NEW YORK—According to speakers at the seventh annual Leisure Travel Summit, held here last month, U.S. hotel owners along with airlines and rental car companies can expect business this summer—still the peak leisure travel season—to be better than summer 2011, but still not back to where bookings were in 2006 and 2007.
Sponsored by Best Western International, the session presented its SVP for marketing & sales, Dorothy Dowling, along with senior executives from the U.S. Travel Association and the American Automobile Association, assessing what they see as the present state of consumer confidence.
“Our advance bookings are up 21%, year over year, but we’re still not back to where we were in the boom years,” noted Dowling, adding that, “Consumers are eager to travel, but there’s greater emphasis than ever on value.”
Last year, the travel industry benefited from consumers’ pent-up demand, coming out of the recession, and some of that pent-up demand is still there. “Americans, especially families with children, feel a summer vacation is their right,” said Bill Sutherland, VP for travel at AAA.
“Consumers may cut back on the number of nights they take for a vacation or they may trade down from a higher-price-point hotel brand to a lower-price-point brand. They may also spend less on entertainment or dining. But they’re still going to take the trip,” Sutherland told the Summit.
Dowling noted that rate increases in the broad mid-market of hotels, where Best Western, Best Western Plus and Best Western Premier operate, have been fairly moderate, relatively speaking. Industry-wide, the luxury segment was the first to recover post-recession, having fallen the most precipitously.
The mid-market was next to recover.
“As demand has rebounded and occupancy rates climbed, owners have been raising rates gradually, but haven’t been getting appreciable push back from consumers,” Dowling noted. “It plays to the value perception people have of the mid-market.”
Hotels at this price point typically offer complimentary breakfast, complimentary high-speed Internet access and other amenities free-of-charge, building the cost into the room rate. “This represents a tremendous savings, especially the free breakfast, for a family of four,” she added.
Coming out of the recession, consumers are just savvier when it comes to their travel preferences, according to Gary Oster, SVP for business development at the U.S. Travel Association. “They’ve taken the time to research their options on the Internet and expect transparency when it comes to pricing and value-adds,” Oster said. A charge for something vaguely described as “resort fees” would be an example of what consumers increasingly find suspect.
Best Western research indicates that consumers on average check as many as 27 websites before booking, Dowling confirmed. “It puts pressure on the websites to be able to deliver the information requested quickly and cogently. Consumers are increasingly pressed for time and, if they can’t get the information they want quickly, they’ll move on,” she said.
While there was a fear in the spring that rising gas prices would deter domestic summer travel plans—since a significant amount of summer family travel is by car—that hasn’t turned out to be a major issue. Similarly, there was concern that rising jet fuel prices would cause a spike in airfares. Gas prices actually have fallen in many parts of the country, panelists noted, and to some degree, consumers have just come to accept high gas prices as a fact of economic life.
“More than 75% of the people we asked said rising gas prices wouldn’t influence their plans,” Sutherland noted.
Many of the U.S. Travel Association’s recent efforts have focused on the international arena, specifically making the U.S. a more hospitable destination for overseas visitors. This, in turn, will be a tremendous benefit to the U.S. travel industry, starting with hotels.
“We’re focused on removing the barriers people face traveling here, starting with citizens of developing countries having trouble obtaining a visa to the lack of a warm welcome they receive when clearing customs at our airports,” Oster explained. The airport arrival experience is “international visitors’ first impression of America,” he added.
Dowling had spoken earlier of Best Western’s efforts to provide guests with improved “customer care.” Oster picked up on that theme. “We want to take the necessary security precautions, while still showing arriving international visitors the right amount of customer care,” he said, endorsing recent Transportation Security Administration (TSA) initiatives like the Trusted Traveler, Global Entry and Pre-Check programs.
“Congress needs to work with the TSA to expedite these programs,” he added.
While hotel bookings from Europe have been flat year-over-year, Best Western has been seeing an uptick in reservations from Brazil, Russia, India and China, the market known as the BRIC countries. Business from Asia, for example, is up 27%, year-over-year, Dowling noted.
“The gateway cities are always number one on the itinerary of travelers from these countries. In most cases, it’s their first time in the U.S. and they’re excited to be here. Best Western is well represented globally, so many of these travelers already know us from their home countries,” she explained. “Our goal is to get them to become repeat visitors, staying with Best Western as they visit other destinations.”