Tour operators are off to surprisingly fast start in 2013

By Michelle Baran
How quickly things can change.

Escorted tour operators admit that with the country experiencing a contentious presidential election, the looming fiscal cliff and unrelenting airfares, they weren't feeling optimistic about 2013 as last year wound down.

But to just about everyone's surprise, bookings for the new year have been extremely robust, with an unexpectedly strong rebound in travel to Europe.

Suddenly, the outlook for 2013 is very positive.

"The good news is that Europe is back full force, so it's blowing away our projection of overall business," said Steve Born, vice president of marketing for the Globus Family of Brands. "That to us was a surprise, how quickly Europe came back."

Across the board, escorted tour companies are reporting a strong resurgence in bookings to Europe after a sluggish 2012, due in large part to the Summer Olympics in London, rioting in Greece and budget-busting airfares.

For 2013, Globus last week reported a 14% uptick in bookings to Europe across all four of its brands: Globus, Cosmos, Monograms and Avalon Waterways. Britain alone is up more than 70%, making it the company's most popular destination and beating out Italy for the first time in 10 years.

The fact that the U.K. is doing so well suggests that Britain might in fact break the Olympic curse of a post-Games slump in arrivals.

Other operators are also reporting double-digit bookings growth so far for 2013.

"This is probably the most optimistic I've been in years," said Marc Kazlauskas, president of Insight Vacations. "2013 is going to be a very good year."

Insight's 2013 bookings to Europe are up 25% over 2012, with the U.K. up more than 35% and France up 30%.

Cliffs Of Moher IrelandTrafalgar reported that Britain and Ireland are up nearly 25% and that its multi-country Europe itineraries are up more than 20%.

Collette is seeing a 13% increase in bookings for 2013 compared with 2012. CEO Dan Sullivan Jr. said he expected that growth to reach as high as 15%, adding that 2013 could shape up to be the company's best year ever.

At Tauck, President Jennifer Tombaugh said, "So far, the consumer seems to have really bounced back from the holiday period with enthusiasm." She said the company is seeing healthy double-digit bookings growth in 2013 compared with 2012.

The truth is, not everyone was this hopeful heading into 2013.

Paul Wiseman, president of Trafalgar, said at best he was expecting business would be flat this year.

"There was a huge amount of discussion about our expectation, because we were facing another fiscal cliff, airfares are going up, the American economic situation," said Wiseman. But, he noted, "since mid-November we've seen a dramatic escalation in the amount of business."

A reversal of fortune

Operators attribute the positive booking trend for 2013 to two main factors: pent-up demand and pricing.

A favorable dollar-to-euro exchange rate and the ability to flex their negotiating muscle in distressed destinations such as Greece enabled operators to cut prices for their 2013 Europe product by between 2% and 18% compared with 2012.

In addition, they said, airfares seem to be holding steady in 2013, and travelers seem to have gotten over their initial sticker shock.

As the economy recovers from a recession during which many people held back on spending and traveling, and with more and more travelers entering retirement age, operators said they were getting the sense that Americans are tired of holding off.

"People have come through a bit of austerity fatigue," Tombaugh said. She added that travelers are taking the attitude that "life is too short, and these moments are too precious."

Throughout the recession and even now as economic indicators seem to take one step back for every two steps forward, Wiseman said, "There's always been a huge question about whether people really have money or they don't. And they're voting with their wallet. ... They're releasing the funds."

Operators said the majority of travelers currently making bookings are baby boomers who are booking across markets, from more upscale product like Tauck and Insight Vacations down to more budget brands such as Cosmos and Trafalgar's Cost Saver.

What has also helped bolster bookings, operators said, is less media coverage of riots in Greece, Italy and Spain over austerity measures, which is making the Continent as a whole more appealing to travelers.

Elsewhere in the world, bookings are strong, as well. Japan is seeing a healthy comeback after the tsunami of 2011. And operators report positive increases across most major destinations, including Mexico.

The notable exception is the Eastern Mediterranean and Middle East, where ongoing political unrest, civil war, revolutions and terrorism have continued to discourage travel to destinations such as Egypt and Israel.

Waiting for the other shoe to drop

While operators seemed almost giddy with their 2013 results thus far, they were all careful to contain their enthusiasm given that the year is barely under way.

"I don't think 2013 is in the bag by any stretch of the imagination," Tombaugh said. She added that as long as U.S. congressional leaders and the government continue on a solution-based path and the world stays relatively peaceful, 2013 should shape up to be a very good year indeed.

As far as 2013 travel and international events are concerned, Born observed, "No news is good news."

Follow Michelle Baran on Twitter @mbtravelweekly. 
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