Strategic Vision’s 2017 Pulse of the Industry Survey reveals that top travel management firms expect to see growth. But security, political stability, and Zika remain pockets of concern.
The U.S. luxury travel industry is predicting a strong year for 2017, citing the resilience of the post-election economy and increased consumer confidence as main factors. But it does expect some areas of softness and concern, particularly around international travel. These are the conclusions of the Pulse of the Industry Survey conducted this February by Strategic Vision, a global marketing communications firm servicing the luxury travel and lifestyle industries.
Survey respondents, which include senior executives of the nation’s leading luxury travel management firms, bridging the leisure, corporate and meetings & incentives sectors, are largely optimistic about their clients’ 2017 travel sentiments.
“The high end of the industry is feeling very upbeat about travel in 2017,” says Strategic Vision President & Founder Peter J. Bates. “They foresee higher revenue and, in a sign of confidence, plan to hire more advisors. As expected, there is some hesitation in clients’ minds, but on the whole, the top of the market is still enthusiastic about traveling – a lot – this year.”
Nearly three in five of the surveyed firms (58%) say their clients are optimistic about domestic travel, while 44% report that their booking habits haven’t changed. Only 2% report “cautious” feelings among their clientele.
When it comes to international travel, however, the outlook is less rosy. Nearly half of the firms characterize their clients’ sentiments as “cautious,” compared to 31% who call it “optimistic,” and the same percentage, 31%, who say that booking habits haven’t changed.
Why the mixed feelings? The consensus among these travel executives is that a strong economy is spurring trips, yet clients still have some reservations about safety and security while abroad, largely around terrorism. “The stock market is up and seniors are enjoying their lives,” says Anne Scully, President of McCabe World Travel.
But pockets of concern surround specific destinations, due in particular to terrorism, the Zika virus, and the overall geopolitical climate. Some firms point to Paris, Mexico, Turkey and the Middle East as destinations where security and safety issues are causing reticence. There is less discomfort around North America, Italy, Scandinavia, and Portugal. Several respondents cited the effect of the Trump presidency on the American image abroad as a concern, with Rudi Steele, President of Rudi Steele Travel, Inc., saying, “clients are worried that they are no longer liked overseas.” But for many clients, the impulse to travel outweighs any concerns. As Tim Krenzien, President and Owner of Paul Klein Travel, puts it, “Experienced travelers understand the risks and do not want to forgo travel and life experiences.”
Asked specifically about the impact of the Zika virus, most agencies see it as a minor consequence. Two-fifths quantify the impact as less than 10%, while one-fifth say it is between 10% and 30%. A third say the virus has had no impact at all. When asked which destinations are most affected by Zika, respondents cite the Caribbean, Mexico, Central America, and, less frequently, Florida.
Regarding specific sectors of their business, firms report several areas of strength. Majorities foresee an increase in interest in North America (89%), the Far East (57%), Australia (73%), Southeast Asia (60%), and cruises (56%).
“The increasing interest in farther-flung destinations such as Asia and Australia suggests that luxury travelers are ready to splurge on longer and more ambitious journeys,” says Bates. “At the same time, consumers are giving cruises a second look, a testament to the perceived value and convenience of that type of vacation.”
As for destinations where they expect less interest, the surveyed agencies most frequently cite the Caribbean/Mexico (33%), Central America (20%), Latin America (18%), and Europe (18%). The “fear factor” is given as the principal reason that clients are less interested in the Caribbean/Mexico, Latin America, and Europe.
Despite these areas of caution, the respondents express general optimism about their firms’ performance in 2017. Four out of five (80%) predict an increase in their own company’s revenues in 2017, compared to 13% who predict no change, and 7% who foresee a decrease.
In terms of hiring plans, 70% expect to bring on more travel advisors in 2017, with 23% expecting headcounts to stay the same, and only 7% expecting them to decrease. A substantial number of respondents say that finding qualified travel consultants to hire is a challenge. “We can’t get enough great agents,” says Michael Holtz, Founder and CEO of SmartFlyer. Scott Milne, President of Milne Travel, lists “finding new talent, attracting young people, and fear of artificial intelligence’s impact” as key issues.
Delving deeper, four out of five of the surveyed firms report that they expect leisure travel business to increase in 2017, with about 18% forecasting no change in that sector. About half predict growth in corporate travel (51%) and meetings & incentives (49%).
Another recurrent theme is the increasingly complexity of running a travel business in the Information Age. Steve Orens, President of Plaza Travel, mentions the difficulty of “staying ahead of all the information available on travel,” while Bobby Zur, Founder and Owner of Travel Artistry LLC, describes the challenge as “how to navigate the world of OTA’s and Airbnb, and harness and distill information, instead of feeling threatened by it.”
In sum, it seems that in the luxury travel industry, business is good—but always presents new challenges.
About the Pulse of the Industry Survey:
The Pulse of the Industry Survey was sent in late February to CEOs, presidents, and other senior leaders of the leading luxury travel management firms and meetings & incentive buyers in the U.S. These firms, members of Strategic Vision’s research panel, arrange travel for luxury leisure clients, corporate executives, and high-end meetings and incentive groups. The survey garnered a response rate of 52%.
If you wish to learn more, click here to access the full deck containing the findings: Pulse of the Industry Survey Results