Consumers: Outlook for the Travel Industry Bright This Holiday Season

While Location and Price Predominantly Drive Travelers’ Choices, Loyalty Programs Are a Key Differentiator for High-End Consumers

Deloitte The signs are bright for the U.S. tourism and hospitality market this holiday season, with 36 percent of nearly 16,000 U.S. consumers planning to take a long-distance trip of 250 miles or more this holiday season, according to a consumer survey of holiday spending plans and trends commissioned by Deloitte & Touche USA LLP.

In the organization’s first survey tracking consumer’s tourism and hospitality plans for this holiday season, nearly half (46 percent) of those respondents traveling are staying at least one night in a hotel. Interestingly, 47 percent of those planning to increase their holiday spending this year are also planning on taking a long-distance trip, while more than half (55 percent) of those consumers polled that earn more than $100,000 in household income plan to travel as well.

This survey was conducted online by research firm Ipsos-NPD from October 13 through October 25 and the survey’s margin of error is +/- 3 percentage points.

“This bodes well for a spending increase in the travel industry these last two months of the year,” said Adam Weissenberg, national managing partner of Deloitte & Touche USA’s tourism, hospitality and leisure group. “Thanksgiving was a very good holiday for the industry, hitting a peak not seen in 4 years, and I would expect to see continued increases in the domestic leisure travel segment in 2005. While the industry has suffered a series of blows over the past couple of years, there is a great deal to be optimistic about.”

For leisure travelers, location and price are still their number one factors when choosing a hotel (both at 71 percent), while brand (36 percent), service (34 percent) and loyalty program (20 percent) were other major factors. Those in the $100,000 household income bracket are more apt to favor loyalty programs, with 34 percent citing this as a factor.

“There is a message here for the industry, in that high net-worth consumers are continuing to embrace loyalty programs. The survey results show that those earning above $100,000 in household income, on average, belong to 2 hotel and airlines loyalty programs— more than double the average for all other consumers. While this should not be a surprise, the industry needs to further enhance its customer programs to hit this profitable niche,” said Weissenberg.

The rapid growth of the Internet for leisure travelers continues, as 67 percent of consumers are extremely or very likely to use the internet to book or research their trip.

“While these numbers are very favorable to the travel segment as a whole, I believe that consumers will find that bargains are getting harder to find as the industry rebounds,” said Weissenberg. “As some of the market leaders have recognized, the industry should look to upgrade today’s transaction processing capabilities into intelligent platforms comprising customization, relationship management, feedback and cost elimination. This will give the traveler better value, more individual service, more efficient travel plans and a more pro-active approach to handling delays and cancellations.”

Additional results from the survey show that gift giving is also being influenced by the travel and hospitality sectors. More than a third (34 percent) of respondents expect to give at least one gift card for a restaurant meal as a present this year, while 12 percent plan to give a vacation or trip. Nearly a quarter (23 percent) of consumers in households earning $100,000 or more plan to give a vacation as a gift.

“As part of our nineteenth annual holiday survey, we measured consumers’ total spending plans for this holiday season,” noted Tara Weiner, vice chairman and national managing partner of the Consumer Business Industries Practice at Deloitte & Touche USA LLP. “Over the years, we’ve been monitoring this trend toward increased spending on services and experiences during the holidays. This is the first year we have specifically asked about travel plans, and the responses suggest that many consumers will indeed be spending a good part of their holiday budgets on services related to long-distance travel.”

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