Travel Industry

Richard Fain, chairman and CEO, Royal Caribbean Cruises Ltd. officially takes ownership of Oasis of the Seas .

The hype has been enormous — seminars touting the retractable roofs, interior balconies, ziplining, aqua theater, an elevator bar and a promenade that features real grass the employees have to mow. Heck, they’ve even signed Rihanna to provide entertainment in December. But despite the webinars, CLIA classes, brochures and emails telling the travel industry between the lines that Royal Caribbean’s Oasis of the Seas will invigorate profits, it’s now looking like … well, hype.

Even the world’s largest ship can’t overcome the plummet in discretionary income to persuade folks to book sooner than a few weeks out in this fourth quarter. Travel agents are telling Cruise Week that at the end of October, there’s still plenty of vacancy on Oasis for Christmas and New Years sailings, even though the $1.5 billion vessel is the most talked about new cruise ship to come along in years, the publication points out. This includes everything from the inside Category Q spaces to balcony categories, although the suites at the top of the pricing chain are sold out.

It’s the same story for the first quarter of 2010, too: suites sell, while agents paddle to get vacationers to commit to the rest of the ship. That 40 percent additional space to entertain as many as 6,360 passengers per sailing may turn into 40 percent more booking headaches as the recession continues.

And since Oasis also carries another accolade — world’s most expensive cruise ship — slow bookings can’t be too welcome within the accounting department at Royal Caribbean, particularly with sister ship Allure of the Seas hot on its heels in the shipyards.  Oasis is scheduled from December 2009 to April 2010 to offer 7-night trips from Ft. Lauderdale to St. Thomas, St. Maarten and the Bahamas. Beginning in May, the itinerary changes to Haiti, Jamaica and Mexico out of Port Everglades, one of the few large enough at the moment to allow Oasis to dock.

“It’s in the DNA of our company, about every 10 years, to take more or less a fresh sheet of paper and create the greatest cruise ship in the world,” CEO Adam Goldstein has said. He’d better hope he also reinvents American travel habits in the next 12 days as well.

Photography: Royal Caribbean Cruises Ltd.

This post is part II of a series we’re doing on detecting travel trends and holiday weekend hotel booking patterns, based on an analysis of data collected by UpTake. In Part I, we saw the trends and patterns in the San Francisco market. In this post, we’ll be looking at the New York area data, which shows significant differences as compared to San Francisco.

W New York Union Square

The first data sample was taken on June 19, and the results of successive rate checks were noted down all the way through the 4th of July weekend and onwards to-date, leading up to Labor Day. The hotels included are all 3 or 4 star hotels in New York City, and spots ideal for drives out of New York City, like the Hudson Valley and Cape May, NJ.

Rates for the 4th of July weekend at hotels in New York City start creeping up surprisingly late. As of June 19, the 4th of July weekend rates at the W New York Union Square and The Benjamin Hotel were actually less than the weekend rates offered for bookings 4 weeks on. At the Sofitel New York, both the weekend rates and the 4th of July rates were exactly the same.

The same thing happened again, in the next sample taken on June 26. What does this mean? To make sense out of this, you have to look at the data for the rest of the New York region. In samples taken for both Cape May, NJ and hotels in the Hudson Valley, most units were completely sold out - as of June 19 – for 4th of July stays, which made the June 26 sample redundant.

In places perfect for getaways from the City – where bookings were still available as of June 19, such as the The Bell House in Hillsdale, rates were at a premium  -$175 for 4th of July bookings, as compared to $150 for weekend bookings 4 weeks on. 

This heavy demand in areas surrounding New York City, taken in conjunction with the lack of demand in New York City itself, suggests that during the 4th of July weekend, more people actually leave the City, than come in to visit. Mayor Bloomberg might want to dispute this notion, but numbers don’t lie.

Moving on to the Labor Day bookings, the trends are much brighter – and faster – for New York City. In the previous post, we saw that the cutoff date for Labor Day bookings in the San Francisco market is August 6 – beyond which the prices start going up beyond standard rates.

For New York, the cut-off date starts much earlier. In five successive rate checks conducted between June 19 and July 20, the Labor Day weekend rates for New York hotels held steady at rates less than advance booking rates for non-holiday weekends. But in the sample taken on July 26, the Labor Day rates for all sampled hotels in New York City shot up. 

The W New York Union Square offered $249 nightly weekend rates and $344/night for the Labor Day weekend. For the Sofitel New York, it was $225/$265.

Rates outside the City – in the Hudson Valley and in Cape May, NJ – did not go up for Labor Day. On the contrary, Labor Day rates at NYC getaway hotspots like the Albert Steven Inn in Cape May actually dropped to $165  in comparison to weekend rates of $210. Rates at the aforementioned Bell House in Hillsdale remained the same ($150) as weekend rates.

This means that less New Yorkers go out of the City for Labor Day, as compared to the 4th of July. The overall inference here is that New York City’s hotel booking patterns depend not only on incoming visitors to the City, but also heavily depend on the vacation patterns of NYC residents. Why this is so a matter we’ll discuss in a forthcoming post.

Photo courtesy Starwood Hotels & Resorts Worldwide

Ask any executive why the business travel segment is suffering, and you’ll likely get an earful on how the government has stigmatized the traditional corporate meetings in Las Vegas and Hawaii.

business travel changes

Believe me, I like to make Uncle Sam my whipping boy at every opportunity, and the government has put a fear into companies who think a resort in Palm Desert looks nice for an incentive trip. But according to PhoCusWright’s U.S. Corporate Travel Distribution report, no less than seven trends are shaking up the status quo right now:

1. Balancing the Triple Bottom Line

Accounting now looks at a company’s environmental and social performance areas in addition to pure cash. It’s also known as “going green,” and with environmentalists blaming airlines for 7 percent of worldwide carbon emissions, it puts the squeeze on decisions involving lots of airport check-ins.

2. Putting the E Cart Before the T Horse.

A clever way of saying “we want to reconcile booked vs. ticketed vs. pre-trip vs. spend vs. reconciled (or post-trip) travel data.” Still scratching your head? According to PhoCusWright, it means companies want to pull all of their travel partnerships into one end-to-end solution.

3. Business Travel Goes Retail: Supply Chain Management

When the going gets tough, the tough expect their partners to share insider information on their key performance indicators, too. Companies with corporate travel accounts want to see risk-reward set ups that give them extra perks for exceeding their terms — luckily, they’re willing to pay a penalty for missing, too.

business travel on the move

4. Traveler-Centric vs Trip-Centric Buying

Thanks to the Internet, travelers of all stripes expect a little “me” in everything they book. The game isn’t about finding a great destination now at a great price — it’s also about knowing this traveler’s history and profile at the same time.

5. Going Mobile

Nearly 70 percent of frequent business travelers have a smartphone somewhere on their person. Corporate travel players need to know how to send down itinerary changes, boarding passes and other pertinent information to these phones. Pretty soon, they’ll be demanding e-wallet payment options, too, so look lively, industry.

6. Video Conferencing: Traveling Without the Trip

Face it, if companies can set up face-to-face meetings over the Internet without the travel drama, they’re going to run with the opportunity.

7. SMEs Become Big Business

SME stands for small and mid-sized enterprises, that group of businesses whose employees do some travel, but they’ve always just asked a secretary to make the booking on Expedia. The recession is actually an excellent time for the travel industry to introduce itself to these dollars, as any offer to help save time and money gets bigger play today.

Photography: laverrue, vandelizer

PhoCusWright

PhoCusWright has published the Top 10 Travel Technology Trends for 2009. Every year, PhoCusWright takes a fresh look at the technologies and innovations that have the potential to drive change in the travel, tourism and hospitality in this annual publication.Each of the 10 trends from this report, listed below, has been weighed by PhoCusWright experts for its business value and potential to change the face of travel.

Bob Offutt, senior technology analyst and editorial director, Technology Edition, explained that “Innovation is at the very heart of the travel industry-from the beginnings of air travel and global hotel brands to GDSs and OTAs. These ten technology trends will reshape the way consumers search shop and buy travel.”

1. Despite Market Woes, Pockets of Investment Still Exist
2. The Entire Trip Experience Will Be “Informationized”
3. Software as a Service (SaaS), Cloud Computing and Open Source Spawn a New Flock of Innovators
4. Suppliers (Finally!) Provide Personalized Shopping/Booking Tools
5. Technologies Will Continue to Converge
6. A Flood of New Mobile Travel and Location-Based Applications Come to Market
7. Advertising Technology Transforms Travel Distribution
8. Still Searching…for Better Search
9. Democratization of Supply Levels the Playing Field
10. Business Intelligence and Analytics Move to the Forefront

The complete article, with technology overviews, in-depth strategic implications and examples of each trend, is available here (purchase required), but I’ll give you a sneak peek at the kind of stuff you’ll find inside.

The first trend, about investment, points out that 23% of private equity companies, 5% of venture capitalists and 25% of other investors are actually planning to increase investment in the travel sector in 2009. According to their survey results, investors still believe there is plenty of room for innovation, considering the large gap between Travel 1.0 and Travel 2.0 functionality.

Examples cited for this trend include the funds raised by AdventureLink, TVtrip, Uptake and Tripwolf (when I started writing this post, I had no idea Uptake was mentioned in the report). Summary of it is that if you have the confidence in your innovation/product, now is the time to hit the road, so to speak.

The second trend, about the trip experience being informationized, details the improvements and opportunities in local information access tools and content, which have enabled service providers to hang on to travelers even mid-trip, for things like local transport, restaurant reservations, trip changes or cancellations, etc. Leveraging existing content with GPS, tools from Google and the abilities of devices like Apple’s iPhone has resulted in the opening up of a huge local content market, and provides more opportunities for offering services from the time you leave home on a trip until you return.

And this area of development is also benefiting from additional trends that are improving the ability to rapidly deploy new capabilities, like Software as a Service (SaaS), Cloud Computing and acceptance of Open Source in production applications.

We’re on to trend three here, and if I go on, PhoCusWright won’t take kindly to my considering all their hard work as open source, so… if you want to read the rest, you can get the full report here – http://www.phocuswright.com/report/09techtrend

PhocusWright 2008 came to a close yesterday. During the four days, three trends surfaced. The first trend was the extreme pessimism about the economy and its impact on the travel industry, the second was the rising importance of video and the final trend was the impact of mobile on travel

1.  A global economic meltdown is worth discussing

Downward Spiraling DOW

If I wasn’t concerned before the conference, I am now. The state of the economy was discussed on stage, in blogs and during lunch breaks. It is obvious the travel industry is preparing to be hit hard and is doing its best to prepare. A few of the center stage speakers comments were noteworthy and offered some hope in the new economy:

Jean-Claude Baumgarten President and CEO World Travel & Tourism Council just arrived on stage direct from from India.  He encouraged and inspired attendees to look at India and China’s emerging economies are a realistic means of growing their travel businesses world wide. These two countries each have a thriving middle class with money to spend and a desire to travel.  His comments were inspirational and informed.

McKinsey supports Mr. Baumgarten’s message with these statistics in a recent report:

“The lure of China’s urban-affluent segment is easy to understand. These consumers earn more than 100,000 renminbi (about $12,500) a year and command 500 billion renminbi—nearly 10 percent of urban disposable income—despite accounting for just 1 percent of the total population. They consume globally branded luxury goods voraciously”

And TimeAsia offers the same growth statisitics from India,

” for the past 23 years India’s GDP has grown at an average annual rate of 6%, making it one of the fastest-growing economies in the world. The growth rate may have been lower than that of China’s, but it is double that achieved by the West during the Industrial Revolution. As a result, India’s middle class has more than tripled in size to 250 million people.”

With record growth in these two economies, the west can look to the East for revenue and profits for growth or just survival during the next few years.

A few other speakers joined in the discussion, Stephen Kaufer, President of TripAdvisor, told the conference  he was irritated by the pessimism and found it “boring.”  Jeffery H. Boyd, President and CEO of Priceline, when asked if the economic climate could be a windfall to Priceline, responded, “we are not feasting on their pain, we are helping fill seats and rooms. This comment alone proves that even in a downturn, some firms may show record growth.

The overall message from the conference was that we must innovate, invest in the product, cut all possible costs and focus on profitability.

2.  The rising importance of video

Travel Channel

Most travel web sites don’t feature video. Beautiful photography, UGC and original editorial content seem to be everywhere, but not video, unless you look for it.  However, Charles Younge, President of the Travel Channel, stated that “video and travel go together like love and marriage, horse and carriage.”  With the growth and popularity of YouTube, the rising number of mobile phones (350 billion worldwide) and the fact that 1 in 7 people view a video prior to making a travel purchase, he may be right. He  mentioned that the TravelChannel had 30,000 visitors view a short video on a resort in the Bahamas, in just a few weeks that had had no promotional effort whatsoever. In his opinion, if video is done correctly it can be a game changer. To do that it must be:
Searchable-support multiple video platforms, optimize, etc.

Relevant-if presented correctly, it can be a deal closer

High quality-most viewers consider web- based video unsatisfactory, they want the good stuff

Trusted-”bad creates a premium for good,” he recommends 90 seconds that is  not overtly commercial, takes them beyond the obvious such as Intercontinental Hotel Group concierge series

Ubiquity-one reason travel planners don’t search for video is that they don’t think it exists

Two firms seem to be on trend,  TVTrip offers high quality hotel videos by professional photographers and TripTelevision offers an award-winning, intelligent media player that travel marketers can “visually direct their customers through an intelligent, TV like experience. It was only after Mr. Younge’s presentation that I realized TripTelevision with its high quality and searchability may be onto a good idea.

3. Mobile & travel may have made a match

IM@ wins Innovation Award for 2008

Mobile remains the new profit frontier because the industry leaders recognize its importance and the innovators are delivering a product that performs for everyone.

• Steve Kaufer mentioned, “TripAdvisor brought out a great mobile product a few years ago. It was used by 1,000 people.”

• The Travel Innovation Summit Innovator Award winner was IM@, Interactive Mobile @dvertising, LLC. They offer a free downloadable travel application for most phones. The application offers travelers information they need while on the road. It caught the audience and the judges’ award winning attention.

In a few short days, a leader in travel mentions he tried to capture the power of mobile, but failed.  Conference participants chose IM@ from32 innovators as one of the top six, and then a panel of experts selected it the winner of innovation for 2008. It won because it promises to make mobile work for the consumer and for advertisers. That says potential… Here is the link to the demo video from the Innovator stage presentations.

(now you see what I mean about video, if only this worked better, and was searchable…)

Three trends:

1. A economy spiraling out of control;

2. Video gaining momentum; and

3. Mobile applications delivering on both sides of the travel equation.

I will be interested to see what happens in the next year, who is flourishing and who is not and if these trends continue to rise in importance.