Power of Travel Promotion Evolution

Transcription

1 Power of Travel Promotion Evolution

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3 Promotion More Important than Ever

4 Power of Promotion $7 million Median state = marketing budget FY OR 45 seconds worth of Super Bowl ads $100 million = Presidential election TV advertisements through early August 2016

5 Travel Drives America s Economy

6 Revenue Generator

7 Educator

8 Travel Promotion s Virtuous Cycle

9 Case Studies

10 Halo Effect

11 Influencer

12 Economic Driver

13 Building U.S. Market Share

14 Partner

15 $ millions Economic Risks of Cutting Tourism Promotion $30 $25 Total Budget $20 $15 $10 $5 $ * Pennsylvania United States Average Source: U.S. Travel Association *Note - 46 states reporting in FY

16 Economic Risks of Cutting Tourism Promotion 2014/2010 Growth Rates U.S. total Competitive region 0% 5% 10% 15% 20% 25% Direct Travel Spending State and Local Travel Tax Revenues Travel Employment Note - The nine-state region includes: PA, NY, NJ, DE, MD, DC, VA, WV, OH. Source: U.S. Travel Association

17 Weathering the Storm

18 Back in the Game

19 Key Takeaways 1. Travel gives back to local communities. 2. Investment in travel promotion helps destinations compete and thrive. 3. Enhanced travel-related offerings help states and destinations attract visitors and businesses. 4. Brand USA boosts tourism to the United States. 5. Decreases in travel promotion investments have an immediate and long-term negative impact.

20 Resources

21 The Rising Dollar and International Travel to the United States With post-brexit update

22 Currency movements and global economy impact trade Percent growth 20% 15% 10% Value of Dollar (Jan 1997=100) % 80 0% -5% -10% -15% % Exports Trade-Weighted GDP Growth (Outside U.S.) Dollar 0 Source: U.S. Department of Commerce, Federal Reserve and Oxford Economics

23 Travel not as adversely affected as other sectors Percent growth 25% Value of Dollar (Jan 2007=100) % % 10% 5% % -5% % 20-15% Manufacturing Exports Agriculture Exports Travel Exports Dollar 0 Source: U.S. Department of Commerce and Oxford Economics

24 Remarkable scale of U.S. dollar appreciation in 2015 Largest single-year appreciation in 33 years Appreciation against all major currencies in 2015 Appreciation against the U.K. pound has been relatively low Foreign currency per U.S. dollar Australia Canada Eurozone United Kingdom Source: Oxford Economics

25 Appreciated currency = higher relative prices A 12% increase in U.S. prices compared to OECD average; not seen since 2002 Total (OECD = 100) United States OECD Source: The Organization for Economic Cooperation and Development (OECD)

26 What has happened in first part of 2016? A slight reversal of dollar appreciation trends Changes in U.S. dollar exchange in first half of 2016 United Kingdom (pound) 11.2% Mexico (peso) 7.5% China (yuan) 2.1% India (rupee) 1.9% South Korea (won) -1.9% Australia (dollar) -1.9% Eurozone (euro) -2.0% Canada (dollar) -6.2% Japan (yen) -14.9% Brazil (real) -19.2% Slight depreciation of U.S. dollar against many currencies. But significant appreciation against the U.K. pound. This was due to Brexit. Source: x-rates.com

27 Major fluctuations against top inbound markets over past year U.S. dollar appreciation, June 30, 2015-June 30, 2016 Change in value of U.S. dollar 25% 20% 15% 10% 5% 0% -5% -10% -15% #1 Overseas United Kingdom #2 Overall Mexico China India Canada Australia South Korea Brazil Eurozone Japan #2 Overseas -20% Source: x-rates.com

28 The rise of the dollar in perspective Change in value of U.S. dollar Total U.S. dollar appreciation, through June 30, % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Brazil (2011) Mexico (2011) India (2010) Australia (2012) Source: x-rates.com and U.S. Travel Association Canada (2011) Japan (2011) Eurozone (2011) United Kingdom (2014) Eurozone (2014) South Korea (2014) China (2014)

29 So why is Brexit so significant for the U.S. travel market? 1. Was quite sudden, and affected a relatively strong currency Dollars per Pound 1.5 June 23, 2016 Brexit Referendum $ Source: x-rates.com

30 So why is Brexit so significant for the U.S. travel market? 2. Visitations from the U.K. to the U.S. are relatively sensitive to currency rate fluctuations Growth in visitations from the U.K. 15% Fluctuation of dollar/pound exchange rates -15% 10% 5% 0% -5% -10% -15% % -5% 0% 5% 10% 15% -20% Visitations from the U.K. Source: U.S. Department of Commerce and Oxford Economics U.S. dollar/u.k. pound nominal exchange rate 20%

31 So why is Brexit so significant for the U.S. travel market? 3. The U.K. is our largest overseas market Other Overseas, 40% Italy, 3% India, 3% Australia, 4% Source: U.S. Department of Commerce United Kingdom, 13% Japan, 10% China, 7% Brazil, 6% Germany, 6% South Korea, 5% France, 5% Top long-haul U.K. outbound markets U.K. % of total LH to each country % of total LH from U.K. United States 13% 24% United Arab Emirates 11% 6% India 20% 5% Thailand 12% 5% Egypt 11% 5% Canada 14% 4% Australia 9% 3% China 8% 3% Mexico 10% 3% Morocco 5% 2% Source: Oxford Economics

32 Brexit: Impact on U.K. Inbound Travel To the U.S. Annual Percent Change in U.K. Visitations to the U.S. 6% 4% 2% 2.7% A percentage point loss of 7.7% in % -2% % -6% U.K (pre-brexit) U.K (post-brexit) -5.0% Source: Oxford Economics

33 A projected loss of half a million U.K. inbound travelers in 2017 Visitations from the U.K. (thousands) U.K. (pre-brexit) 4, % 5, % 5,150 U.K. (post-brexit) 4, % 4, % 4,624 Loss to Brexit (visitations) Loss to Brexit (%) -2.9% -10.2% Source: U.S. Travel Association based on data from U.S. Department of Commerce and Oxford Economics 10.2% loss in U.K. visitations next year 10.2% * 12.8% (U.K. share in overseas) = 1.3% loss in Overseas visitations

34 Signs of change in demand from the U.K. in Second Half of 2016 YoY % change in share of searches 30% 20% 10% 0% June 23rd - Polling day for EU referendum -10% -20% -30% -40% -50% -60% U.K. Demand for U.S. Search Week Source: Nsight

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36 Overall Current Travel Indicator (CTI) Index (>50=expansion, <50=decline) Mar Feb-06 Jan-07 Dec-07 Nov-08 Oct-09 Sep-10 Aug-11 Jul-12 Jun-13 May-14 Apr-15 Mar Financial crisis 45 Source: Oxford Economics and U.S. Travel Association

37 Domestic vs. International Current Travel Indicators (CTI) Index (>50=expansion, <50=decline) Mar-05 Feb-06 Jan-07 Dec-07 Nov-08 Oct-09 Sep-10 Aug-11 Jul-12 Jun-13 May-14 Apr-15 Mar International (3 month moving average) Domestic (3 month moving average) 35 Source: Oxford Economics and U.S. Travel Association

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