Last updated: 12:53 PM ET, Thu June 09 2016

MMGY Predicting An Unprecedented Boom in Travel

Features & Advice | David Cogswell | June 09, 2016

MMGY Predicting An Unprecedented Boom in Travel

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Get ready for a boom year! If MMGY Global is right in its latest edition of its market research project Portrait of the American Traveler, the forces are aligned for an unprecedented travel boom over the next 12 months.

“Absent an unexpected shock to the system,” says the report, “the year ahead will be a record year for the travel industry.”

The Portrait of the American Traveler is a study that surveys 2,300 American households about their plans in the coming year. The data is updated quarterly to maintain an image in motion of the traveling public as it changes throughout the year.

The survey is the only travel study that looks into the future, according to Peter Yesawich, MMGY Global’s vice chairman emeritus. “Most of what we’ve seen in the business looks into the rear view mirror, asking people what they have historically done, where did they go, what they have spent and so forth, all of which is very important, but the past may not be prologue, as we discovered as we came out of the Great Recession.”  

According to the results of the April edition of this survey, two thirds of Americans plan to take at least one trip involving overnight accommodations during the next six months. That breaks down to at least 80 million Americans traveling during the next six months.

“The outlook is incredibly positive,” said Yesawich. “The Traveler Sentiment Index, a measure of consumer confidence that we take every six months, has never seen a more positive trend [during the last nine years].”

Twenty-eight percent of those surveyed said they intend to take more trips in the next 12 months than in the last 12 months. Fourteen percent said they would take fewer trips. That is a net positive of 14 percent. It’s a 10-year high and an increase that breaks the previous record, a pre-recession increase of 11 percent from 2007 to 2008.  

The MMGY Global survey has been conducted for 26 years. It surveys a segment of the population, those with an income of $50,000 a year or more, those most likely to participate in the travel industry. It measures the intentions of people rather than their actual travel.

Although the number of people intending to travel has not increased, their number of trips and the amount of their expenditures have risen. Vacation spending has fully recovered from the trough of the recession following the 2008 stock market collapse.

“In 2010, travelers reported having spent an average of $3,874 on vacations during the previous 12 months,” said the report. “By 2013, that amount had risen 8 percent to $4,209.”

In 2016 travelers are planning to spend $5,182 per vacation, a 23 percent rise over the last four years and 9 percent higher than 2015.

Drawing Finer Marketing Categories

The study also looked into who will be driving the boom, breaking the population into demographic groups that are more subtly delineated than the conventional boomers and millennials categories.

MMGY has isolated demographic categories it calls microsegments. While there is a huge buzz on the fact that the emerging millennial demographic is increasingly a force in travel, it is actually far too general a category to be of much use to marketers.

There are 84 million millennials (as compared to 78 million boomers). They range from ages 16 to 36 now. According to MMGY, it is far too diverse a group to market to. So the company has broken the population into smaller categories with catchy names, such as the HENRYs, the GottaGoSOLOs, the YAHTZEEs, the Jet Sweaters and The Brat Pack.

HENRYs are High Earners Not Yet Rich. They are luxury travelers with plenty of cash flow but little accumulated wealth. They represent a quarter of the millennial population. They have annual household incomes of $125,000. They are a relatively untapped market that will become increasingly important in coming years.

They want experiences, not things. And they are on the hunt for good deals.

GottaGoSOLOs is a category of people who are married with children but still take solo vacations. They account for 5.8 million households. They take more than seven vacations a year on average and two of them are solo. Three fourths of them are millennials and a quarter are generation Xers. The category is expected to grow.

READ MORE: MMGY Study: Travelers Unfazed by Safety Concerns

YAHTZEEs are Young at Heart Travelers Zooming Everywhere Enthusiastically. They are active retirees traveling more than three times a year for vacation. It’s a large group representing 4.1 million households and 6.9 percent of American travelers. They are intent on increasing their travel over the next 12 months. Most of it is domestic travel, and much of it repeat travel to familiar destinations.

Jet Sweaters are amateur athletes without children. They like to travel to pursue their athletic interests. They represent 10.2 percent of American travelers, 6 million households. Marketing to them requires leveraging events that attract them.

The Brat Pack refers to children under 12, and they make a significant impact on family vacation planning. Nineteen percent of American travelers have children under 12, 11.2 million households. The children affect the choice of destinations, activities and accommodations. The influence is greater than that of teenagers on their family vacation decisions.

OTAs and Hoteliers: Changing Places

MMGY Global pointed to a trend it has observed in its monitoring of the market in which the company believes online travel agencies (OTAs) and hotel companies are in effect reversing roles.

Hospitality companies historically have tried to influence consumer decision making in the early stages, the stages of ideas and inspiration, while the OTAs have tried to direct consumers into their channels at later stages of the planning process. This is changing, according to MMGY.

In recent years OTAs are managing to attract more consumers at the earlier stages of planning, as consumer increasingly refer to the sites for ideas as they are making their initial plans.

The hotel suppliers in recent years, however, have recovered the consumer at the point of purchase, leveraging their own power to offer the lowest price to their loyalty customers. Through this process, hoteliers have regained the marketshare previously lost to the OTAs.  

Hotel consolidation, such as the merging of Marriott and Starwood, have also contributed to the process through which hotel companies have regained control over the purchasing of hotel nights.

In recent surveys travel service providers have also lost ground in the initial planning stages, according to MMGY. During the “ideas and inspiration” stage of travel planning, only 18 percent of those surveyed said they considered enlisting the help of a travel agent, down six points from 2015.

At the same time, travel agents have gained ground at the booking stage of planning. Thirty-two percent of travelers now consider using travel agents for making reservations, which is up 6 points from 2015, about the same percentage as those who use OTAs at that point. Thirty-eight percent of travelers booked at least once through a travel service provider website, and the same percentage booked at least once through an OTA.

But through the grass and the weeds, the one thing that stands out is: Get ready for a boom year, an unprecedented 12 months ahead for the travel industry.

Oh yes, that is “absent an unexpected shock to the system.” The previous record of increase in the amount of travel intentions was in the year 2007-2008. And we know how that ended up, with the crash of 2008.

That is the caveat. The travel industry must live with the potential of the unexpected, and the limits of predictability.


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