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By Mark Dolliver
Americans want to travel, but they want their money to stay put. As the summer-vacation season gets under way, it's a tricky combination of sentiments for travel marketers to contend with.
Throughout the spring, opinion polls have shown consumers skittish about spending their money on a summer vacation. In a USA Today/Gallup survey fielded last month, 50 percent of respondents said they had no plans to travel this summer -- up from 41 percent saying the same in a similar poll last spring. Likewise, a Harris Poll released this month (based on fieldwork in May) found 36 percent of respondents saying they're very or somewhat likely in the next six months to "take a vacation away from home lasting longer than a week." The number of people saying they plan to take some sort of summer vacation was higher (at 64 percent) in a Deloitte poll fielded in late April. But half of these people said the economy would motivate them to spend less than they otherwise would.
Indeed, spending cuts are a recurrent theme of polling data on consumers' summer-travel intentions. Looking at people who took a vacation last year and plan to do so this year, Rasmussen Reports polling last month found 58 percent saying the economy is prompting them to spend less this time around. And in Gallup's survey, 52 percent of those who expect to go on a vacation this summer said they "are altering those plans in response to the current economic recession."
As it happens, the travel sector is intent on helping people economize while vacationing so they won't feel obliged to hunker down at home all summer. "People in the travel industry read the polls, too," notes Andrea Stokes, a Washington, D.C.-based vp of travel and leisure at research firm Synovate. "I think the travel industry has made it easier for people to be frugal this year by lowering rates and fares." She mentions that she'll be going soon to a conference held at a resort in Hawaii, and -- sign of the times-- the rate she's getting there is significantly below what she paid for a room in not-so-exotic Philadelphia when attending a similar event last year.
One school of thought holds that travel brands are setting themselves up for trouble in the post-recession future by discounting so vigorously now. "You cut your prices and it's hard to go back," says Woody Kay, managing partner and chief creative officer of Arnold DC, whose travel-sector clients include the Bahamas Ministry of Tourism, Amtrak and Choice Hotels International. "It puts you in a price category that's hard to escape from."
Moreover, when consumers get trained to react strictly to price, there's no guarantee you'll be able to hang onto them -- a point emphasized by Adam Weissenberg, a vice chairman at Deloitte and leader of that firm's tourism, hospitality and leisure practice. "If it becomes just a question of price, it's going to be tough to build brand loyalty," he says. "People will go across the street to Brand X if it's offering the best deal next time."
Arnold DC last month conducted some man-on-the-street research to gauge consumer sentiment about travel, and the findings formed the basis of advice it offered the travel/tourism sector on coping with consumers' current mood. Among the recommendations was one urging travel clients not to cut their rates: "Slashed prices alone won't attract vacationers, and it sets a negative precedent for the future, post-recession." In addition to targeting "recession-proof targets" like families with kids and newlyweds, brands must "emphasize value."
Such thinking is reflected in a campaign the agency created earlier this year for Choice Hotels. Commercials for the chain pointed out that you could save money by staying at Choice Hotels because of the free breakfast, free Internet access and free whatnot. But viewers then saw the chain's customers using the savings to have fun outside the hotel -- for instance, taking a horse-and-buggy ride. As Kay puts it, "People want to feel they didn't get screwed" by paying too much, "but they also want to feel they had a great time." The brand "has to be a launching pad for a meaningful experience," he says. "It's the value-plus-values equation." Yes, people are cautious about spending money amid a recession. But, adds Kay, "it's about stretching your dollars, not cutting your dollars."
And once people get out on the road (or at sea), maybe they won't be quite as frugal as they told the pollsters they would be. "When you're on vacation, you're on vacation," says Synovate's Stokes. Thus, if you get a great deal on your hotel room, maybe you'll end up spending the money on something else, she adds -- going to a theme park, say, or staying an extra night. She notes that the cruise industry is especially good at this, reducing the price of a cabin in hopes you'll spend the money elsewhere on the boat. "There are so many ways to spend money on a boat."
Of course, money isn't the only finite asset people are spending on a vacation. They're also spending time, and that could be a sticking point this year. Stokes contrasts the thinking last summer and this summer behind the dread "staycation." Last summer, she suggests, the decision to make do with a staycation was typically driven by economic factors like rising gas prices and falling house values. "I think this summer, staycations might be more driven by people not wanting to take time away from work while everyone else is getting laid off at their company." It's more a matter of "low employee confidence," she says, than low consumer confidence. In that sort of environment, workers are reluctant to leave their jobs for a whole week (or more). People are more apt to feel comfortable taking long weekends or "just one day here and there," she says.
That tendency works to the advantage of a venue like Las Vegas, according to R&R Partners' executive vp Rob Dondero, a longtime veteran of the agency's Las Vegas Convention and Visitors Authority work: "The destination doesn't require any long-term planning, can be experienced in a short break -- two, three days -- and fulfills the need to escape the everyday worries we're all experiencing." Along similar lines, Arnold DC's Kay says "nearcations" have emerged as a more significant phenomenon than staycations -- "maybe not going as far or staying away as long, but still going somewhere. Because people need that outlet." Or, as Dondero puts it, "They're tired of being pent up, emotionally and physically." Alluding to R&R's recent Las Vegas tourism advertising, some of which features bogus holidays that people concoct in order to justify getaways from work, Dondero adds, "They want a break, and someone needed to provide permission and the right anecdote."
In Arnold DC's man-on-the-street research, the agency came to the conclusion that "Americans view vacationing as an inalienable right." Still, one must acknowledge that travel hasn't been an unalloyed joy for consumers in recent years. "There's a perfect storm with travel right now of how much abuse you can take," says Kay, as when people endure long security-check lines at the airport only to discover their flight has been canceled. He notes that the agency's Amtrak advertising has played off such travel travails by positioning train trips as part of the fun of going somewhere. "Those brands that become an antidote to the stressful experience people have will succeed," he says.
In order for a travel brand to keep succeeding in a period of such flux, Deloitte's Weissenberg points to the importance of loyalty programs in cultivating long-term customers and getting beyond a one-dimensional focus on price. In the firm's recent poll, 61 percent of respondents who plan a getaway this summer said they don't belong to a hotel loyalty program. With the current price cuts luring consumers to places they might not have stayed at before, hotels "should do everything they can to sign them up," Weissenberg says. Travel vendors also have an opportunity to gain favor with longtime customers by adjusting the terms of their loyalty programs. Because many people have cut back on travel (particularly business travel) in the past year, they may not have spent enough to be eligible to remain in the top tier of a brand's loyalty program. "So some companies are sustaining your elite status even if you haven't spent as much this year," he says, or they're just reducing a customer's status by a single level. "To me, the ones keeping you at the same tier are making a smart move, because you'll remember that when the economy gets better, and it doesn't really cost them much."
Finally, no article on vacation travel would be complete without an allusion to gasoline prices. After falling below $2 a gallon late last year, gas prices have again surged upward in recent weeks. As Weissenberg says, gas prices tend to have a "cerebral effect" on people that's out of proportion to their actual dollars-and-cents impact. So, will this rise in pump prices throw everyone's summer-travel calculations out of whack? Not so far, he says. "I think it's got to get much higher before it has a big impact." But if the price goes back above $4, as it did last summer, "that is going to have an impact.
—Nielsen Business Media
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Where Will Folks Spend Their Summer Vacations?
June 16, 2009By Mark Dolliver
Americans want to travel, but they want their money to stay put. As the summer-vacation season gets under way, it's a tricky combination of sentiments for travel marketers to contend with.
Throughout the spring, opinion polls have shown consumers skittish about spending their money on a summer vacation. In a USA Today/Gallup survey fielded last month, 50 percent of respondents said they had no plans to travel this summer -- up from 41 percent saying the same in a similar poll last spring. Likewise, a Harris Poll released this month (based on fieldwork in May) found 36 percent of respondents saying they're very or somewhat likely in the next six months to "take a vacation away from home lasting longer than a week." The number of people saying they plan to take some sort of summer vacation was higher (at 64 percent) in a Deloitte poll fielded in late April. But half of these people said the economy would motivate them to spend less than they otherwise would.
Indeed, spending cuts are a recurrent theme of polling data on consumers' summer-travel intentions. Looking at people who took a vacation last year and plan to do so this year, Rasmussen Reports polling last month found 58 percent saying the economy is prompting them to spend less this time around. And in Gallup's survey, 52 percent of those who expect to go on a vacation this summer said they "are altering those plans in response to the current economic recession."
As it happens, the travel sector is intent on helping people economize while vacationing so they won't feel obliged to hunker down at home all summer. "People in the travel industry read the polls, too," notes Andrea Stokes, a Washington, D.C.-based vp of travel and leisure at research firm Synovate. "I think the travel industry has made it easier for people to be frugal this year by lowering rates and fares." She mentions that she'll be going soon to a conference held at a resort in Hawaii, and -- sign of the times-- the rate she's getting there is significantly below what she paid for a room in not-so-exotic Philadelphia when attending a similar event last year.
One school of thought holds that travel brands are setting themselves up for trouble in the post-recession future by discounting so vigorously now. "You cut your prices and it's hard to go back," says Woody Kay, managing partner and chief creative officer of Arnold DC, whose travel-sector clients include the Bahamas Ministry of Tourism, Amtrak and Choice Hotels International. "It puts you in a price category that's hard to escape from."
Moreover, when consumers get trained to react strictly to price, there's no guarantee you'll be able to hang onto them -- a point emphasized by Adam Weissenberg, a vice chairman at Deloitte and leader of that firm's tourism, hospitality and leisure practice. "If it becomes just a question of price, it's going to be tough to build brand loyalty," he says. "People will go across the street to Brand X if it's offering the best deal next time."
Arnold DC last month conducted some man-on-the-street research to gauge consumer sentiment about travel, and the findings formed the basis of advice it offered the travel/tourism sector on coping with consumers' current mood. Among the recommendations was one urging travel clients not to cut their rates: "Slashed prices alone won't attract vacationers, and it sets a negative precedent for the future, post-recession." In addition to targeting "recession-proof targets" like families with kids and newlyweds, brands must "emphasize value."
Such thinking is reflected in a campaign the agency created earlier this year for Choice Hotels. Commercials for the chain pointed out that you could save money by staying at Choice Hotels because of the free breakfast, free Internet access and free whatnot. But viewers then saw the chain's customers using the savings to have fun outside the hotel -- for instance, taking a horse-and-buggy ride. As Kay puts it, "People want to feel they didn't get screwed" by paying too much, "but they also want to feel they had a great time." The brand "has to be a launching pad for a meaningful experience," he says. "It's the value-plus-values equation." Yes, people are cautious about spending money amid a recession. But, adds Kay, "it's about stretching your dollars, not cutting your dollars."
And once people get out on the road (or at sea), maybe they won't be quite as frugal as they told the pollsters they would be. "When you're on vacation, you're on vacation," says Synovate's Stokes. Thus, if you get a great deal on your hotel room, maybe you'll end up spending the money on something else, she adds -- going to a theme park, say, or staying an extra night. She notes that the cruise industry is especially good at this, reducing the price of a cabin in hopes you'll spend the money elsewhere on the boat. "There are so many ways to spend money on a boat."
Of course, money isn't the only finite asset people are spending on a vacation. They're also spending time, and that could be a sticking point this year. Stokes contrasts the thinking last summer and this summer behind the dread "staycation." Last summer, she suggests, the decision to make do with a staycation was typically driven by economic factors like rising gas prices and falling house values. "I think this summer, staycations might be more driven by people not wanting to take time away from work while everyone else is getting laid off at their company." It's more a matter of "low employee confidence," she says, than low consumer confidence. In that sort of environment, workers are reluctant to leave their jobs for a whole week (or more). People are more apt to feel comfortable taking long weekends or "just one day here and there," she says.
That tendency works to the advantage of a venue like Las Vegas, according to R&R Partners' executive vp Rob Dondero, a longtime veteran of the agency's Las Vegas Convention and Visitors Authority work: "The destination doesn't require any long-term planning, can be experienced in a short break -- two, three days -- and fulfills the need to escape the everyday worries we're all experiencing." Along similar lines, Arnold DC's Kay says "nearcations" have emerged as a more significant phenomenon than staycations -- "maybe not going as far or staying away as long, but still going somewhere. Because people need that outlet." Or, as Dondero puts it, "They're tired of being pent up, emotionally and physically." Alluding to R&R's recent Las Vegas tourism advertising, some of which features bogus holidays that people concoct in order to justify getaways from work, Dondero adds, "They want a break, and someone needed to provide permission and the right anecdote."
In Arnold DC's man-on-the-street research, the agency came to the conclusion that "Americans view vacationing as an inalienable right." Still, one must acknowledge that travel hasn't been an unalloyed joy for consumers in recent years. "There's a perfect storm with travel right now of how much abuse you can take," says Kay, as when people endure long security-check lines at the airport only to discover their flight has been canceled. He notes that the agency's Amtrak advertising has played off such travel travails by positioning train trips as part of the fun of going somewhere. "Those brands that become an antidote to the stressful experience people have will succeed," he says.
In order for a travel brand to keep succeeding in a period of such flux, Deloitte's Weissenberg points to the importance of loyalty programs in cultivating long-term customers and getting beyond a one-dimensional focus on price. In the firm's recent poll, 61 percent of respondents who plan a getaway this summer said they don't belong to a hotel loyalty program. With the current price cuts luring consumers to places they might not have stayed at before, hotels "should do everything they can to sign them up," Weissenberg says. Travel vendors also have an opportunity to gain favor with longtime customers by adjusting the terms of their loyalty programs. Because many people have cut back on travel (particularly business travel) in the past year, they may not have spent enough to be eligible to remain in the top tier of a brand's loyalty program. "So some companies are sustaining your elite status even if you haven't spent as much this year," he says, or they're just reducing a customer's status by a single level. "To me, the ones keeping you at the same tier are making a smart move, because you'll remember that when the economy gets better, and it doesn't really cost them much."
Finally, no article on vacation travel would be complete without an allusion to gasoline prices. After falling below $2 a gallon late last year, gas prices have again surged upward in recent weeks. As Weissenberg says, gas prices tend to have a "cerebral effect" on people that's out of proportion to their actual dollars-and-cents impact. So, will this rise in pump prices throw everyone's summer-travel calculations out of whack? Not so far, he says. "I think it's got to get much higher before it has a big impact." But if the price goes back above $4, as it did last summer, "that is going to have an impact.
—Nielsen Business Media
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