Tourism is looking like a mixed bag this year, but there are a few bright spots. The good news is that tourism numbers are expected to increase in 2007. The bad news? They’re not growing very quickly, especially when it comes to international visits.
This year, the Travel Industry Association of America is predicting about a 1 percent increase in domestic trips, and about a 5 percent increase in international arrivals. That represents slightly slower growth in the $1.3 trillion travel industry than was projected for 2006. And according to the Discover America Partnership, a collaborative effort of hospitality and tourism organizations, including the National Restaurant Association, the growth in international tourism is largely driven by visitors from Canada and Mexico, who “typically do not create the per capita economic impact of people flying in from overseas for lengthy sightseeing trips or to conduct business in the U.S.”
For operators, all this is worth paying attention to: According to the NRA, travelers account for 15 percent of revenue at quickservice restaurants, 25 percent at casual and family dining establishments and a whopping 40 percent of revenue at fine-dining restaurants. “And those are just median percentages across the whole industry,” notes Robert Ebbin, senior director of research projects for the NRA. “Certainly establishments located in or near tourist destinations are likely to find that their revenue from tourism is higher than that.”
Considering that international travelers spent $102.6 billion in the U.S. in 2005, according to the TIA, the slow growth is cause for concern. International tourist visits have finally returned to pre-September 11 volumes, but Mark Guarino, a Chicago-based analyst with the Mintel International Group, says the numbers have been slowed by what he describes as “anti-American sentiment because of the war in Iraq.” In addition, other countries are investing far more money in tourism promotion than is the United States. Australia, for example, spent $92.9 million on international tourism promotion in 2005, compared to the $6.1 million spent by the United States. The end result is that the United States is losing market share among travelers worldwide.
Still, the United Kingdom and Japan continue to pump the most tourist dollars into the U.S. economy, with 4.3 million British visitors and 3.9 million Japanese travelers entering the U.S. in 2005. Guarino doesn’t expect that to change this year, though he expects that over the next few years visits from U.K. nationals will level off, while Japanese tourists will gain in number.
Via the Discover America Partnership, the tourism industry hopes to draw 10 million new visitors to the United States each year. The group has proposed three mechanisms for doing so: creating a 21st-century visa system that would enable visas to be processed in 30 days or less; modernizing and securing U.S. ports of entry so that visitors are processed in 30 minutes or less; and changing negative perceptions of the U.S. entry experience by launching a targeted promotional campaign. “I see the travel industry getting much more involved in really pressuring the government to change the face of the U.S. overseas,” says Guarino.
One bright spot when it comes to international tourism: new regulations requiring a passport to enter the U.S. from Canada and Mexico haven’t put a damper on the number of visitors from those countries. Currently, the regulations only apply to airline passengers, who’ve become increasingly accustomed to complying with changing security requirements in recent years. The rule goes into effect for land border crossings and cruise passengers as soon as next January, although recent legislative changes may push the change back
to June 2009.
Among domestic travelers, baby boomers are expected to have a major influence, driving trends such as heightened expectations for amenities (even at budget prices), growing interest in healthy and environmentally friendly vacations and the increasing influence of so-called “culinary travelers.” That’s because boomers, the oldest of whom turned 60 last year, are edging toward retirement. A significant number of them are affluent, and traveling is high on their list of priorities. So while forecasters predict modest growth in domestic tourism this year, they’re also looking for the impact of boomers—and their money—on the travel market to continue increasing.
Other positive indicators for domestic tourism this year include projected increases in Americans’ disposable personal income—a key indicator for both the restaurant and travel industries—and less of a spike in gas prices projected for the summer driving season than occurred last year.
The most active domestic travelers are a group that Claritas, Inc., a San Diego-based market research firm, calls “Affluent Empty Nests”—upscale couples who are college educated, hold executive and professional positions and are over 45. Members of this group are much more likely to take cruises and own vacation homes than the general public. Similarly, members of Claritas’ “Accumulated Wealth” group—college-educated, white-collar boomers with kids at home—are frequent travelers, with a high propensity for ski vacations, spa trips and visits to Disney World.
Just because these groups are affluent, however, doesn’t mean they’re heedlessly throwing cash around on vacation. “Americans are spending less on higher-end hotels, and at the same time they’re also expecting more,” says Erik Wolf of the Portland, Oregon-based International Culinary Tourism Association. “You have this sense of travelers feeling entitled to luxury but they don’t necessarily want to pay for it.”
Travelers are also increasingly interested in spa vacations. Once the domain of the wealthy, spa amenities are popping up at even mid-tier chain hotels. Along with that relaxation, an increasing number of tourists are interested in environmentally friendly travel. Ed Hewitt of IndependentTravel.com predicts that in 2007 hybrid car rentals and zero-impact travel packages will move from niche activities into the mainstream. “At the fringes of the trend,” he writes in his forecast for the year, “travelers will even be checking up on ‘green’ ratings for their hotels and airlines.”
The trend toward healthy living extends to food, too: restaurant operators and chefs surveyed by the NRA say locally grown and organic items are increasingly important on their menus. That reflects something Wolf has observed: “Increasingly sophisticated consumers are traveling from the big cities out to the hinterlands and they’re taking their expectations with them,” he says. “Take people in San Francisco who are driving out to Yosemite; they might lower their expectations a little, but they still want their garlic aioli.”
Wolf’s organization recently co-sponsored research into the phenomenon of culinary tourism, defined as travel to “learn about or enjoy unique and memorable eating-and-drinking experiences.” The ICTA found that 27 million leisure travelers have participated in at least one culinary activity on a trip in the last three years. Women, people under age 55 and those with income of $75,000 or more showed the most interest in culinary travel. “Restaurants can look at promoting the aspects of their menu that are distinctive that may appeal to a culinary traveler, as opposed to just basically providing refreshment to someone who’s on the road,” says Ebbin of the NRA, another sponsor of the research. “They could tie in with festivals or other types of community events, or just market the offerings in their restaurants as providing an authentic dining experience for that particular area.”
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