European Marketing ForumEuropean Marketing Forum “The ...• Consumer confidence indexes steady...

European Marketing ForumEuropean Marketing Forum

“The Changing Market E i t Aft thEnvironment, After the Crunch What next?”Crunch. What next?

9 No ember 20089 November 2008Glaziers Hall, London

Glaziers Hall, London - 8 November 2009

DEBBIE HINDLEDEBBIE HINDLEForum Moderator,

Managing Director, bgb communicationscommunications

“Introduction”

“Introduction”

bgb the travel PR and representation specialists

Good morning

ChinaChina

• This month TripAdvisor aquired Kuxun cn (China’s • This month TripAdvisor aquired Kuxun.cn (China s number 2 search engine) and recently launched Daoda the new Chinese travel-review website

• Expedia plans to invest US$50 million in China to 2012 and already owns China’s number 2 travel yagency eLong

• Chinese market-leader Ctrip is five times bigger than rivals Source: PhoCusWright

ChinaChina“One area where competitors are mounting a One area where competitors are mounting a significant challenge in China is in providing tools in the travel discovery phase. The media model enables intermediaries to bypass some of the challenges associated with automated online fulfillment i Chi d t t t it f th in China and represents a great opportunity for growth and investment.”

Source: PhocusWright

RussiaRussia

• 142 million• 142 millionThe population of Russia

• 11 3 million• 11.3 millionThe number of 2008 outbound holidaymakers booked via tour operators or travel agencies (so excluding via tour operators or travel agencies (so excluding independent and business travel)

Source: EventicaSource: Eventica

RussiaRussia

• In 2009 TUI Travel Plc signed joint venture and • In 2009 TUI Travel Plc signed joint venture and acquisition agreements with two key tour operator and travel agency groups in Russia and Ukraineg y g p

• VKO Travel is Russia’s second largest tour operator and has 120 retail shopsp

• There are 15,000 agencies in Russia. Largest chain only 200 shops

RussiaRussia

• VKO Travel winter 2010 2011 programme could • VKO Travel winter 2010 –2011 programme could include Caribbean

• 80% of Russians book within four weeks of departure80% of Russians book within four weeks of departure• Visa restrictions on Russian travellers can block this

opportunityopportunity

New technologiesNew technologies• 94 per cent of online touch points before purchase are given no 94 per cent of online touch points before purchase are given no

credit for conversion. We only tend to evaluate "last click”. (Source Microsoft Research)

• Last year social networking sites were the second biggest traffic drivers to websites after search engines (Source Hitwise)drivers to websites after search engines. (Source Hitwise)

• 28% reported they’d made a reservation following an initial p y gcontact on Twitter. (Source: 501 Places)

New technologiesNew technologies

CooperationCooperation

• Sustainable industry development

Tourism@forumforthefuture [email protected]

• Political lobbying• Caribbean Tourism Organisationg

SIMON FERGUSONSIMON FERGUSONChief Executive OfficerChief Executive Officer, Travel Weekly Group

“UK Travel Industry in the past year”UK Travel Industry in the past year

UK travel sectorUK travel sector…shape and impacts

UK travel sector…

Simon Ferguson

Chief Executive, TWgroup Ltd

TWgroup Ltd

The TWgroup is the UK’s leading travel trade media group, and connects today’s travel industry in print online and in persontravel industry in print, online and in person

The group contains the industry’s leading print and online

brand, the award-winning online information service for the

travel agents, and the only media brand to target the

dynamic online travel sector

UK coping with a crisis of trust

Crisis of trust……

Is the current economic climate having any effect on your holiday plans?holiday plans for 2009? answer]

19Source: Travel Tracker Apr’09

What is affecting your holiday plans?

20Source: Travel Tracker July ’09

Travel agents….major changes in customer behaviour

Customers are Shopping round…I have to work much harder for the booking 75%Customers are booking much later 72%A greater requirement for price matching 58%Holidays outside the Eurozone are proving more popular 52%Customer are booking more online 49%Wanting money off 45%Customers have spent about the same this year as last year 26%Loyal customers have not taken a holiday this year 24%Holidays are considered a luxury rather than a necessity 12%Holidays are considered a luxury rather than a necessity 12%Customers are taking more UK holidays 12%Customers have spent more on holidays this year 11%Source: Travel Weekly/Advantage consortium ‘state of the nation’ survey Sept 2009

All major UK online travel providers reporting rise in look-to-book ratios and searchingE-Digital consulting & research

Impacts

Reassurance/’permission’-based marketing

Shift back towards traditional travel channelsShift back towards traditional travel channels

Shift towards all inclusive holidays

Suppliers increased reliance on leisure travel agent channelpp g

Brand perception

Growth of online information/User Generated Content creates promiscuity and

brand confusion

Twitter feeds to be indexed by Google

UK travel sector

2003 2007

UK Travel agents 8,747 7,294

UK tour operators 1,469 1,377

UK travel market worth £56bn

Travel agent share of bookings 42% 2008 Vs 49% 2001

Significant consolidation in tour operator/agent channel driven by Thomas Cook/TUI travel acquisitions

C 34% of UK travel bookings now online butC. 34% of UK travel bookings now online, but growth slowing

Analysts predicting replica of US model- 50% bookings online, but no further growth (source: Forrester research)

Sources: Mintel; Keynote; PhocusWright

Recession impacts

Plimsoll consulting analysis of top 800 travel agencies

Market will continue to polarise…..

Mass market/scale SpecialistMass market/scale Specialist

Specialist tour operators

Independent travel agentsIndependent travel agentsHome-working travel agentsBig 2 conglomerate of tour

operator brands

Multiple travel agents

Growth of independent ‘sm@rt agents’

8%

Is the internet an opportunity or a threat?Unsure SKILLS THAT ARE IN SHORT SUPPLY

S lli kill 54%26%

A threat

An opportunity Selling skills 54%Customer service 51%E-marketing/web skills 43%IT skills 41%66% IT skills 41%Product/destination knowledge 37%

How technology-savvy are your staff?Quite savvy 58%Q yVery savvy 32%A little savvy 9%Source: Travel Weekly/Advantage consortium ‘state of the nation’ survey Sept 2009state of the nation survey Sept 2009

Engaging with sm@rt agents

Travel Weekly Travel Hub social networking site allows agents to connect and share online

“Economists were created to make weather forecasters look good” Rupert MurdochEconomists were created to make weather forecasters look good Rupert Murdoch

Great predictions…….

“There is not the slightest indication that nuclear energy will ever be obtainable…..”

“There will not be a woman prime minister in Britain in my lifetime…”

“There is a worldwide market for perhaps 4 computers ”There is a worldwide market for, perhaps, 4 computers….”

“This has no discernable purpose……”

“Travel agents are finished…..dead…..within ten years they’ll barely exist”

Travel agents….impacts on business over next 2 years

Economic downturn 82%Customers booking online 79%Price discounting 74%Rising business overheads 72%T ti f th i d t 64%Taxation of the industry 64%

How optimistic are you going forward?

Very optimistic8%

A little optimisitc24%

Not very/not at all12%

Quite optimistic56%

Summary

Slow consumer recovery, impacted by cyclical and structural economic factors

Consumer confidence critical…..traditional channels will continue to perform better when this is weak

M t k t t ll l i b t k t Mature markets naturally polarise between mass market scale and specialisation

Online channels will reach a critical point driven by product complexity, technology and customer experience

The UK travel market will show further consolidation creating a smaller, agile, specialist travel agent sectora smaller, agile, specialist travel agent sector

UK travel sectorTHANK YOU

UK travel sector…

Simon Ferguson

Chief Executive, TWgroup Ltd

S h S llSarah SmalleyManaging Director,g g ,

GFK Ascent-MI Limited

“British Consumers Booking Trends”

GfK Ascent-MI 8th November 2009

Caribbean market performanceCaribbean market performanceS h S ll 8th November 2009Sarah SmalleyManaging Director


Who are GfK Ascent?

36

• Ascent-MI launched 2007

• 19 million individual buying choices captured each year

• Over 50% of ABTA agents provide live acquisition data together with a number of major Tour Operators

• 82% of all UK packaged holidays are captured (source IPS data)

• Countries currently covered by GfK:ItalyFranceGermanyNetherlandRussiaUK


UK the largest European country of origin for the Caribbean

37Expenditures per Capita US$

Netherlands $1,301

United Kingdom $1 121• Britons #2 holidays spenders per capita

United Kingdom $1,121

Germany $1,108

Canada $810

France $693

Ital $519

• “ Holidays are a necessity not a luxury”

Italy $519

United States $262

Japan $218

Russian Federation $175Data as collected by UNWTO, 2009

• Caribbean accounts for 35% of all UK long haul travel

4.5%UK

FRANCE

S09 Share of CaribbeanS09 Caribbean Passengers by Country

1.4% 1 2%

3.3%

1 2%

ITALY

GERMANY

RUSSIA

NETHERLANDS

46.0%

23.3%

3.7%

UKFRANCEITALYGERMANYRUSSIA % 1.2%

0.6%

1.2%

4.4%6.9%

15.8%

RUSSIANETHERLANDS


UK Major Economical changes: when the recession bites…..

38

• UK interest rates remain low• Average earnings (excluding bonus) slowest growth• Average earnings (excluding bonus) slowest growth

rate since records began• Highest unemployment levels since mid 90’s• Average household wealth - £31,000Average household wealth £31,000• Consumer confidence index lower than in last

recession

12

Unemployment

10

GfK Consumer Confidence Index

6

8

10

12

%15

-10

-5

0

5

10

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Source: National Statistics website: www.statistics.gov.uk

0

2

4

1993 1995 1997 1999 2001 2003 2005 2007 2009Research carried out by GfK NOP on behalf of the European Commission

-35

-30

-25

-20

-15


UK Major Economical changes: when the recession bites…..

39

• Exchange rate £1= €1.12 (Sept 2009)• Exchange rate £1=$1.63 (Sept 2009)g $ ( p )• Over the past 16 years, home owners have been

borrowing against their always growing properties value

• Average house price decrease £40,000• Consumer borrowing down by £10bn since 2008

1 4

1.6

Euro/GBP Exchange Rate

180

200

Property Transactions in the UK

0.6

0.8

1

1.2

1.4

80

100

120

140

160

0

0.2

0.4

Jan-06

May Sep Jan-07

May Sep Jan-08

May Sep Jan-09

May Sep 0

20

40

60

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Source: HM Revenue & Customs: www.hmrc.gov.ukSource: Bank of England: www.bankofengland.co.uk


Overview of the UK market

40

• Summer 2008: consolidation of the `Big four’S 2009 t tl d it• Summer 2009: operators vastly reduce capacity

• Summer 2010: delayed launch of short and mid haul programmes

• Bank of England – “fragility of 2010”• Consumer confidence indexes steady for 3rd

consecutive monthconsecutive month

• Summer 2010: -13%• direct channel -21 3% vs -9 4% shop

Summer 2008

Summer 2010

Summer 2009 • direct channel 21.3% vs. 9.4% shop

• continued failure of online channels to launch new seasons effectively?

-2%

-13%

-10%


Summer 2010 – Key UK destinations

41

• Spain remains #1

S10 TO Sep 09 Share

S09 TO Sep 08 Share

Trend

Spain remains #1

• Caribbean more resilient than other destinations, gaining share

1 Spain 28.1% 31.5% -21%

2 Turkey 15.7% 10.7% +30%

3 Ocean Cruise 12.9% 9.2% +23%

• ‘star’ destinations:

• Turkey

4 Greece 12.7% 14.1% -21%

5 USA 8.0% 8.7% -18%

6 Cyprus 5.0% 5.9% -25%u ey

• Ocean Cruise• Egypt• Tunisia

7 Caribbean 4.6% 4.5% -9%

8 Egypt 4.4% 4.0% -2%

9 Portugal 2.1% 2.1% -15%

10 Tunisia 2 0% 1 5% +19%

• Turkey fastest destination +30%…Tunisia +19% growth

10 Tunisia 2.0% 1.5% +19%

11 Mexico 1.8% 2.5% -34%

12 Italy 1.6% 1.7% -17%


Summer 2010 – Look out for all inclusive and mid haul!

42

• The rise and rise of all inclusive market +32%• All inclusive 93 2% of all Caribbean bookings• All inclusive 93.2% of all Caribbean bookings• Customers are turning towards Mid Haul• Caribbean: a key long haul destination (35%)

that is performing better than the long haulthat is performing better than the long haul market

Board Basis Destination

49%

93% All Inclusive -5.8%

Total LTM

Short Haul

Mid Haul

Long Haul

35% 42% 49%

LTM

Mid

Hau

l

Long

Haul

Carib

bean

-13.3%

-19.7%-18.2%


Summer 2010 – The importance of Agents in the Higher price points

43• Overall market sees reduction in holidays priced

over £799, -1.5%• Lower priced holidays impacted• 85% of Caribbean bookings above this price

point• Agents are important…77% of bookings overAgents are important…77% of bookings over

£799 are sold trough a shop• 73% of the Caribbean bookings are made

through a shop

Greater LondonSouth EastEast Anglia

Shop vs. Direct Caribbean Booking region

39.4%27.2%

over £799 up to £798

2.9%

20.3%

3 1%

9.8%

7.3%9.3%

South WestWalesWest MidlandsEast MidlandsNorth WestYorkshireNorthScotland

60.6%72.8%

Shop Direct

3.1%

5.2%5.4%

11.1%8.7%

15.7%


Summer 2010 – What about the Caribbean Countries?

44

• Dominican Republic, the top #1 destination, is suffering the most (-15%)su e g t e ost ( 5%)

• Cuba increases market share to 28%• Jamaica to 15.5%

• Caribbean Cruises grow +59%Caribbean Cruises grow 59%• Mediterranean Cruise +51% • Alaskan Cruise +3%

Dominican Republic

Caribbean: Growth S10 vs. S09 Caribbean: Market Share S10 vs. S09

45%

58%Dominican Republic

Cuba

Jamaica

Caribbean Cruise

Barbados15%

20%

25%

30%

35%

40%

-15%

4%10%

7%12%11% Aruba

St Lucia

0%

5%

10%

15%

S10 S09


Summer 2010 – Are booking patterns changing or is the market recovering?

45

recovering?

• Change in importance of booking months• August and September now more• August and September now more

important• Late launch of S10 or successful

marketing?g• July saw market increase for S10 bookings, not

replicated by Caribbean…resurgence in September

S09

Caribbean: Share of Bookings by Month Booking Growth % S10 V 09

30%MarketCaribbean

8%

14%16%

21% 21% 20%

12%14%

20%23%

26%S10

50%-40%-30%-20%-10%

0%10%20% Caribbean

8%

6%

prior toMay

May June July Aug Sept

-80%-70%-60%-50%

prior toMay

May June July Aug Sept


Summary

46

• The UK and the Caribbean are of strategic importance

• Caribbean has performed ahead of the market despite the UK economic position and the higher price it commands

• Bookings are being made later in the cycle…August and September booking months have become more important

U d t di d d i i l i T l h d k UK i ff• Understanding and driving sales via Travel agency shops, and key UK regions offer potential enhanced sales

• Understanding the wider market is key, eg. duration and product preferencesg y, g p p


Contact details

47

Sarah Smalley Managing DirectorSarah Smalley - Managing [email protected]

Stephan Lamouroux - Senior Account [email protected]

Tel:+44 (0)870 6038264


Appendix Section

Caribbean market performanceCaribbean market performance8th November 2009


Terminology

49

• Summer Season: passengers departing between the 1st May up to 31st October

• Winter Season: passengers departing between the 1st November up to 31st April

• Summer 2010: Bookings to date made for the summer 2010 period, giving you and early view of the market trend and developmentview of the market trend and development

• Direct: bookings made online (web) + those made via a call centre

• Shop: bookings made at a Travel Agencies retail outlets

• Haul Departure: Please contact us for a full listStephan Lamouroux - [email protected]: +44 (0)870 6038264


Summer 2010 – Is the traditional duration changing?

50

• Traditional Operator model of 7 and 14 nights changing…c a g g

• 90% Caribbean bookings 14 nights

• 8-13 nights market up by 22.5%g p y• 8-13 nights up by 13% on Long Haul

22.5% 6 nights or under

7 nights

8-13 Nights Share% Duration Performance

10.9%

8 to 13 nights

14 nights

15 to 28 nights

6%8.4%

S08 S09 S10

-5.0%

-11.1%

-19.9%

-10.9%


Summer 2010 – Families are suffering the most! Not for Cuba and Jamaica

51

Jamaica

• Family booking the hardest hit within overall market, -17% familya et, % a y

• Caribbean Summer 10 Family bookings 34% • Dominican republic -21%p• Reverse trend for Cuba and Jamaica

16%20%

Caribbean: Family % Caribbean: Family performance

71% 67%60%

68%

Non Family

Family 10%

5%

9%

1%

-5%

0%

5%

10%

15%

Caribbean Cuba DominicanRep

Jamaica

32% 29% 33%40%

Caribbean Cuba DominicanRep

Jamaica

-16%

-21%

-5%

-12%

-25%

-20%

-15%

-10%

Rep


Questions? Please feel free to contact me

52

Stephan Lamouroux - Senior Account Managerstephan lamouroux@gfkascent-mi [email protected]

Tel:+44 (0)870 6038264


Caribbean market performanceCaribbean market performanceS h S ll 8th November 2009Sarah SmalleyManaging Director

Si B kSimon BrooksHead of Consumer Sales,,

British Airways

Questions from CTO Members: P R d d id I t i ith WilliPre Recorded video Interview with Willie

Walsh, Chief Executive Officer and Carol Hay.

THANK YOUTHANK YOU

HAVE A SUCCESSFUL WTM!!HAVE A SUCCESSFUL WTM!!HAVE A SUCCESSFUL WTM!!HAVE A SUCCESSFUL WTM!!

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