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June 18, 2013
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MMGY Report Looks Ahead to Growing Travel Trends




Yesterday, Peter Yesawich, Vice Chairman of MMGY Global, spoke at a gathering of industry professionals to share MMGY’s latest travel research, particularly in terms of affluent travelers. In partnership with Travel Horizons, the study focused not on recent trends, but on how people expect to travel going forward. More than 2,000 American families that go on regular vacations and business trips were asked about why they travel, why they don’t travel and what they want when they travel.

Of course, one cannot look forward without looking back, so Yesawich began with a chart that showed some interesting changes in travel trends over the past six years. Using March 2007 as a base line, the study found sharp drops in travel spending as the recession began to hit—but spikes as suppliers cut their costs and offered deals. More recently, spending has approached March 2007 levels at a gradual but steady pace, indicating a more permanent change rather than temporary surges. The much-debated sequester seems to be helping, Yesawich added, noting that the GDP outlook seems positive for the next few years.

So what is preventing people from traveling? Notable deterrents include the price of gasoline and air tickets, although the survey indicates that these factors are less worrisome now than they were in early 2012. And over the past year, the percentage of surveyed people traveling more than 75 miles from home and staying in a hotel has remained steady at 90 percent, though the numbers were slightly higher in 2010 and 2011 (92 and 91 percent, respectively). Ninety percent took at least one leisure trip (with an average of four trips), and forty percent took at least one business trip (with an average of five trips). For business travel, most attended association meetings. The percentage of travel, Yesawich noted, has not changed, but the number of trips has: Where people once took four vacations per year, they now take three, and business travel has seen a more substantial decrease to the same number of annual trips from seven.

Markets and Mindsets

Millennials, otherwise known as Generation Y, are the new up-and-coming niche market, Yesawich said. Many of them are eager to try new experiences and, unlike the previous generation, do not want to do the same thing twice: “Dilettantes love to sample and move on,” he said.

Meanwhile, the “Traditionalists”—those aged 68 and above—take the longest trips as, being retired, they have the most time. They also spend more on all aspects of travel. Both markets can be valuable for all kinds of travel, but it is vital to know how to approach each one. (Stay tuned for more tips on that.)

And while the economy is still shaky a new frugality has emerged that is not necessarily cheap, but that emphasizes value for money. “If you like five stars, you’ll pay for five stars,” Yesawich said, “but you don’t want to overpay.” Travelers are willing to pay full price for a product or service if it comes with a guarantee of quality. This also applies to travel agents: Millennials are increasingly turning to travel professionals for advice rather than OTAs. “They have better things to do and they want value, so they will pay for the service,” Yesawich said.

In terms of destinations, the Caribbean and Western Europe are still at the top of the charts, although Yesawich predicts Asia as the destination of the future. For domestic travel within the United States, California and Hawaii are tops—but travelers to Hawaii seem increasingly interested in the “neighbor islands” rather than Oahu, he noted.

Multi-generational travel is also on the rise, and hotels and resorts are not doing enough to cater to this market. Cruise lines, on the other hand, are, and get the bulk of the business.

Technology

A full two-thirds of travelers now have some kind of smartphone, and 31 percent own a smartphone as well as some sort of tablet. Social media is also a growing force in promoting travel, whether it’s a hotel’s channel on YouTube or a traveler’s personal photo album on Facebook. (Nearly half of the survey respondents who use social media are millennials, Yesawich noted.)

Sixty percent of travelers use TripAdvisor when choosing a destination or hotel, but YouTube is the second-most popular resource, and Yesawich predicts that it could soon reach parity with the popular travel site. “The culture of users hasn’t migrated,” Yesawich said of the social media platforms. “They still have value to add to the commentary.”

 

 

 

 


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About the Author: Jena Tesse Fox

Jena Tesse Fox


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