volume $10.6 State of the Vacation Timeshare Industry $1.9 $4.2 $2.2 $2.7 $3.1 $3.8 $4.8 $5.5 $6.5 $7.9 $8.6 $10.0 International Travel:The chickens come home to roost! : International Travel:The chickens come home to roost! Slide 38: The economy will take a hit due to slowdown in international arrivals, which has cushioned U.S. destinations up to this point Total international arrivals (including Canada/Mexico) will decline -1.6% in 2009; only slight growth in 2010 Overseas arrivals will decline -3.1% in 2009; slight growth in 2010 As the dollar gains strength, we need better solutions Travel Promotion Act Record Outlook for 2008 ( )based on % growth needed and 2008 YTD % : International Total * 55,986 10% 9% 1 Canada 17,761 11% 14% 2 Mexico 14,333 8% -7% Overseas ** 23,892 10% 10% 3 United Kingdom 4,498 8% 7% 4 Japan 3,531 -4% -5% 5 Germany 1,524 10% 20% 6 France 998 26% 29% 7 Korea 806 6% -1% 8 Australia 670 11% 6% 9 Brazil 639 22% 21% 10 Italy 634 19% 29% Origin of Visitor 2007 07 / 06 08/07 Aug.YTD (000s) (% change) (% change) Record Outlook for 2008 ( )based on % growth needed and 2008 YTD % * International travelers include all countries generating visitors to the U.S. ** Overseas includes all countries except Canada and Mexico. International Visitors to the U.S. and Projections(2000-2012) : Arrivals in Millions Sources: U.S. Department of Commerce, ITA, Office of Travel & Tourism Industries; Secretaria de Turismo (Mexico); Statistics Canada & Tourism Economics International Visitors to the U.S. and Projections(2000-2012) Short-Term ForecastInbound Travel to the U.S. : Short-Term ForecastInbound Travel to the U.S. Long-Term ForecastInbound Travel to the U.S. : Long-Term ForecastInbound Travel to the U.S. Origin Country 2007 Change 2012 Change Actual 07/06 Forecast 12/07 (000s) (%) (000s) (%) Total Visitation 55,986 10% 64,944 16% Canada 17,761 11% 20,958 18% Mexico 14,333 8% 16,626 16% Overseas * 23,892 10% 27,237 14% Asia / Oceania 7,211 4% 7,932 10% Europe 10,406 13% 11,967 15% Latin America and Carib. 4,377 15% 5,252 20% Middle East and Africa 898 11% 1,041 16% Overseas includes all countries except Canada and Mexico. Sources: OTTI; Statistics Canada; Banco de Mexico; Tourism Economics Visa Waiver Program Expansion : Visa Waiver Program Expansion 27 Current countries: Andorra, Australia, Austria, Belgium, Brunei, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Monaco, Netherlands, New Zealand, Norway, Portugal, San Marino, Singapore, Slovenia, Spain, Sweden, Switzerland, United Kingdom, Accounted for 64% of 2007 overseas visitors. 7 New countries: Czech Republic, Estonia, Latvia, Lithuania, Hungary, the Republic of Korea and the Slovak Republic Accounted for 4% of 2007 overseas visitors. Beginning mid-November, requires biometric passport and ESTA registration. Summary : Summary U.S. Travel Forecast : U.S. Travel Forecast 2008 Total Domestic Person-Trips - 1.0% Leisure Person-Trips - 0.2% Business Person-Trips - 3.6% International Inbound + 9.1% 2009 Total Domestic Person-Trips - 1.7% Leisure Person-Trips - 1.3% Business Person-Trips - 2.7% International Inbound - 1.6% Source: Travel Industry Association; U.S. Department of Commerce, Office of Travel & Tourism Industries; Tourism Economics Slide 46: Travel Expenditures in U.S. To Exceed $784 Billion in 2008 p = preliminary; f = forecast Billions of dollars of direct spending by domestic and international visitors Source: Travel Industry Association; U.S. Department of Commerce, Office of Travel & Tourism Industries; Tourism Economics Slide 47: Spending Growth Will Slow Significantly in 2009 Percent Change from Prior Year Source: Travel Industry Association; U.S. Department of Commerce, Office of Travel & Tourism Industries; Tourism Economics Slide 48: www.tia.org scook@tia.org

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