On September 27 to 28, nearly 1,000 of the travel industry’s brightest and best will gather in New York City for the third annual Skift Global Forum, the largest creative business gathering in the global travel industry. In only two years it has become what media, speakers, and attendees have called the “TED talks of travel.”
This year’s event at Alice Tully Hall, Lincoln Center will feature speakers including the CEOs of Marriott International, Carnival Corp., Expedia Inc., TripAdvisor, Etihad Aviation Group, Club Med, and many more.
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In preparation for the event we are featuring articles and insights from some of the speakers that touch on big-picture issues that begin in travel, but also impact businesses and industries beyond the sector.
Roger Dow has concerns about forces inside and outside the travel industry pushing visitors away from the U.S. to other destinations around the world.
As president of the U.S. Travel Association, Dow has presided over a huge uptick in both domestic and international travel. But 2016 seems to have marked something of a turning point in the outlook for increased travel to the U.S.
The growth in domestic tourism has slowed down to 2012 levels, according to U.S. Travel’s latest Leading Travel Index. International visitation is also seeing weaker growth as the result of a more expensive U.S. dollar and more limited routes from domestic carriers.
Skift: There are strong headwinds facing travel in the U.S. this year. How do you view the disruption that is happening?
Dow: Travel is always like water, it seeks the easiest path. When there’s things that get in the way, travel goes elsewhere. So if we cant get people through customs in an expedited manner, they say maybe they’ll visit Canada or Europe. Whenever something gets in the way, it chips away at the strong inbound growth.
That said we’re putting out a caution with several factors we believe are going to slow travel. One is the strength of the U.S. dollar, making it much more expensive for Canadians and Europeans to spend money. The next is the risk of the visa waiver program under attack by many who don’t understand it. It’s responsible for 60 percent of inbound overseas travel, it would be a financial and business disaster to get rid of it…
Always a concern is something like Zika. Pandemics show this is a very powerful industry, but it’s very fragile. Any of these things can put us back to ground zero.
Skift: How does consolidation among U.S. airlines affect the overall health of tourism?
Dow: Based on what the U.S. carriers have done, if I was sitting at their board table, I would applaud them. But they’re basically pulling out of any route that is less profitable so you get cities like Pittsburgh, Cleveland, and Palm Springs that now have 30 to 50 percent less capacity than five years ago. This hurts them. [The airlines’] role is to grow capacity slowly with discipline, which is the codeword for raising prices and fees. They’re doing extremely well, we want them to do well, but not at the detriment of the U.S. economy and jobs.
Skift: How big a deal is the strong U.S. dollar for the overall travel economy?
Dow: When it comes to hotel rate or other stuff travelers buy, we’re beginning to see a traveler spending less. They’re not going to as many Broadway shows, they’re maybe doing three fancy dinners instead of five. Associated spending is starting to tail off, and they may stay at an upscale hotel instead of a luxury hotel. We’re watching rates level off and start coming down. As hotels are sensing less inbound travel, it’s not so much in [tourism] numbers but it’s going to affect spending.
Skift: This year marks the first U.S.-China Tourism Year agreement between the two countries. How is that collaboration going from your perspective?
Dow: The biggest thing is that we’ve put a spotlight on China for destinations, and begun to help the U.S. try to get China-ready. Big cities are behind the curve, there are a lot of places where if a traveler speaks Mandarin, they can’t find someone to speak to.
I think we’re not as a nation totally ready, but this gets people talking and to put things in place in their destinations. The Chinese travel where they feel most comfortable and the hotel companies cater more to them really understand that.
Skift: Do you think that projections of reduced travel growth represent a new normal, or that these challenges are merely bumps in the road?
Dow: We’re beginning to see a slowdown in domestic leisure travel, which has been very important to the travel economy because it has made up for shortages in group and convention business.
We’ve had such strong growth that you get to the point where you can’t grow, grow, grow. People are making decisions these days with limited dollars. I think its just a matter that we’ve experienced such growth [and it can’t go on forever.]