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Analyses - January 16, 2006

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January 2006

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Print Trends,

What’s coming in 2006?

Each new year brings with it a new batch of forecasts and predictions on a variety of topics. From new technologies, to the hotel sector, to the latest hot destinations, here are some things to watch in the coming year.

Leisure travel

In 2006, leisure travel will continue to drive tourism growth. According to some US experts, rest and relaxation motivate more than half of all leisure travellers. Destinations like spa resorts and those offering a stress-free atmosphere look the most promising. A recent Tripadvisor.com survey showed that 50% of the 3000 respondents planned to take a spa vacation in the next year. With short stays still in vogue, the challenge facing the industry is to offer the most relaxation within the shortest amount of time.

Visits to national parks will rise, while attendance at amusement parks will drop. The cruise industry should continue its upward climb and enjoy an excellent year, notably due to the launch of new boats and the growing popularity of this product among families. Timeshares on cruise ships have been identified as a promising new trend in the coming years.

Cities that emphasize fun and a wide variety of activities within a small area – ideally within walking distance – are likely to attract more travellers. And, finally, the increased demand for leisure travel has led experts to encourage consumers to reserve early to ensure that what they want is available at the desired time.

Business travel

North American business travel will enjoy a good year with projected growth of 5% in 2006, compared to the 4% recorded in 2005. This increase will be driven primarily by the meetings and conventions sector. However, for their daily corporate needs, business people continue to seek alternatives to having to travel for business.

Recent forecasts from Meeting Professionals International (MPI) confirm a 7% increase in meeting expenditures and the number of events for next year. This forecast is based primarily on national markets, because American and European organizers do not expect more events to be held at international destinations. In Canada, the number of visitors attending American conventions should remain stable.

Good news for suppliers: MPI anticipates that convention lead times will begin to increase. In 2006, it is estimated that lead times will grow by nearly 40%, translating into an additional two or three months between the invitation to tender and the event date.

Hotels

In North America, increased demand and slow growth in supply means average room rates should continue to rise in 2006. The upscale and luxury sectors in particular should benefit from this situation. Furthermore, in 2006, the hotel industry, like all travel and tourism sectors, will face the dual challenge of staff shortages and human resource management. According to a recent US study, 25% of hotel industry employees are dissatisfied with their jobs and 32% of these people would like to find a new job in the next year. The year 2006 is also likely to be challenging for hotel owners in major US cities because many collective agreements are up for renewal.

Transportation

Pressures on the North American airline industry will persist as discount carriers continue to invade the traditional routes of the major airlines. In this competitive environment, ticket prices will remain low, but an expected increase in fuel prices (combined with fewer available seats) should nudge average prices higher among regular carriers. There will also be an increase in the number of pay-per-use in-flight services (pillows, blankets, meals, snacks, etc.).

As for airports, we should see an increase in the services offered to travellers. The addition of shops, restaurants, gyms, beauty salons and professional services are some of the tactics being adopted by airport managers to diversify revenue sources and improve the customer experience.

In 2006, the Airbus A-380 will begin commercial flights. The world?s largest passenger jet, the two-storey airplane will be the first to offer on-board areas for socializing.

In the United States, train travel will grow in 2006. Improved services and schedules, and especially the opportunity to transform travel from a utilitarian role into an experience unto itself, have piqued consumer interest in this service, especially among Generation X travellers.

Technology

Travellers, both business and leisure, are increasingly demanding the opportunity to “plug in” anywhere and any time. Hotels, resorts, convention centres, airports and various types of public transit will intensify their efforts to provide high-speed internet access (for free, if possible!). Sometime in the year 2006, US airlines will begin offering wireless in-flight internet access.

Increased internet use by consumers continues to revolutionize the marketing and distribution of travel products and services. In 2006, the number of online transactions will continue its strong growth. The firm PhoCusWright predicts that by the year 2007, 40% of all travel-related purchases in the United States will take place online.

Furthermore, tourism now constitutes a growing presence on major search engines (Google and Yahoo) and general online shopping sites (Pricegrabber). With more comparison tools now available, the resulting price transparency is forcing suppliers to work even harder on their brands, since the consumer?s perception of value is a combination of price and supplier image.

Tourism marketing should attach greater importance to the internet. It is expected that the concepts of “best price guaranteed”, dynamic packaging and search engine positioning (pay-per-inclusion) will grow in popularity. Experts are also pointing to the growing popularity of internet-related media like blogs and instant messaging. Individuals will have a fast and growing influence on the commercial success of products and services.

Destinations

At this point in the year, China is still the destination that excites the most interest and curiosity. According to guidebook publisher Lonely Planet, this country heads the list of hot destinations, followed by Mali, Brazil, Iceland and Serbia & Montenegro. As for destinations offering exceptional value, the publisher puts Argentina at the top, followed by New Zealand, Morocco, India and Mexico.

In Europe, according to American Express, Great Britain, France and Italy remain the most popular destinations for Americans. However, Eastern Europe continues to attract a lot of interest, particularly the countries on the Adriatic Riviera (Croatia, Slovenia, Montenegro), which are a less expensive alternative.

Sources:
– Armstrong, David. “Travel, Tourism Bouncing Back – Conventions and Visitors Returning, but Room Rates and Airfares Are Going Up,” San Francisco Chronicle, January 8, 2006, p. J1.
– Cruise Lines International Association. “Cruise Industry Trends for 2006,” [Traveldailynews.com], January 16, 2006.
– Grossman, David. “What’s in Store for Business Travelers in 2006?” USA Today, January 9, 2006.
– Harpaz, Beth J. “2006 Hot Spots Include Colorado, China & Croatia,” Associated Press, [CNN.com], December 29, 2005.
– Jones, Steve. “Steady Growth Forecast for Business Travel,” [Travelmole.com], January 3, 2006.
– Meeting Professionals International. “Meetings Industry to Grow in 2006,” [4hoteliers.com], January 11, 2006.
– Randall, Judy. “Top Travel Trends for 2006,” The Charlotte Observer, December 25, 2005.
– Sloan, Gene. “China, the New Croatia?” USA Today, January 5, 2006.
– Westenberg, Kerri. “Travel Trends: Where it’s at in 2006,” [StarTribune.com], January 2, 2006.
– Yesawich, Pepperdine, Brown & Russell. “Ten Trends to Watch in the Year Ahead,” [ehotelier.com], December 30, 2005.

 

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