Top Trends in Leisure Travel
2015 is positioned to be a good year for travel in the U.S. But keeping an eye to key influences that can swing performance one way or another for a destination can make the difference between a good year and a great year.
Europe Travel Slowing – Some Segments Hold
There has been a decline in overall online travel search activity from European Leisure travelers to the U.S. starting in October, when year-over-year search demand down 16%. Double digit declines continued in November and December. For travel arrivals in the next 120 days this year, the average weekly search activity from Europeans to the U.S. is down an average of 35% versus the same period last year.
It’s not just that European interest in travel to the U.S. is declining. Hotel bookings from these European travelers is slowing as well, down 2% overall from Europe for January and down 7% so far for April, compared to last year.
Travel to the U.S. from Europe is down for variety of reasons – but the number one driver that negatively impacts several aspects of international travel is higher cost.
- Stronger dollar means less travel buying power for Europe – 2014 began with the Euro trading around 1.40 versus the US dollar. Last week, it was tracking to 1.13, along a decline that started accelerating in October. European travelers are not getting a natural “currency discount” for their trips to U.S. destinations.
- Higher and rising travel prices – In addition, the U.S. economy is much stronger and pricing on travel-related items such as hotel rooms are up. We’ve even seen declarations of overall market price increases to come. So Europeans will have to pay at 25-40% more for a trip to the U.S. than they did just last year.
For many destinations, European travelers represent a small, but important, part of the visitor mix. It’s important to stay on top of what’s happening with European travelers to individual markets, as opposed to painting the market with a broad brush. While the UK is down in February for both Search and Bookings to the U.S. – bookings from Spain and Italy are up 6% and 9%, respectively, over last year on third-party travel sites.
Look at specific country and major city source markets to see year-over-year trends in search and booking. Understand what’s happening with lead times (both search-to-book and book-to-stay windows). Know the specific European traveler personas that are still strong.
Domestic Travel Steady – Drive Markets Pumped Up
The best news for U.S. destinations is that domestic travel is steady, lead by high levels of drive market growth. On a sampling of several major U.S. destinations, nSight shows year-over-year search demand from their drive markets is up an average of 24% for travel arrival dates through June 30, 2015.
There are three key factors influencing the growth in drive market travel driven by lower U.S. gas prices and higher airline costs.
- New travel is being inspired – With gas more economical, some travelers are opting to drive instead of fly, which means they will look to destinations they might not have considered visiting even last year. It’s putting more people on the road to travel.
- People are traveling more – These same conditions mean “infrequent” leisure travelers (those who may not have traveled that much in the last few years) are considering another trip this year and driving is their most cost-effective way to get there. This is opening up the drive market to more frequent travel.
- The drive market is expanding – With better economic conditions, travelers are more often considering drive trips as far as 500 miles more frequently – instead of the traditional 250-mile max. So the drive market is bigger, with more travelers and more trips.
Clearly, capturing more drive market business will be a key theme in 2015. Destinations should alter all of their marketing to capture as much of the growth in Leisure travel from the new expanded drive geography.
Destinations need to understand how best to showcase their destination’s attributes versus competing drive destinations. In addition, it means being “smart” about how to target drive market business. Understand search-to-book lead times from key drive source markets so your digital marketing on Google, banner networks, TripAdvisor or the OTAs is directed to travelers at the source market and persona level who are most likely to make visit your destination.
Another Night Stay – A Strong Growth Strategy
You know the adage: “it’s easier to sell a buyer something more, than a shopper something at all.” In 2015, with demand for Leisure travel on the upswing, hotels are selling more rooms for more money. In many markets, Length of Stay is growing, too. For destinations and local hotels, it’s the easiest way to boost revenue and level out occupancy peaks and valleys.
Understanding the Length-of-Stay patterns and how they vary by source market and persona can help you create strategies to grow the number of days visitors stay and generate more revenue for your market and hotels.
Millennials Matter – For the Long Term
Millennials travel. They book more trips of shorter duration than Baby Boomers or Family Travelers. They’re loyal, are spending more, and bring others via social media.
- Millennial spending on travel is up – Millennials seek authentic experiences, travel in small groups, and are more likely to book into alternative lodging like AirBnB or latest generation hostels. As we learned from MMGY’s “2014 Portrait of American Travelers,” (a survey of 2,500 travelers in 4 generational categories) Millennials spent 20% more on travel in 2014 than 2013, a healthy gain against the average traveler average increase of 12%.
- Millennials want unique travel – They seek authentic experiences, travel in small groups, and are more likely to book into alternative lodging like AirBnB or the new generation hostels.
Most importantly, hotels and attractions are taking notice of Millennials. Many are shaping their marketing and product to capture more Millennial business. Investment in the Millennials is good business sense as this segment will evolve to become higher income travel spenders that support future destination growth.
This is a perfect time to generate increased interest and visits from Millennial travelers. Destinations can work with hotels to have a consistent Millennial strategy.
Understand the Millennial demographic. Specifically, look at your best source markets to see what is their average search-to-book lead time is for Millennials? What hotel rates are they paying? Then test campaigns within your digital media to learn what attracts their interest in your destination. Is it events like concerts, sporting events or festivals? Or is it weekend getaways that profile authentic experiences such as food, art, or outdoor activities?