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Europe's "New Normal"
By James Ruggia
Published on: March 9, 2010
The European Travel Commission (ETC) held its 29th Annual Transatlantic Conference in New York in late February, bringing together a full slate of marketing gurus, economic prophets and analysts. It was a day to hear about the numbers. American arrivals to Europe fell 12 percent in 2009, and revenues suffered even worse as travelers who did go to Europe responded heavily to deals and discounts.
Europe has its mystical $1.40. When the euro is worth more than $1.40, one tourism director told me, American visits to Europe sag. Happily, the euro now stands at a shaky $1.36, but these days even good news is couched in bad as the weakening of the euro is largely due to the huge government debts of Greece, Spain, Italy and Ireland. Another thing that helps is the 12 percent fall in European hotel rates compared to a year ago. Grim though these factors are for Europeans, they do bode well in a market that has grown savvy about finding value and is showing a little pent-up demand after a year of tightening its belt.
Putting its best game face on, the ETC believes there will be modest growth of between 3.6 and 4 percent in 2010 that will restore arrivals (not revenues) back to their 2008 levels. The best of the conference’s speakers was Kate Muhl, vice president of consumer strategies and demographics for marketing consulting firm Iconculture, who said that even though the over-arching economy was in recovery, consumers still continue to experience recession on the ground. Some 44 percent of all U.S. families lost jobs and working hours, or took a pay cut. “Consumers are redefining, they’re not downscaling,” she said. “That redefinition will present the biggest challenge this year.” One of the first casualties of that redefinition, said Muhl, is indulgence travel. “The Great Concession,” she said, “will see travelers emphasizing social responsibility and rescaling the things they expect from their travels.”
The general tenor of the conference recalled ETC gatherings of the past when the road side often failed to bloom with primrose. At the 1990 ETC conference, a full 20 years ago, the organizers projected a photo of Saddam Hussein onto a giant screen behind the lectern in the gilt rococo ballroom of New York’s Plaza Hotel to a shuddering crowd. Hussein had just invaded Kuwait and back then trouble in the Middle East signaled an overarching collapse for travel almost everywhere.
The measure of the change between now and then is summed up in the phrase the ETC used as the theme of this year’s meeting, “The New Normal.” ETC Chairman Jean-Philippe Pérol noted: “New trends seem to have dramatically changed the travel industry, including continued bargaining on prices and products, the strong growth of sustainable tourism and the new austerity in luxury travel. These three factors might lead us to think that business will never be the same, even if economic growth is around the corner. Business will be back, but we will have to adapt to a new normal or business as unusual.” Indeed, the ETC believes that travelers today are going to travel under almost any circumstances.
In his address to ETC members, Perol compared the downturn in visitors to Europe in 2008 and 2009 with its final tally in 2009 of nearly 12 million to 2004, one of the most depressed years for travel in the aftermath of Sept. 11, 2001. Europe recovered from that with a record high of 13.3 million U.S. visitors in 2007. But Pérol conceded that “the current downturn is different,” citing the explosion in social media and online networking and a baby boom generation that is anxious about its one time 401K investments now being just 201K.
Howard Byck, AARP’s senior vice president for lifestyle products, reminded those attending the conference that baby boomers still represent 78 million consumers, with a $2 trillion per annum spending power. But he also pointed out that many boomers find themselves carrying both their parents and their adult children through these tough times. Five million adult children moved back home in 2009 and there are some four million parents of boomers now in their deep old age. Given these cold economic facts, along with the loss of some $7 trillion in home value, one can hardly blame baby boomers for seeking deals. Byck also attacked the notion that boomers constitute the “Me” generation, noting that 65 percent of them seek “green” hotels and 53 percent are willing to pay more to travel “green.”
Another speaker, Justin Francis, managing director of responsibletravel.com, urged sellers of travel to tell the “back story” when selling “green” and responsible travel. “To these travelers, the back story is essential: Who made itω How was it madeω What is its impactω” Francis said. He went on to say that in the next five years responsible travel will dominate the market as travelers demand deeper experiences, back stories, authenticity, sustainability and a connection with the people impacted by their travel.
In concluding the conference, Rob Franklin, ETC’s executive director in Brussels, remarked that perhaps the most important message to take away is that now more than ever travel is not a commodity, and therein lies opportunity for the savvy marketer. “It’s more important to give travelers the most value for their money, than to give them the cheapest possible price while cheapening the experience at the same time,” he said. “That way, profits and principles can be natural friends, not enemies.”
For more information on Europe, visit www.visiteurope.com.
James Ruggia is executive editor covering Europe for TravelPulse.com.
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