Preview 2013: Retail

By Kate Rice
Preview 2013Travel retailers are getting a running start on 2013, with many reporting that bookings for 2013 -- and even 2014 -- are well ahead of where they were a year ago.

Agencies are reaping the benefit of pent-up demand and rising consumer confidence. At the same time, many of them are delving deeper into the intricacies of customer relationship management (CRM) tools to make sure they maximize opportunities as they emerge.

With a bitterly fought presidential election behind them and confidence that Washington will find a solution to the "fiscal cliff" stalemate, consumers are booking travel. And they're booking it further in advance than they have in the recent past, itself a sign of confidence.

This is not an anomaly but rather a reflection of a broader economic trend of returning consumer confidence. The Bloomberg Consumer Comfort Index, a weekly barometer, reported in early December that consumer confidence was near a seven-month high, with consumers entering the holiday shopping season prepared to spend.

Typically, consumers spend less during presidential election years, which bring uncertainty that in turn generates caution among consumers.

"I think it's odd how travel drops off during election years," said Libbie Rice, co-president of the Ensemble Travel Group. But, she noted, it never fails to do so.

That said, Ensemble's year-over-year numbers and those of other agency groups are up.

Roger BlockRoger Block, president of the Travel Leaders Franchise Group, said the group is seeing double-digit sales increases of as much as 15% to 25% across multiple categories, including sun-and-fun, luxury, midmarket, tours and cruises.

River cruises, the darling of both consumers and travel agents, continue to sell, primarily because they offer travelers a destination-focused cruise experience and are a high-margin product for agents.

Numbers for 2013 suggest that Europe is also back. Consumers are apparently resigned to high airfares and less concerned about the unrest that accompanied last year's economic crises.

Bookings up across the board

Luxury is back, big time. Block said Travel Leaders' luxury sales are up by as much as 20% with some cruise lines.

He said a recent survey of Travel Leaders members found that 60% said bookings for 2013 were higher than they were at this time a year ago.

John Lovell, president of Vacation.com, said that premium and luxury products are selling well for 2013 and that business in general is up.

"We are really outpacing where we were last year at this point," he said. Even so, he said, the midmarket consumer appears to be a holding back a bit, a trend he attributes to concerns about higher taxes on the middle class should Congress and the White House fail to avoid the fiscal cliff, the combination of tax increases and spending cuts that will be triggered automatically if no budget compromise is reached.

Despite apocalyptic media reports about what will happen should the country be pushed over the fiscal cliff, and despite election rhetoric about a struggling economy, many agents have reported that 2012 is shaping up to be their best year ever.

Bob Joselyn, president and CEO of Travel Agent Management Systems (TAMS), has a unique perspective on the state of retail travel. A financial benchmarking and networking group, TAMS has 172 member agencies ranging in size from $2 million leisure agencies to $500 million-plus corporate travel agencies. Members agencies are also members of Virtuoso, Signature Travel Group, American Express, Ensemble, Travel Leaders and most other consortia and franchises.

Thus TAMS can offer a broad window into what's happening in retail travel. Joselyn said that for many TAMS agencies, this year has been, if not the best ever, among the best ever -- despite the usual election-year falloff in bookings.

Bob JoselynPart of that, he said, is that agencies, like other businesses, are reaping the benefits of belt-tightening in recent years, working more efficiently than ever even as their business grows. But it's also partly because consumers are buying again. And they're buying further out than the past, a sign of confidence.

"When the marketplace gets really uncertain, we see a lot of close-in buying," Joselyn said.

One piece of evidence of increased sophistication in the way agents are working is the way they're using ClientBase, a major CRM tool for retail travel sellers.

Joselyn said he is having TAMS agents use ClientBase's Trams Crystal Report, which enables agencies to do some forecasting of their business. Most TAMS members had used Crystal Reports infrequently, Joselyn said, but now that they're increasing their use, they have a much better view of their businesses' futures.

"And their futures look really strong," he said.

Growing interest in ClientBase is also coming from the ground up. Block said that Travel Leaders is adding to the training it offers for the software because Travel Leaders agents are using it a lot more.

He said ClientBase works well with increasingly sophisticated marketing programs that are highly targeted based on consumers' past purchases, their lifestyle and where they live. Agents are using CRM tools across the board, he said.

A vulnerable industry

Despite encouraging numbers, the travel industry remains almost uniquely vulnerable to a broad range of geopolitical factors such as political unrest, economic uncertainty, tragedies like the Concordia accident and natural disasters.

The beginning of 2012 looked promising, too, Lovell said. Then, the Concordia ran aground on the cusp of Wave season, concerns mounted over Europe's economic crisis and high airfares knocked the wind out of some would-be travelers' sails. Business picked up, but the industry, particularly cruise, lost a crucial selling season.

"Everyone knock on wood," Block suggested.

Follow Kate Rice on Twitter @krtravelweekly.  
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