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CANADIAN TRAVEL

DISTRIBUTION REPORT

A Q U A R T E R L Y R E P O R T

J U N E 2 0 0 6

W H A T ' S I N S I D E

The following report identifies the size and characteristics of Canada’s travel agency, on-line and tour operator distribution channels. Survey research is used to measure travel agency brand use, tour operator

brand recognition, booking travel on-line, travel Website use, package travel and other variables.

Table of Contents Highlights 5 Background 6 Size of Outbound Leisure Market 6 Travel Distribution Channels 9 Travel Agency Channel 9 Travel Agent Use 12 Travel Agent Brand Use 13 Regional Travel Agency Brand Awareness 15 Travellers using many channels when approaching agents 19 On-line Trip Planning and Booking 20 Buying Travel On-line 21 Types of Websites Accessing 24 Websites to be Used for Purchasing Travel 26 Summary of Website Use Trends 29 Credit Card Used to Purchase Travel 30 Cell Phone Use Amongst Vacation Travellers 33 The Tour Operator Channel 35 Intended Use of Package Operators 35 List of Tables 3 List of Figures 3

© The Conference Board of Canada 2

List of Tables Table 1: Summer Outbound Pleasure Trips 7 Table 2: IATA Approved Travel Agency Locations 10 Table 3: Travel Agency Operating Revenues 11 Table 4: Retail Travel Distribution in Canada: Top Agencies & Number of Stores 11 Table 5: Number that made 1 or more On-line Travel Purchases

Past 12 Months 23 Table 6: Credit Card Used by Bank of Issue 32 Table 7: Revenue by Operator 35 Table 8: Travellers by Operator 35 Table 9: Package Tour Operator Plan to Buy Package From 36 Table 10: Package Tour Operator Website Plan to Buy From 36 List of Figures Figure 1: Pleasure Trips by Canadians to the Caribbean/Mexico/

S. America Winter Period November through April 6 Figure 2: Total Visits by Canadians to Florida/Arizona/California/Nevada/ Hawaii Winter Period November through April 7 Figure 3: Pleasure Trips to US each Summer 8 Figure 4: # of Approved IATA Travel Agency Locations 9 Figure 5: Employment in Travel Agencies 10 Figure 6: Per Cent of Outbound Travellers Planning to Use Service

of an Agent for Summer Trip 12 Figure 7: Fewer Travelers Planning to Use Travel Agents 13 Figure 8a: National Results for Travel Agency Brand Travellers Intend to Use 14 Figure 8b: Ontario - Travel Agency Brand Most Likely to Use 15 Figure 8c: Ouebéc - Travel Agency Brand Most Likely to Use 16 Figure 8d: West - Travel Agency Brand Most Likely to Use 17 Figure 8e: Atlantic- Travel Agency Brand Most Likely to Use 18 Figure 9: How Travelers Making Arrangements with Agent 19 Figure 10: % of Travelers with Internet Access 20 Figure 11: Per Cent of Summer Travelers Using Internet to Obtain Information about Trip 21 Figure 12: Number of Canadians making at least one On-line Travel Purchase last 12 months by Type of Purchase 22 Figure 13: Purchasing of some/all Summer Trip On-line 24 Figure 14a: Category of Websites Travellers Plan to Use Visiting Canada in Summer 2006 24 Figure 14b: Category of Websites Travellers Plan to Use that are Visiting the US in Summer 2006 25 Figure 14c: Category of Websites Travellers Plan to Use that are Visiting Destinations Outside North America Summer 2006 25 Figure 15a: Websites Summer 2006 Travellers Plan to Purchase Travel 26


Figure 15b: Travel Within Canada: Websites Summer 2006 Travellers Plan to Purchase Travel 27

Figure 15c: Travel to the US: Websites Summer 2006 Travellers Plan to

to use to Purchase Travel 28 Figure 15d: Non-US Destinations: Websites Summer 2006 Travellers Plan to Purchase Travel 29 Figure 16a: Credit Card Canadians to Use Most Often 30 Figure 16b: Credit Card Used Most Often When Travelling in Canada 31 Figure 16c: Credit Card Used Most Often When Travelling to the US 31 Figure 16d: Credit Card Used Most Often When Travelling Internationally 32 Figure 17a: Cell Phone Use by Destination of Summer 2006 Vacation 33 Figure 17b: Taking Cell Phone Pictures by Destination of

Summer 2006 Vacation 34 Figure 17c: Cell Phone Company Subscribers 34


Highlights • Pleasure trips to the Caribbean/Mexico region during the November ’05

through April ‘06 winter period grew by 4.7 per cent to 1.651 million trips. • Winter trips to the Caribbean/Mexico region are forecast to reach 1.8 million

for 2006/07. • Winter pleasure trips to five key southern US states grew by 6.5 per cent to

3.2 million and are expect to reach 3.3 million next winter. • Canadians will make 1.6 million oversea trips in summer (May through

October) 2006. • Summer ’06 pleasure travel to the US will reach nearly 4.9 million.

The number • of IATA approved agency locations has fallen by 24 per cent

• cent since 1999

• ues reached about $3.06 billion in 2005 or

•

.

ternet.

summer trip.

lan line compared with only 30 per cent in 2002.

ned by

• 72 per cent of Canadians visiting the US this summer plan to take their cell phones of which 16 per cent will take pictures to send home.

since 1999. Employment in retail travel agencies has risen by 11.5 perwith the number of part-time and home based agents up. Travel agency operating revenabout $68,899 per employee. Fewer Canadians plan to use a travel agent for their summer 2006 trip planning. The CAA has retained its top spot as the agency brand most mentioned by • respondents planning to use a travel agent for their summer trip planning

• Most travellers using a travel agent use a multi-channel approach when planning their trip with an agent.

• 85 per cent of Canadians planning a summer trip have access to the In• 82 per cent of Canadians planning a trip to an international destination

planned to go on-line to plan their• Canadians bought 228 thousand travel packages on-line last year while 1.2

million purchased flights on-line. • More than half of Canadians planning an overseas trip in summer 2006 p

to buy part of their trip on-• Airline and resort Websites are most frequently accessed for Canadians

planning a trip to the US. • On-line agents are second in importance after airline Websites for Canadians

going overseas in summer. • Expedia.ca remains the on-line agent Website most frequently mentio

travellers using an on-line agent regardless of travel destination. • MasterCard and American Express have gained use share amongst

Canadian travellers while Visa has lost share.


Background The following report examines the distribution channels Canadians intend to use when planning and purchasing travel products and services. Information used in the report is derived from a survey of 2,000 Canadian adults commissioned by the Conference Board of Canada. The report examines the size of the outbound leisure market, travel agency brands travellers intend to use, on-line trip planning and purchasing, tour operator brand use, package travel and a number of other travel distribution issues.

Size of Outbound Leisure Market Winter: Canada’s outbound winter leisure market to the Caribbean/Central America (including Mexico) for winter 2005/06 was estimated at 1.65 million trips. The winter period is defined as between November 1st and April 30th. Winter trips to the Caribbean/Central America region grew by 4.7 per cent last winter after declining in winter 2004/05 by -2.5 per cent. With the exception of Mexico, most countries in the region reported an increase in Canadian visits. The Dominican Republic for example reported a 17.7 per cent growth in Canadian hotel registrations during first quarter 2006 while Jamaica reported a 22.2 per cent increase in tourist arrivals from Canada. Cancun however reports a 66 per cent decline in Canadian tourists during first quarter 2006 due to the devastation caused by Hurricane Wilma. Visit growth to the Dominican Republic and Jamaica indicate that Canadians are amenable to switching destinations—in this case from Mexico to the Dominican Republic, Cuba and Jamaica.

Figure 1: Pleasure Trips by Canadians to the Caribbean/Mexico/S. America Winter Period November thourgh April

1,617,934 1,577,707 1,651,5911,770,505

2003/04 2004/05 2005/06 2006/07

Source: CBoC estimates from Statistics Canada visit data. Table refers to individual pleasure trips. Data converted to trips from Statistics Canada “visit data”. Figures refer to pure pleasure travel only and does not include business travel or travel to visit friends and relatives.


Estimates of Canadian travel to select US southern destinations for winter were also made. Winter is again defined as the period from November 1 through April 30 of the following year. This period is used as it coincides with the winter season as defined by Canada’s major package tour operators. The chart below represents “visits” as opposed to “trips” to the following five southern US destinations: Florida, Arizona, Nevada, California and Hawaii. These five destinations capture about 45 per cent of Canadian winter (November through April) visits to the US.

Figure 2: Total Visits by Canadians to Florida/Arizona/California/Nevada/Hawaii

Winter Period November through April

2,766,876 2,979,657 3,172,329 3,264,009

2003/04 2004/05 2005/06 2006/07

Winter visits to these five southern states have grown consistently since winter 2003/04 with growth for winter 2006/07 expected to be 2.9 per cent. Visits to the US during the January through April period are expected to be affected by the implementation of the Western Hemisphere Travel Initiative (WHTI) which will require all air travellers to carry a valid passport or equivalent document. Birth certificates and drivers licenses will not be accepted for entry into the US come January 1, 2007. While there is talk of a delay in the implementation of the WHTI, this is by no means certain. In our estimates, we have assumed there will not be a delay in the implementation of the WHTI. Summer Travel Market Size Summer is defined as the period from May 1 through October 31. Canadians made almost 1.5 million pleasure trips to non-US destinations in summer 2005.

Table 1: Summer Outbound Pleasure Trips

(May through October each year) Caribbean Europe Asia Other Total

2003 503,042 627,619 77,786 66,857 1,275,304 2004 508,266 692,604 113,801 79,703 1,394,374 2005 514,455 781,089 110,418 79,594 1,485,556 2006 540,178 812,332 116,380 81,186 1,628,169


Pleasure trips are expected to reach 1.6 million in summer 2006. Europe captures the largest share of non-US summer pleasure trips. Europe’s share of non-US summer pleasure trips has grown from 49 per cent in 2003 to 53 per cent in 2005. While Canadian pleasure trips to the Caribbean/Mexico region have grown, summer travel to region is constrained by hurricane activity. Hurricane activity was the highest on record during summer 2005. Weather forecasts indicate another season of high hurricane activity for summer 2006. Summer Pleasure Travel to the US A strong dollar combined with a good economy has lifted summer pleasure travel to the US since 2003. Canadians made 4.5 million pleasure trips to the US in summer 2005. Pleasure trips of 1+ nights will grow by about 7 per cent in 2006 as Canadians take advantage of the exchange rate. Many Canadians are also taking advantage of visiting the US this summer in advance of the implementation of the WHTI starting in January 2007. Auto travellers have until January 1, 2008 before they need to produce a passport to visit the US. However, with the high dollar (US $ .90) many Canadians believe that this summer is a good time to travel to the US.

Figure 3: Pleasure Trips to US each Summer(May through Oct. each year)

3,982,042 4,207,493 4,543,291 4,861,321

2003 2004 2005 2006


Travel Distribution Channels The remainder of the report examines the use of the various distribution channels including travel agent brand, use of on-line agents and tour operators. The following analysis reports on “intended” channels travellers plan to use. In future reports we will be examining which channels and brands winter and summer travellers actually did use. This will result in us looking back as opposed to forward. Discussions with key travel industry players suggested that actual market share of brand use would be more useful than intended brand use. Travel Agency Channel The retail travel industry has been affected in recent years by world events, the vertical integration of tour operators, reductions in commissions and a growing importance of the Internet. The number of IATA approved agencies fell from 4,011 in August 1999 to 3,035 by November 2005. This represents a drop of 24 per cent in the number of IATA approved agencies in about seven years. The decline in IATA agencies is a result of a consolidation in the retail travel industry, agencies going out of business and agencies being acquired or joining larger consortiums. The choice for most independent travel agencies today is to join a franchise or a consortium or to specialize in niche markets such as cruises, golf vacations or group travel.

4,011 3,851 3,651 3,5563,179

3,0343,035

1999 2000 2001 2002 2003 2004 2005

Source: IATA.

Figure 4: # of IATA Approved Travel Agency Locations

Seven years ago, Canada had one of the highest ratios of travel agents per capita in the world. Consolidation in the industry was inevitable. During the last seven years, the big travel retailers have become larger through a series of mergers and acquisitions that took place during most of the1990s. Agencies also consolidated their IATA approved locations as technology enabled agencies to issue tickets from centralized locations. So while the number of IATA approved


agencies has fallen, employment in the retail travel agency sector has actually grown.

Table 2: IATA Approved Travel Agency Locations (Number of locations by province)

Province 1999 2000 2001 2002 2003 2004 2005 % Share

2005 vs

2004

2005 vs

1999 Alberta 423 406 379 367 329 323 322 10.6% -1.8% -23.6% BC 718 696 662 644 586 563 557 18.6% -3.9% -21.6% Manitoba 125 117 107 99 94 95 90 3.1% 1.1% -24.0% NB 53 53 54 57 48 44 43 1.5% -8.3% -17.0% Nfld. 54 55 55 52 52 45 43 1.5% -13.5% -16.7% NWT/Nunavut 16 15 14 14 12 8 7 0.3% -33.3% -50.0% Nova Scotia 94 92 92 93 85 76 70 2.5% -10.6% -19.1% Ontario 1,784 1,715 1,622 1,586 1,403 1,337 1,345 44.1% -4.7% -25.1% PEI 10 13 13 13 11 9 9 0.3% -18.2% -10.0% Québec 642 602 570 552 488 466 482 15.4% -4.5% -27.4% Sask. 86 81 77 75 67 64 64 2.1% -4.5% -25.6% Yukon 6 6 6 4 4 4 3 0.1% 0.0% -33.3%

TOTAL 4,011 3,851 3,651 3,556 3,179 3,034 3,035 100.0% -4.6% -24.4% Source: IATA. As of end of December each year except 1999 (August), 2000 & 2005 (November). Total employment by travel agencies grew by 11.5 per cent between 1999 and 2005. In 1999, employment of full and part-time Canadians in the retail travel trade was estimated at 39,900 by Statistics Canada. Employment grew in 2000 but fell in 2001 and 2002. Agency employment began growing again in 2003 reaching 44,500 in 2005. While consolidation has lead to a decline in the number of travel agency locations, travel agency employment is higher today than in 1999.

Figure 5: Employment in Travel Agencies(full & part-time jobs)

44,50043,10039,800

36,40036,40041,80039,900

1999 2000 2001 2002 2003 2004 2005Source: Statistics Canada.

Although travel agency employment has grown, a larger share of travel agency jobs is made up of part-time workers and agents working from home. Agency revenues grew at a faster rate than travel agency employment. Agency employment grew by only 11.4 per cent between 1999 and 2005 while agency revenue grew by 24.3 per cent. When adjusting the revenue figures in Table 2 for


inflation, agency operating revenues and revenues per employee were about 8 per cent higher in 2005 than in 1999.

Table 3: Travel Agency Operating Revenue

Year Total Operating Revenues Employment Revenues per Employee

1999 $ 2,467,000,000 39,900 $61,830 2000 $ 2,776,000,000 41,800 $66,411 2001 $ 2,649,000,000 36,400 $72,775 2002 $ 2,640,000,000 36,400 $72,527 2003 $ 2,849,000,000 39,800 $71,583 2004 $ 2,899,000,000 43,100 $67,262 2005 $ 3,066,000,000 44,500 $68,899

Source: Statistics Canada. Ratio f revenues per employee calculated by CBoC. “Operating Revenues” refers to commissions, fees and the sales of products like maps, books, etc.

The travel agency sector has experienced significant consolidation during the past few years. There are fewer independent agents today as independents have either gone out of business or have become affiliated with a larger retail travel distribution company. The table below identifies the general size of the major travel retailers in Canada in terms of store locations. The most notable recent consolidation was the acquisition of the Thomas Cook stores by Transat AT.

Table 4: Retail Travel Distribution in Canada: Top Agencies and Number of Stores in 2006

Agency Number of Locations

Number of Locations

2005 2006 Sears Travel 113 112 Thomas Cook (acquired by Transat May ’06) 223 190

CAA 143 144 Carlson Wagonlit 169 164 Uniglobe 108 96 TravelChoice/American Express/Sun Holidays (34) /Dream Vacations 70 70

Consultur: TravelPlus (53)/Voyages en Liberté (62)/Club Voyages (102)/Tripcentral (22)

195 239

Algonquin Travel (29)/BelAir Travel (14)/Voyage Funtastique (12)/MyTravel Retail (16)

86 71

Flight Center 115 121 Maritime Travel (46)/ LeGrow's Travel (21)/ Maritime Travel @ the Bay (14) 68 81

Sources: Confirmed numbers from CAA. Other figures gained from Websites and news releases.


Transat A.T. Inc. also acquired the 10 agencies of Tripcentral.ca in May 2005. Tripcentral.ca was also known as the Travel Superstore Inc. The new agencies join the company’s other retail brands, Travel Plus, Club Voyages and Voyages en Liberté. Also on acquisition trail was Maritime Travel which acquired the 13 offices of Atlantic American Express Travel Services in November 2005. Maritime Travel reports to have 81 locations (including shops in the Bay). Travel Agent Use Consolidation in the retail travel agency sector has resulted from heightened competition from on-line suppliers. Pressure on this sector’s profitability has also been affected by commission cuts. The competition from on-line agents is evident with a decline in the number of travellers expecting to use the service of a travel agent. For their summer 2006 trip only 49 per cent of travellers expect to use the services of a travel agent. With the Canadian dollar reaching US $ .90, auto travel to the US is expected to grow this summer. Auto trips to the US were already up by nearly 8 per cent through April 2006. As travel agents are used less frequently for travel to the US, it does not come as a surprise that fewer Canadians planned on using an agent for their trip this summer.

Figure 6: Per Cent of Outbound Travelers Planning to Use Service of an Agent for Summer Trip*

78%67%

61% 61%

49%

Summer '02 Summer '03 Summer '04 Summer '05 Summer '06

*March survey each year except in 2005 & 2006 when the survey was conducted in April.


Of Canadians going to destinations outside of the US, 56 per cent indicated they plan to use the services of a travel agent while only 35 per cent of Canadians visiting the US plan to use the services of a travel agent. The decline in the use of off-line agents for international travel mirrors that of the decline in agent use for travel within Canada.

Figure 7: Fewer Travelers Planning to Use Travel Agents (% of summer vacation travelers by likelihood of using an agent)

46%

65%

84%

39%

66% 68%

39%

51%

64%

30%

58%62%

21%

35%

56%

Canada US Destination International Destination

20022003200420052006

Travel Agent Brand Use Outbound travelers were asked which travel agency brand they were most likely to use to book their summer trip. Agency brand names were listed in a random order. “Another Agency” other than the brand names identified continues to top the list. Although fewer respondents selected “Another Agency”, this was mainly due to the addition of brand names to the list such as Uniglobe, TravelPlus and BelAir Travel. Many survey respondents that plan to use an agent continue to be unaware of the agency brand name they intend to use. Brand name: Respondents that indicated they planned to use a travel agent to help make their trip arrangements were asked which travel agency brand they were likely to use. A list of travel agency brand names were read out to the respondent in a random order. The CAA retained its ranking as the most mentioned agency brand name. The agency brand names added in the 2005 survey (MyTravel, Uniglobe, TravelPlus, etc.) all grew share over the past year. These agencies were previously assigned to the “Another Agency” category. Thomas Cook/Marlin and Sears Travel both lost brand share over the past few years.


Figure 8a: National Results for Travel Agency Brand Travellers Intend to Use

Thomas Cook/Marlin

Sears Travel

American Express

Carlson Wagonlit

CAA/BCAA/AMA

On-line Agency

Flight Centre

Another agency

Uniglobe

MyTravel/Algon/BelAir

TravelPlus/ClubVoyages

June '02 to Mar '03June '03 to Mar '04June '04 to Feb '04June '05 to April '06

June '02 to M ar '03 11.0%9.4%5.4%7.8%15.6%7.9%2.8%40.1%---

June '03 to M ar '04 10.9%7.7%3.0%5.4%14.0%9.5%4.2%45.4%---

June '04 to Feb '04 8.90%7.40%3.80%6.20%12.20%12.80%3.50%43.70%0.60%0.40%0.60%

June '05 to April '06 6.40%6.10%3.00%5.50%13.70%12.20%5.60%39.50%2.10%1.50%4.30%

Thomas Cook/M arl

in

Sears Travel

American Express

Carlson Wagonlit

CAA/BCAA/AM A

On-line Agency

Flight Centre

Another agencyUniglobe

M yTravel/Algon/Bel

Air

TravelPlus/Club

Voyages

Note: Uniglobe/MyTravel/TravelPlus not measured prior to 2005.


Regional Travel Agency Brand Awareness The following figures provide information on travel agency brand awareness on a regional level. As the margin for error is higher at the regional level, the reader is advised to interpret the following charts more in terms of the rank order of agency brands rather than as an absolute change in agency brand use from year to year.

Figure 8b: Ontario - Travel Agency Brand Most Likely to Use

Another agency

CAA

Online

Sears

Marlin/Thomas Cook

Flight Centre

Carlson

Amex


TravelPlus

Uniglobe


June '02 to M ar '03 38.10%12.30%11.60%10.30%9.90%3.00%9.90%5.00%0.00%0.00%0.00%

June '03 to M ar '04 50.00%11.10%9.30%6.90%8.30%8.30%3.70%2.30%0.00%0.00%0.00%

June '04 to Feb '04 45.10%10.20%13.30%8.30%9.20%4.40%6.70%2.90%0.00%0.00%0.00%

June '05 to April '06 40.20%8.10%11.10%6.80%8.10%7.70%7.70%4.30%2.10%0.90%3.00%

Another agencyCAAOnlineSears

M arlin/Thomas Cook

Flight CentreCarlsonAmex

M yTravel/Algon/Bel

AirTravelPlusUniglobe

The survey results for Ontario respondents show that making travel arrangements on-line continues to hold the number one spot when compared with the travel agency brands identified. Making arrangements with “Another Agency” remains the number one choice amongst Ontario travelers although fewer respondents selected this response.


Most Québec respondents continue to indicate “Another Agency” when asked which agency brand they plan to use to arrange their winter trip. Transat’s agency brands in Québec ranked number one amongst the brand names identified.

Figure 8c: Ouebéc - Travel Agency Brand Most Likely to Use

A not her agency

C A A

Online

Sears

M arlin/ Thomas C ook

C arlso n

A mex

C lub V oyage/ V oyage enlibert é


June '02 to M ar '03 49.60%20.00%5.20%5.90%3.70%4.40%11.10%0.00%

June '03 to M ar '04 47.40%12.50%11.80%13.80%5.90%3.30%5.30%0.00%

June '04 to Feb '04 51.00%14.30%10.20%8.80%4.80%2.70%8.20%0.00%

June '05 to Apr i l '06 48.70%12.70%10.00%5.30%2.70%4.00%2.70%14.00%

Another agencyCAAOnl i neSear sM ar l i n/ T homas

CookCar l sonA mex

Cl ub Voyage/ Voyage

en l i ber té


In Western Canada (provinces west of Ontario), the CAA (AMA & BCAA) ranked number one by a wide margin amongst the agency brands identified. The Flight Centre grew brand share while Thomas Cook/Marlin Travel and Carlson Wagonlit showed a marked decline in brand share.

Figure 8d: West - Travel Agency Brand Most Likely to Use

Another agency

AMA/BCAA

Marlin/Thomas Cook

Sears

Online

Carlson

Amex

Flight Centre


TravelPlus

Uniglobe


June '02 to M ar '03 39.10%18.10%15.80%7.40%6.00%6.50%2.30%4.70%0.00%0.00%0.00%

June '03 to M ar '04 38.20%22.40%16.40%3.60%8.50%4.80%2.40%3.60%0.00%0.00%0.00%

June '04 to Feb '04 38.20%14.50%15.60%4.30%14.50%7.00%1.60%4.30%0.00%0.00%0.00%

June '05 to April '06 31.70%23.10%5.40%5.40%14.50%2.20%1.60%9.10%2.70%1.10%3.20%

Another agency

AM A/BCAA

M arlin/Thomas Cook

SearsOnlineCarlsonAmexFlight Centre

M yTravel/Algon/Bel

AirTravelPlusUniglobe


Sample sizes in Atlantic Canada are less than 50 respondents for each period. Therefore the margin of error is large for the Atlantic region. Readers should concentrate more on the rank order and change in brand awareness rather than on the absolute numbers. As in the other regions of the country “Another Agency” was selected most frequently. Maritime Travel was identified in the survey for the first time. However it is not shown here as it was not measured in the previous surveys. Maritime Travel is one of the largest travel retailers in Atlantic Canada with 46 Maritime Travel locations and 21 LeGrow’s Travel locations in Newfoundland. Of the brands identified, the CAA gained in recognition although Carlson Wagonlit had the most mentions.

Figure 8e: Atlantic- Travel Agency Brand Most Likely to Use

Another agency

CAA

Marlin/Thomas Cook

Sears

Online

Carlson

Amex

Flight Centre

TravelPlus


June '02 to M ar '03 25.70%8.60%20.00%28.60%2.90%14.30%0.00%0.00%0.00%

June '03 to M ar '04 41.30%4.30%23.90%4.30%6.50%17.40%2.20%0.00%0.00%

June '04 to Feb '04 40.50%5.40%10.80%8.10%8.10%18.90%5.40%2.70%0.00%

June '05 to April '06 37.80%10.80%8.10%10.80%13.50%13.50%2.70%0.00%2.70%

Another agency

CAAM arlin/Thomas Cook

SearsOnlineCarlsonAmexFlight Centre

TravelPlus


Travellers using many channels when approaching agents More travelers connect with their travel agent through a combination of channels—in-person, telephone and the Internet. In 2002 only 19 per cent of travelers intending to use an agent used a multi-channel approach. This rose to 28 per cent in 2003 and 26 per cent in 2004. The April 2006 survey indicated that 35 per cent of summer travellers planned to use the three channel approach to working with their agent. More travellers also expect to communicate mainly in person and over the telephone with their agent. Only 7 per cent of travellers expect to work primarily on-line with their agent.

Figure 9: How Travelers Making Arrangements with Agent

19%

32%

16%

28%

18%

27%

18% 20%

35%

22% 22%

14%

24%

16%

33%

26%

18% 16%

24%22%

Combination of telephone,in person and Internet

In person In person & telephone By telephone

Source: CBoC surveys each year

2002 2003 20042005 2006

Figure 9: How Travelers Making Arrangements with Agent

6%

2%

4%

1%

3% 3%

7%

0%

2%

1%0%

9%

4%3%

8%

Mainly over the Internet Another type of arrangement Dont knowSource: CBoC surveys each year

2002 2003 20042005 2006

About 79 per cent of respondents plan at some stage to visit their agent in-person even if they will also use another channel to communicate. This figure compares with 67 per cent in 2005 that planned to meet personally with their agent to help arrange their winter trip. For travellers using a travel agent,


personal contact between client and agent continues to be important. It is also clear however, that travellers are more likely to use many other channels today to connect with their agent before finalizing their trip plans. Personal contact with a traveller enables agents to sell additional services such as travel insurance, rental cars and excursions. Having a client’s email address also permits agents to develop a more personal relationship with their most important clients. On-line Trip Planning and Booking Canadian travellers are well connected with 85 per cent indicating they have access to the internet. The Internet has clearly become the first place most travellers go for travel information regardless of the destination they plan to visit.

Figure 10: % of Travelers with Internet Access

No Access, 15%

Access, 85%


Nearly 3 in 4 Canadians planning a summer trip to the US indicated they planned to go on-line to obtain information about their trip. Of Canadians travelling to a destination outside of North America, more than 8 in 10 will use the Internet to help plan their trip this summer.

Figure 11: Per Cent of Summer Travelers Using Internt to Obtain Information about Trip

48%

64%67%

52%

70%75%

53%

79%75%

62%

73%

81%

61%

46%

56%53%

82%

73%

52%60%

Canada US trip International trip TotalSource: C B oC surveys.

20022003200420052006

Buying Travel On-line In 2005, Canadians spent an estimated $4.9 billion on-line for all types of products, including travel. The $4.9 billion represented a 66 per cent increase in on-line spending since 2003. Statistics Canada estimated that Canadians spent $3 billion over the Internet in 2003—the last time the agency published a survey on on-line spending. Spending rose that year by 25 per cent as an estimated 3.2 million Canadians households placed 21.1 million orders on-line. We have estimated that on-line buying grew by $600 million in 2004 and by $624 million in 2005. Still less than 1 per cent of all household spending is done on-line. The low penetration rate for on-line spending guarantees double digit growth for the on-line industry for a number of years. Travel is the second most popular item purchased on-line. Books, CDs and magazines are the most popular on-line purchase. The PMB 2006 survey (for the year 2005) indicated that 16.4 per cent of Canadians (aged 12 and over) made a purchase of some kind on-line in the past 12 months. These purchasers represented a population of just over 4.5 million individuals.


A travel product of some kind was purchased on-line by more than 1.2 million Canadians in the past 12 months. About 228 thousand Canadians purchased at least one travel package on-line, 778 thousand purchased commercial accommodations and 393 thousand a rental car. Another 1.2 million Canadians purchased flights on-line during the past 12 months. The number of on-line travel purchases made in the last 12 months was not asked in the PMB survey nor was their a breakdown of on-line travel purchases by destination of travel (outbound or domestic).

Figure 12: Number of Canadians making at least one On-Line Travel Purchase last 12 Months by Type of Purchase

228,000393,000

778,000

1,192,000

Travel Package Rental Car Accommodation Flights

Source: PMB 2006. Purchase of travel on-line made last 12 months regardless of destination and trip purpose. Ontario residents made 32 per cent of on-line package purchases and 39 per cent of on-line accommodation purchases. Ontario residents also made the most on-line purchases of car rentals and airline flights. With Ontario having the largest population, it is not surprising that the province would rank number one in terms of on-line travel purchases. While Quebec has the second largest population in Canada, residents of the province are significantly less likely to make an on-line travel purchase than are residents of Alberta and BC. Toronto and Edmonton along with Vancouver have the highest rate of on-line travel purchases amongst the major cities. Edmonton and Vancouver have the highest per capita purchase of on-line travel products of any major Canadian city.


Table 5: Number that Made 1 or More On-line Travel Purchases Past 12 Months

Packages Accommodation Car Rental Flights

‘000 ‘000 ‘000 ‘000 ATLANTIC 3 47 7 71 QUEBEC 40 85 23 90 ONTARIO 73 302 189 535

MAN.,SASK. 8 32 13 41 ALBERTA 52 141 92 187

B.C. 51 173 69 269 Total 228 778 393 1192

MONTREAL 27 57 16 63 OTTAWA 9 42 17 52

TORONTO 40 146 120 288 CALGARY 10 56 23 51

EDMONTON 39 78 62 119 VANCOUVER 38 81 42 126

Per Cent Share ATLANTIC 1.3% 6.0% 1.8% 6.0% QUEBEC 17.5% 10.9% 5.9% 7.6% ONTARIO 32.0% 38.8% 48.1% 44.9% MAN.,SASK. 3.5% 4.1% 3.3% 3.4% ALBERTA 22.8% 18.1% 23.4% 15.7% B.C. 22.4% 22.2% 17.6% 22.6%

TOTAL 100% 100% 100% 100% MONTREAL 11.8% 7.3% 4.1% 5.3% OTTAWA 3.9% 5.4% 4.3% 4.4% TORONTO 17.5% 18.8% 30.5% 24.2% CALGARY 4.4% 7.2% 5.9% 4.3% EDMONTON 17.1% 10.0% 15.8% 10.0% VANCOUVER 16.7% 10.4% 10.7% 10.6% 71.5% 59.1% 71.2% 58.6% Source: PMB 2006.


More than half of Canadians planning a trip outside of North America in summer 2006, plan to buy at least some of their trip on-line. In 2002, only 30 per cent of Canadians planning an oversea trip intended to buy some of their travel on-line.

Figure 13: Purchase of some/all Summer Trip On-line (% planning to purchase at least some of summer trip on-line)

27%

41%

30% 29%26%

42% 42%

30%

54%

46%38%

30%

41%

52%

35%32%

42%

54%

36%33%

Canada trip US trip International trip Total

20022003200420052006

Types of Websites Accessing The type of Websites travellers are accessing differs depending on where Canadians are travelling. Travellers planning to stay in Canada use the Internet to research things to see and do at the place they are visiting. As most Canadians travel by auto in summer, hotel/resort Websites are more important than airline Websites.

Figure 14a: Category of Websites Travellers Plan to Use Visiting Canada in Summer 2006

Respondents asked to select the one Website category most likely to use)

34%

25%

17%

8%

8%

5%

2%

1%

0.3%

Website of place visiting

Hotel/resort Website

An Airline Website

Website of country/city visiting

Another type of Website

On-line travel agency Website

Car rental website

Tour operator Website

Cruise Line Website

Canadians planning to visit the US this summer are most likely to examine airline and hotel/resort Websites to help plan and purchase their travel. Canadians


travelling to destinations outside of the US and Canada are also likely to use airline Websites before any other Website. On-line travel agency Websites are more important for overseas travellers than for Canadians staying in North America. Destination Websites are also more important for Canadians going overseas than Canadians travelling to the US or Canada.

Figure 14b: Category of Websites Travellers Plan to Use that are Visiting the US in Summer 2006

(Respondents asked to select the one Website category most likely to use)

32%

24%

12%

9%

9%

8%

3%

1%

An Airline Website






Cruise Line Website


Figure 14c: Category of Websites Travellers Plan to Use that are Visiting Destination Outside North America in Summer 2006

(Respondents asked to select the one Website category most likely to use)

35%

24%

14%

6%

6%

5%

4%

3%

3%

An Airline Website







Cruise Line Website

Car rental website


Websites to be Used for Purchasing Travel Respondents planning to purchase at least some of their summer trip on-line were asked which one Website they were most likely to use. Expedia was the number one Website Canadians were most likely to use when making an on-line travel purchase regardless of whether the trip was within Canada, to the US or to a destination outside of North America. Figure 15a: Websites Summer 2006 Travellers Plan to Purchase Travel

(All summer travellers, domestic and outbound)

7.1%

4.3%

2.9%

1.4%

1.4%

18.6%

28.6%

20.0%

10.0%

5.7%

Expedia.ca

Travelocity.ca

ITravel2000.com

Selloffvacations.com

Flightcentre.ca

Exitnow.ca

Tripcentral.ca

Lastminuteclub.ca

Wholesaletravel.com

Other agency Website


Canadians planning to travel this summer in Canada and purchase some or their entire trip on-line indicated that they would most likely use Expedia.ca to make their on-line travel purchase. Travelocity.ca and iTravel2000.com were also rated high as well as Flightcentre.ca.

Figure 15b: Travel Within Canada: Websites Summer 2006

Travellers Plan to Purchase Travel

25.8%

16.1%

6.5%

3.2%

3.2%

9.7%

29.0%

3.2%

3.2%

Expedia.ca

Travelocity.ca

ITravel2000.com

Flightcentre.ca

Lastminuteclub.ca


Tripcentral.ca

Wholesaletravel.com

Other agency Website


The same percentage of travellers going to the US this summer plan to use Expedia and Travelocity to purchase some of their summer 2006 trip. Websites like Searstravel.ca and iTravel2000.ca did not register with travellers going to the United States this summer.

Figure 15c: Travel to the US: Websites Summer 2006 Travellers Plan to use to Purchase Travel

33.3% 33.3%

11.1%

22.2%

Expedia.ca Travelocity.ca Selloffvacations.com Other agency Website


Canadians planning a trip this summer to destinations outside of the US such as to Europe or Asia and who planned to buy at least some of their trip on-line, were most likely to use Expedia.ca. Travelocity.ca, iTravel2000.ca and Selloffvacations.com were a distant second.

Figure 15d: Non-US Destinations: Websites Summer 2006 Travellers Plan to Purchase Travel

(% of travelers going to non-US international destinations in summer 2006 and the Websites they are likely to use to research and/or purchase travel)

26.7%

10.0%

10.0%

10.0%

6.7%

6.7%

26.7%

3.2%

Expedia.ca

Travelocity.ca


Exitnow.ca

Flightcentre.ca

iTravel2000

Tripcentral.ca

Other Website

Summary of Website Use Trends Expedia has the clear top of mind recognition of websites Canadian travellers are most likely to use when purchasing travel. Expedia advertises more heavily than most other on-line agencies and also has a world-wide reach. While Expedia has clear top of mind recognition, on-line travel agencies are expected to be challenged by the new meta-search travel Websites such as Kyak, SideStep, Yahoo! Farechase and Mobissimo. The meta-search engines have the ability to search many Websites in order to find the best deal for travellers. Meta-search engines have developed arrangements with many travel suppliers to provide access to as many fares and hotel rates as possible. The greater the range of fares and rates accessed by an engine, the better the guarantee that


these sites can offer consumers the ability to find the best possible price and perhaps more importantly, the best travel option. For example Kayak's Fare Buzz enables users to ask where they can travel next weekend for less than $1,000. Meta-search engines have the ability to become trip planning aids rather than simply Websites to find the lowest price. When search capabilities such as the weather, the distance to the beach, nightlife, etc. are added, the meta-search engines will become even more valuable trip planning aids. Established on-line agencies also have this ability, should they choose, to also go in this direction. One way on-line agents like Expedia have responded to the challenge provided by Meta-search engines is by optimizing their position when general search engines are used. When the phrase “visiting Mexico” or just “Mexico” was searched on Google.ca, Websites such as Expedia.ca, tripcentral.ca and exitnow.ca came up at the top right of the screen. No meta-search engine appeared. This was the same situation in October 2005. Established on-line agents are buying a position with Google to ensure that they continue to be shown ahead of the meta-search engine. Credit Cards Used to Purchase Travel More than 8 in 10 (82 per cent) Canadians use a credit card when travelling on vacation, with Visa and MasterCard being the dominant cards used. Visa continues to be the most popular credit card used by Canadians although both MasterCard and American Express have gain share in the past 12 months. In the 2005 survey 64 percent of Canadians indicated that they pulled out their Visa credit card most often when travelling on vacation. A year later, only 55 per cent of Canadian travellers indicated that Visa was the card used most frequently. MasterCard was reported to be the card of choice for 30 per cent of travellers in 2005 but 38 per cent of travellers in 2006.

Figure 16a: Credit Card Canadians to Use Most Often

64%

55%

30%

38%

5%2% 3%

7%

2005 2006

VisaMasterCardAmerican ExpressOther Cards

Source: CBoC March 2005 1,444 respondents and April 2006 1,105 respondents.


Vacation Travel in Canada: Visa is the number one card used when Canadians are travelling on vacation in Canada. While 63 per cent of Canadians indicated in the 2005 survey that they used Visa while travelling in Canada on vacation, only 53 per cent indicated Visa as their card of choice in the 2006 survey. MasterCard’s share of credit card use by domestic vacation travellers shot up from 31 per cent to 40 per cent. More domestic vacation travellers also indicated that they used an American Express card in 2006.

Figure 16b: Credit Card Used Most Often When Travelling In Canada

63%

53%

31%

40%

5%1%

7%0.4%

2005 2006

VisaMasterCardAmerican ExpressOther


Vacation travel to the US: A similar pattern emerged for Canadians travelling to the US. Visa is the main card used by Canadians travelling on vacation to the US, although MasterCard and American Express have gained share on Visa.

Figure 16c: Credit Card Used Most Often When Travelling to the US

61%56%

31%35%

7%2% 0%

9%

2005 2006

VisaMasterCardAmerican ExpressOther



Vacation travel to International Destinations: Visa continues to be the main card used by Canadians going overseas although more international vacation travellers are also using MasterCard while fewer reported to be using an American Express card.

Figure 16d: Credit Card Used Most Often When Travelling Internationally

64% 63%

26%31%

9%6%

2005 2006

VisaMasterCardAmerican Express


The CIBC and Royal Bank were both identified by 27 per cent of vacation travellers as the banks from which they obtained their Visa cards. More travellers indicated they received their Visa cards from banks other than the main four banks compared with 2005. The Caisee Populaire was not listed in the 2006 survey which could account for some of the growth in the “Other” category in 2006.

Table 6: Credit Card Used by Bank of Issue

Banking Institution Visa Visa Master- Card

Master- Card

2005 2006 2005 2006 CIBC 25% 27% Royal Bank 24% 27% TD Canada Trust 18% 19% Caisee Populaire 13% na Bank of Nova Scotia 9% 10% Bank of Montreal 34% 33% National Bank 12% 8% Other 11% 17% 54% 59%

Total 100% 100% 100% 100% The Bank of Montreal remains the dominant issuer of MasterCard’s in Canada. MasterCard continues to grow the number of affiliates that issue its cards. PC


Financial MasterCard is issued through Loblaws, a grocer with the CIBC acting as the banking institution. Cell Phone Use Amongst Vacation Travellers Cell phones have become an important technology for business and vacation travellers. Vacation travellers now use cell phones to take pictures and to keep in touch with their home and office via email and voice. Cell phones are expected to gain more use as an Internet search tool for travellers to locate hotels, restaurants, events and to book and arrange travel. As a mobile technology, cell phones have become an indispensable aid for many travellers. Most travel companies have yet to take advantage of the growing ability of cell phones to search for travel suppliers and opportunities. However it is likely that within five years cell phones will become one of the most trusted travel aids of the international vacation traveller. We expect to see cell phones being used to book hotel rooms, restaurants, and tickets for events. GPS technology will enable cell phone users to locate hotels, events, restaurants, etc. once at a destination. Our April 2006 survey indicated that 70 per cent of vacation travellers planned to take a cell phone with them on their summer vacation trip. Cell phone use is more prevalent amongst domestic vacation travellers. Over 75 per cent of travellers planning to take a vacation trip in Canada this summer indicated they would take their cell phone with them. Of Canadians going to the US this summer, 72 per cent planned to take their cell phones. Less than half (44 per cent) of Canadians travelling to destinations outside of North America were planning to take their cell phones with them this summer.

Figure 17a: Cell Phone Use by Destination of Summer 2006 Vacation

75% 72%

44%

70%

Canada US International Total

Source: CBoC April 2006 survey 893 respondents.


Taking Pictures with Cell Phones: Only 18 per cent of travellers plan to take pictures with their cell phones while on vacation this summer. As cell phone camera technology improves, this percentage is expected to grow. We expect younger cell phone users and families to be attracted to the idea of instantly sending pictures to family, friends and colleagues back home while on a trip.

Figure 17b: Taking Cell Phone Pictures by Destination of Summer 2006 Vacation

17% 16%

28%

18%

Canada US International Total

Source: CBoC April 2006 survey 893 respondents. Cell Phone Company Subscribers: Of Canadians travelling this summer with their cell phones, 28 per cent have a cell phone subscription with Rogers, 25 per cent with Bell and 23 per cent with Telus.

Figure 17c: Cell Phone Company Subscription

28% 25% 23%

16%

5%1%

Rogers Bell Telus Other Fido Virgin

Source: CBoC April 2006 survey 738 respondents. There are wide regional differences in cell phone company subscription. About half of Quebec summer travellers have Bell as their cell phone subscriber with Rogers at 25 per cent and Telus at 15 per cent. In Ontario, 39 per cent of summer travellers use Rogers, 36 per cent Bell and 15 per cent Telus. Telus is the dominant company used by cell phone subscribers in Western Canada. Rogers is more popular amongst Canadians over the age of 60 while Bell and Telus fight it out for the 18 to 40 year-old Canadian.


The Tour Operator Channel Financial data released by the parent companies as well as information from Dun & Bradstreet and Profit Magazine were used to estimate the relative size of Canada’s major tour operators.

Table 7: Revenue by Operator

Tour Operator FY 2004 FY 2005 Transat Holidays $1,796,600,000 $1,589,000,000 MyTravel $ 876,653,280 $ 884,436,900 Signature Vacations $ 425,217,600 $ 395,412,000 Conquest Vacations $ 241,038,000 $ 250,679,520 Sunwing Vacations $ 160,162,982 $ 168,176,131

Table 8: # of Travellers by Operator

Tour Operator FY 2004 FY 2005 Transat Holidays 1,147,000 1,024,500 MyTravel 604,588 609,956 Signature Vacations 364,000 286,000 Conquest Vacations 210,000 208,900 Sunwing Vacations 123,202 129,362 Sources: Annual reports, Websites, press releases, Dun & Bradstreet. Of the major package tour operators, only Conquest Vacations and Sunwing Vacations do not own travel agencies. The parent company of Transat Holidays is the largest owner of travel agencies in Canada with its recent purchase of the Thomas Cook/Marlin Travel agencies. MyTravel owns travel agencies such as Algonquin Travel, BelAir Travel, and the Lastminuteclub. Signature Vacations owns Travel Choice retail agencies as well as Sun Holidays and Dream Vacations. Many of these same operators also own on-line agents. Signature Vacations owns Selloffvacations.com while Transat owns exitnow.ca and tripcentral.ca. MyTravel owns wholesaletravel.com. Another major tour operator is Air Canada Vacations, which is a subsidiary of Air Canada (ACE Aviation). According to ACE’s annual report ACV had 441 employees in fourth quarter 2005. Information of the number of employees by MyTravel and Signature Vacations was not available. Intended Use of Package Operators Our October 2005 survey indicated that 38 per cent of winter travellers planned to purchase a package vacation outside Canada. Canadians intended to purchase 1,468,256 packages for travel to the Caribbean/Mexico/S. America region and 354,602 packages for travel to the US. This made for a total of 1.8 million packages Canadians intended to purchase last winter. When asked which tour operator’s package they were most likely to purchase, Air Canada Vacations was mentioned most often. Transat Holidays is generally considered to be the largest package tour operator in Canada. That Air Canada


Vacations and Sunquest would be mentioned more often than Transat speaks more of name brand recognition than actual package purchase. Air Canada Vacations topped the list of even though the list of operators was read out in a random order. It should be noted that 27 per cent of respondents were not sure of which tour operator from which they would purchase a package. Another 16 per cent indicate they would use another tour operator other than the ones listed. Future surveys will measure actual rather than intended purchase of tour operator packages. The survey will also be conducted on-line so respondents do not have to remember the name of the operator. The on-line survey will randomly list the tour operators (one respondent may see ACV listed first while another respondent will see it listed third or fourth).

Table 9: Package Tour Operator Plan to Buy Package From

Tour Operator Atlantic Que. Ont. Man/Sask Alta BC Total ACV 18% 19% 15% 25% 8% 17% 16% Sunquest 9% 0% 19% 0% 20% 17% 13% Transat 18% 17% 8% 8% 8% 7% 11% Signature 9% 3% 8% 17% 4% 4% 6% Go Travel Direct 9% 9% 3% 0% 4% 7% 5% Nolitours 0% 12% 4% 0% 0% 2% 5% Conquest 0% 0% 0% 0% 0% 2% 0.4% Sunwing 9% 0% 1% 0% 0% 0% 1% Other 9% 17% 15% 17% 20% 15% 16% Not sure 18% 23% 28% 33% 36% 28% 27%

Total 100% 100% 100% 100% 100% 100% 100% Source: October 2005 and April 2006 surveys, 272 responses.

Respondents planning to purchase travel from a tour operator’s Website were asked which operator’s Website they would most likely use. Air Canada Vacations’ Website again topped the list by a considerable margin.

Table 10: Package Tour Operator Website Plan to Buy From

Tour Operator Total

Aircanadavacations.com 27% Sunquest.ca 15% Signaturevacations.com 10% Transatholidays.com 7% Gotraveldirect.com 4% Conquestvacations.com 3% Nolitours.com 2% Sunwing.ca 0% Other 17% Not sure 14%

Total 100% Source: October 2005 and April 2006 surveys, 92 responses.

Only 92 respondents indicated they planned to purchase their package off of a tour operator Website or about 20 per cent of outbound travellers. Package sales continue to be highly dependent on the use of travel agents.


Canadian Travel Distribution Report - ACTA · The report examines the size of the outbound leisure...

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