Agent Issues 2013 Consumer Trends Giving due weight to survey's data, good and bad July 29, 2013 Share 1 -- To read the Consumer Trends report, click here. The PBS program "Wall Street Week With Louis Rukeyser" was both the first national talk show focused on finance and also the longest running. It premiered in 1972 and aired for 32 consecutive seasons before it was canceled shortly after Rukeyser left. One feature of the show was a check-in on the "Elves Index." Ten market indicators were surveyed to see if they had moved up or down during the previous week. An indicator that was bullish was assigned a value of +1; if bearish, -1; and if neutral, 0. When the total was +6 or above, it was considered a "buy" market. If +4 or below, "sell." Our Travel Weekly Consumer Trends Survey annually revisits several indicators that take the pulse of consumer behavior to help us understand various channels of distribution (to read the Consumer Trends report, click here). But do they, in aggregate, provide a reliable index of where those channels are headed? As with the Elves Index, the answer is "maybe." And for several reasons. The problem with prognosticating based on past behavior is that both markets and consumer sentiment are dynamic. And changes in both often occur because those whose livelihoods depend upon trends pay attention to them and will attempt corrective action if things are heading in the wrong direction. Awareness doesn't always lead to a turnaround, but often it does. The Elves Index was retired by Rukeyser shortly after 9/11, when it had provided spectacularly bad advice in the weeks following those attacks. It had exhibited very strong "sell" signals for a period after the 9/11-related market crash, when in fact that period represented an investment opportunity, recovering fairly quickly after a short but steep decline. And markets, by their very nature, have winners and losers. As one critic of "Wall Street Week" put it, "It is mathematically impossible for the 30 million viewers of this show to beat the market, since they are the market." On the other hand, an industry can have an enormous population of winners for long periods of time. While regional travel might be sensitive to everything from weather and natural disasters to civil disturbances and taxation, megatrends related to globalization are so strong that, as a whole, travel appears to be a great "buy and hold" industrial segment for the foreseeable future. Ultimately, expert insight into the dynamics of an industry (or markets) can also provide a complementary perspective to indicators. One problem with the Elves approach was that all indicators were given equal weight, when in fact some might have had varying importance, especially long-term. As an example, if the data points of the Travel Weekly Consumer Trends Survey were added up and given equal weight in an index, it might appear that there's trouble ahead for both travel agents and online travel agents (OTAs), particularly as regards market share against consumer-direct bookings. Additionally, agents appear to be running behind both the direct channel and OTAs when it comes to mobile technology. These are not small things. Agents should take note, and they should take particularly careful note of analyst Norm Rose's comments on what can be done on the mobile front. But as regards the supplier-direct question, things might be more complicated in the long term than the survey indicates. In particular, I believe this trend will be affected by two other influences in combination, one revealed within the survey and one outside its scope. First, there are profound implications in the charts accompanying these introductory pages. Taken together, they indicate that consumers who use travel agents take more trips per year, take longer trips whenever they travel and spend more money per day on trips than consumers who book through other channels. And, importantly, the number of trips, the length of trips and the spend all increased significantly year over year. This makes agents a highly desirable method of distribution. And the aspect that is outside the scope of the survey can be found in reports that have recently appeared in Travel Weekly about Carnival Cruise Lines' efforts to repair its damaged relationship with some travel agents. Leo Burnett, the legendary founder of the eponymous ad agency, once observed, "In order to make a proposition to a friend, you need, first, to have a friend." In response to erosion of Carnival's brand image and booking power following incidents that received widespread negative media attention, the line found that its relationships with many travel agents had deteriorated to the point that agents did not feel inclined to assist the cruise giant. These agents did not consider Carnival a friend, and they weren't listening to any propositions. In response, Carnival is making significant efforts to repair the relationship. That scenario is not without precedence. Airlines and even OTAs have turned to travel agents with incentives when they have found themselves in need. Travel counselors, it turns out, have the power to be effective brand ambassadors -- or not. Agents cannot assume that this puts them in a superior position. There are certainly indicators in the survey that point to weaknesses with travel agent distribution. If agents want to make the case that their strong relationships with desirable consumers can be viewed as an insurance policy against reversal of fortunes, they'd better pay close attention to the behavior and preferences of their client base. There are elves in this survey whose importance must not be underestimated. Email Arnie Weissmann at firstname.lastname@example.org and follow him on Twitter. Click here to read the Consumer Trends report. MethodologyThe consumer trends identified in this report are the result of research conducted by the Warren Weiss Co. during the second half of June 2013 and by PhoCusWright between Jan. 25 and 29. The Warren Weiss Co. collected data by using a survey questionnaire that was distributed online to a representative sample of the general U.S. population. Qualified respondents had to be 21 or older and had to have taken one or more leisure trips that required an overnight stay in the previous 12 months. A total of 603 respondents completed the survey. This sample size provides an overall margin of error of +/- 4% and allows for analyses of different subgroups. After being screened for qualification, respondents were asked detailed questions about each leisure trip taken in the previous 12 months that required at least one overnight stay, beginning with their most recent leisure trip. These questions were then repeated for the second most recent trip, if taken, and so on for each trip up to a maximum of the four most recent trips. The remaining questions were general queries about travel booking methods used and satisfaction with them, amounts spent, usage and influence of travel review websites and social media and, finally, demographics. PhoCusWright fielded an online consumer survey through Global Market Insite, targeting members of the U.S. adult population who have Internet access and travel for leisure. Qualified respondents said they had taken at least one leisure trip at least 75 miles from home in the previous 12 months that included paid lodging and/or air travel. Survey participants also had to have played an active role in planning their leisure trips. PhoCusWright received 2,520 qualified responses, and the weighted respondent pool can be projected with confidence to the U.S. adult population with Internet access. A total of 4,839 respondents were surveyed to obtain baseline metrics about travelers and nontravelers within the general online population. The error interval for analysis of the U.S. traveler population is +/--2% at a 95% confidence level. Significant differences noted in this report were identified at a 95% confidence level. Based on data from the U.S. Census Bureau and Pew Research Center, PhoCusWright projects the number of U.S. adults with Internet access who have taken at least one leisure trip to be 115 million people in 2012. These travelers represent 50% of the total U.S. adult population. The additional requirement for respondents to have played an active role in travel planning further tightens the focus of the study, as 18% of travelers were consequently disqualified. Click here to read the Consumer Trends report.