Ten Trends To Watch In The Year Ahead

2005 will end on a high note for the travel and tourism industries. Travel (both domestic and international), will meet and/or exceed the record levels achieved in 2000, regardless of the metric. And the outlook for the year ahead remains robust, notwithstanding lingering concerns about the potential impact of terrorism, natural disasters, the escalating cost of fuel, and rising interest rates.

But as we approach the dawn of a new year, there are some compelling clues as to what lies ahead. Some of these represent the continuation of trends that have emerged in recent years, others derive from events that occurred during the previous 12 months, still others reflect insights we have gained through our proprietary marketing research. Regardless of the source, they represent trends worth watching as we enter the New Year:

• Demand for leisure travel services will continue to outpace that for business travel – there are now significantly more leisure travelers filling airline seats, checking into hotel rooms, and consuming other travel services than business travelers, and this gap will grow in 2006;
• More leisure travelers will select cruises and timeshares as alternatives to vacations that include conventional lodging – the popularity of cruising will continue to grow, driven principally by the construction and arrival of magnificent, new floating "resorts" (and remarkably attractive pricing), while timeshares will be in big demand as more savvy travelers discover both the value and flexibility of "owning" vacation time that reflects their lifestyles and travel habits;
• Activities that promote stress reduction will gain in popularity – growing interest in "adventure" travel notwithstanding, the pursuit of stress reduction will remain the number one motivator for the one-half of all active leisure travelers who now feel they "don’t have enough vacation time." This is likely to translate into growing patronage of both amenity and destination spas (by both women and men), as well as the growth of amenity spas in urban hotels that cater to business travelers and meeting attendees;
• Meetings and conventions will drive the recovery of demand for business travel services – individual business travelers will continue to seek ways to do business without traveling, while demand for travel services from meeting and convention attendees will continue to grow;
• Expect to be "fired" if you’re not wired – hotels, resorts, conference centers, even airline terminals that don't provide high-speed Internet access will rapidly discover the error of their ways as more travelers, both business and leisure, demand such access (and for free!) in an increasingly wired world. And they’ll probably head elsewhere if they don't get it;
• Air travel will remain remarkably affordable – hard to believe given the unpredictable nature of the cost of jet fuel and the fact that half of all domestic airline seats are now operated by bankrupt carriers, yet unprecedented competition brought about by transparent pricing for "undifferentiated" brands will insure fares remain low relative to the escalating cost of other travel services;
• Lodging rates will rise – hotel room rates will continue to escalate as operators manipulate yield to capitalize on growing demand. "Upscale" and "Luxury" operators are likely to be the biggest beneficiaries of this trend as consumers who traded up in the go-go '90s begin to indulge once again;
• Travel agents will continue to morph into sellers of "complex" and "high risk" travel products and services – contrary to popular (and unenlightened) opinion, travel agents will actually consolidate and strengthen their position as purveyors of "complex" and "high risk" travel products including cruises, all-inclusive vacations, multi-stop tours and group tours;
• Consumers' utilization of the Internet will continue to reinvent the distribution and sale of travel services – although the actual percentage of business and leisure travelers who use the Internet to plan some aspect of travel is expected to remain flat if not decline, the percentage who go online to make reservations will continue to grow;
• Transparent pricing will underscore the urgent need for brand clarity – techno-savvy consumers can now compare prices for airline seats, hotel rooms, car rentals, cruises, even complete vacations with just a couple of clicks, so the question arises: who will get the sale? The answer will be determined by the "value" ascribed to the proposed transaction which, in turn, will depend on the "clarity" of the brands under consideration. Those that stand for something relevant to the consumer will ascend to the top of the list. Those that do not will become vulnerable.

Clearly, the year ahead will be an interesting one. And here's wishing you the very best...

For further information on Yesawich, Pepperdine, Brown & Russell click here.