Even as the economy recovers, tour operators are continuing to see an unprecedented boom in demand for domestic products.
During the recession, operators reported that domestic programs were helping to compensate for slumping international business. But even with the recession fading, Americans apparently aren’t done rediscovering their homeland. Operators that have not offered domestic programs in the past are quickly getting onboard.
With rising airfares and troubles in North Africa, the Middle East and Japan, tour operators are recognizing that they’re at a disadvantage if they don’t have a safe, affordable, domestic offering in their portfolio.
"It’s airfares. It’s fuel costs. It’s what’s going on in the world," said Marty Seslow, vice president of marketing and sales at Gate 1 Travel, which after years of offering international destinations last month launched its first domestic program, starting with California and Alaska.
"The Middle East has always been a big part of our product line, and all of a sudden I can't sell Egypt," Seslow said. "Take Japan and its effect on Asia travel. Putting all our eggs in one basket is not a good idea. ... The more we can offer our clients, the better off we can be."
Gate 1 is now selling fly-and-drive packages to Napa, Sonoma, Monterey, San Francisco and Lake Tahoe in California as well as Alaska land packages.
Packages for Los Angeles; San Diego; Phoenix; the Grand Canyon; Palm Springs, Calif.; Flagstaff, Ariz.; and Santa Fe, N.M., are in the works.
Indeed, tour operators that have resisted the domestic market for decades are recognizing that they need to have closer-to-home options for a client base that remains wary of traveling abroad, whether for financial, personal safety or security reasons.
Pleasant Holidays, which has a long and well-established presence in Hawaii, launched mainland U.S. products in October comprising 100 hotels in four states. Its goal is to offer 220 hotels in 24 cities by the end of the year.
"One of the things we learned during the recession is that people stayed closer to home," said Pleasant Holidays CEO Jack Richards. "We did not have a very robust U.S. program. There are about 150 million travelers to the top three U.S. markets that we didn’t serve."
In addition, Richards said, "International airfares are getting quite high. If you look at fuel surcharges to Europe now, they are $300 to $400 per person. That definitely is having people stay closer to home."
And although the "price of gasoline is very high," Richards said, "it's still a lot cheaper to drive."
Since the program was launched in October, Richards said, it has exceeded his expectations, having doubled the company's forecast for the first quarter.
And surprisingly, he said, "a significant number of these people are booking domestic air," a trend that he admitted caught him off guard.
Operators with established domestic products are seeing continued strength in the market.
"Collette Vacations’ domestic bookings are looking extremely strong for 2011," said Melissa Snape, Collette's executive vice president. "A combination of factors including increased fuel costs and airfare, particularly for long-haul destinations, are contributing to this."
She noted that the national parks remain among the more popular itineraries. Tour operators have consistently reported the parks were selling extremely well since the domestic-destination renaissance began during the recession.
The New England region and mid-Atlantic are also popular, she said.
Richard Launder, president of TravCorp USA, said of the jump in domestic tours, "Most likely the reason is the air pricing more than anything. I don’t think Egypt or Libya is keeping Americans in the United States."
U.S. travelers who have delayed their booking decisions are being negatively affected by rising airfares, Launder said.
Trafalgar Tours reported seeing 30% growth in U.S. bookings this year over last, and Insight Vacations said it has seen a 64% increase in domestic bookings.
"Insight’s going to have our best year ever in the U.S.,” said Insight President Marc Kazlauskas. "I think it was a perfect storm for domestic: airfares, some unrest in the world, and people are coming back."