In memoriam
On too many occasions in 2010, the industry paused to mourn the deaths of giants, leaders, innovators, characters and friends.
Chief among them was Robert Whitley, president of the U.S. Tour Operators Association, who died unexpectedly on May 13 of complications from abdominal surgery.
Whitley had headed the USTOA since 1978, becoming the consummate ambassador for his association and for the travel industry at large during natural disasters, economic crises and political upheavals. He was the only president most USTOA members could remember, which compounded the shock of his death because it was so difficult for anyone in the industry to imagine the USTOA without him.
Tributes poured in from every segment of the industry and every corner of the globe. He had served his community, and served it well, for 32 years, and he had the friendships, associations and memories to prove it.
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The beginning of the year marked the passing of one of the industry's great innovators, Max Hopper, who died in January at the age of 75. At American Airlines in the 1970s, Hopper became a technology titan, transforming the airline's internal inventory system into the game-changing revenue management and agency reservation tool we now know as Sabre.
Officially, he was the airline's senior vice president of information systems and chairman of its Sabre division, but he was widely known as the "father of Sabre" or its "inventor."
After his retirement in 1995, he continued working in travel technology through his consulting firm, Max D. Hopper Associates.
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The travel agency industry lost a staunch and legendary advocate for professional agency training with the passing in November of Milton Marks, a former ASTA president and the founding president of the Institute of Certified Travel Agents, now the Travel Institute. He was 93.
Marks was active in ICTA as a trustee and board chairman from its founding in 1964 until his retirement in 1988, while also serving for nearly 50 years with his family travel agency, Marks Travel Service, in Dayton, Ohio, from 1935 and until its sale in 1984.
He was inducted into ASTA's Travel Hall of Fame in 1990.
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Also involved in early efforts to promote travel agency education was Henry Davis, a pioneering trade show operator, who died in September. He was 88.
Although best known as the proprietor of the Henry Davis Trade Show, which operated more than 500 product expos and seminars throughout the country, Davis also worked with ASTA to develop an agent training program that evolved into the original ICTA certification curriculum.
He had begun his career in travel in 1946 with AAA in New York.
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We also pay tribute here to two outstanding travel agents, Dan Bohan and Martha Fink.
Bohan, who spearheaded the launch of Omega World Travel's government travel management business, died in August. He was 69.
In the 1980s, Omega became one of the first travel agencies to serve government accounts, when Bohan, who had some experience with government contracting, joined the Fairfax, Va.-based travel agency that had been launched by his wife, Gloria. He eventually assumed the role of COO. He was also instrumental in the launch of Cruise.com, one of the top sellers of cruises on the Internet.
Martha Fink, who died in December at the age of 83, was an outspoken Bay Area travel agent who made headlines in 1971 during one of the travel industry's periodic battles against illegal charter operators.
To prove a point, Fink, who operated Midtown Travel in Palo Alto, Calif., booked the chairman of the Civil Aeronautics Board and his enforcement chief on a supposedly "members only" affinity charter and sent copies of the tickets to Travel Weekly.
Fink was also active as an educator and convention speaker, teaching at Canada College in Redwood City, Calif., and at ASTA's School at Sea program.
It was the year of the ash cloud, the oil spill, the opt-out and the pat-down. It marked the "shellacking" of the Democrats, the return of the bedbug and the end of a trying decade. But 2010 ends on a brighter note than we expected, because for travel it was, finally, a year of recovery.
The recovery is by no means complete, nor as robust as it might be, but travel showed its resilience despite a sputtering economy, and that story leads our annual list of the major news of the year.
RECOVERY
It started, as trends often do, with the airlines. By the second quarter, most of the big ones were back in the black. By the third, the majors were putting up pretty decent numbers. Even American, the only U.S. legacy carrier that hadn't been fattened by merger or streamlined by bankruptcy, was reporting a profit.
ARC's monthly reports of travel agency sales validated the trend. By midyear, cumulative agency sales for the year to date had soared 22% over 2009, and the double digits kept on coming.
Globally, IATA began the year expecting a cumulative net loss for the airline industry, but it revised that forecast several times and now predicts a $15.1 billion profit.
The airlines were buoyed, of course, by their new best friend, the ancillary fee, but civilized oil prices, capacity restraint, pricing discipline and dumb luck all played a role as travelers started coming back.
As the year progressed, it became clear that the good fortune had spread to other modes. People were traveling. Commerce Secretary Gary Locke took to calling travel and tourism "one of the bright spots in our economy."
Carnival Corp.'s third quarter produced a net profit of $1.3 billion on revenue of $4.4 billion, which is about as good as it gets.
Predictions of a stagnant year for lodging also went overboard as occupancy and rates started rising. Tour operators reported some surprising traction, and even Amtrak got a slice of the pie, posting record ridership for the fiscal year that ended on Sept. 30.
Because of high unemployment, slow gross domestic product growth and weaknesses in various regions and economic sectors, analysts are still calling this an uneven recovery, a sputtering recovery, or maybe even a stalled one, but when the holiday shopping season opened, consumers showed that they have money to spend, and booking trends for 2011 indicate that travel is back on their shopping list.
It may be battered and bruised, but travel is back.
FEE, FIE!
Fees became a four-letter word in 2009 with the proliferation of airline charges for ancillary services such as baggage, meal service, leg room and lounge access. The trend continued in 2010 when Spirit spent a few days in the headlines as the first airline to be despised for imposing a fee for carry-on bags.
The accumulating consumer outrage gave rise to "Mad as Hell Day" in September, when consumers staged a protest in Washington about fees, hidden or otherwise.
But the fee flap took on a new tone for travel professionals in 2010 as the debate shifted away from the nuisance factor and began to focus more on the practical problem of getting these fees, and the services they represent, into the workflow of travel agents, travel management companies and online sites. The fee debate is not just about airline pricing anymore. It's now a central issue in the ongoing GDS wars.
The unbundling of ancillary services is enabling airlines to rebundle them into customized packages for particular travelers -- baggage and WiFi for this person, legroom and merlot for that person. Bringing this kind of merchandising to the agency/GDS channel is likely to be the technology challenge of the next decade.
The previous GDS wars were fought over "full content," which at the time meant giving the GDS channel the same content as the airlines' own websites.
Airline-GDS contracts will be coming up for renewal and renegotiation soon, and this time, "full content" will have a whole new meaning.
CONSOLIDATION
The year saw the final disappearance of Northwest Airlines into Delta, the beginning of the United-Continental consolidation, the merger of Frontier and Midwest plus a surprise move by Southwest to acquire and absorb AirTran.
Clearly, the airlines are again being swept up by Merger Mania.
And it's not just a U.S. phenomenon this time. In Latin America, two big airline families continued a cross-border consolidation trend as Avianca of Colombia joined the Taca group and Lan Airlines of Chile cut merger deals with Tam of Brazil and Colombia's second-largest airline, Aires.
In Europe, meanwhile, British Airways and Iberia were completing plans for the formation of a holding company early next year that will operate the two brands under a single corporate umbrella, giving the Oneworld alliance some added muscle in its global chess games against Star and SkyTeam.
But togetherness was not just in the air. It was on the ground, too.
Dollar Thrifty became the object of a bidding war between Hertz and Avis, Google made a play for travel software vendor ITA, and various hotel companies explored ways to broaden their reach through cooperative associations. Sol Melia sold its Tryp brand to Wyndham, and the two companies are partnering on managing and expanding the brand. Marriott, meanwhile, formed a joint venture with Spain's AC Hotels to manage and franchise a new four-star brand, AC by Marriott.
Has codesharing finally mutated to the hotel business?
TRAVEL PROMOTION ACT
The travel industry pulled off a neat trick in 2010: It got the House, the Senate, the White House and the departments of State, Treasury, Commerce and Homeland Security to agree on something. That something was the Travel Promotion Act, and if it works the way it's intended to, it could work wonders.
Signed into law by President Obama in February, the act sets up a Corporation for Travel Promotion to market the U.S. as a destination in foreign countries and to distribute official information about the U.S. and its entry requirements and security procedures.
Compared with the tourist offices of some countries we can name, the U.S. government has never spent much on tourism promotion and never showed much inclination to devote taxpayer funds to this purpose. What made the Travel Promotion Act feasible was the funding mechanism: Its budget will be fueled by a combination of industry contributions and by fees paid by foreign visitors, not by tax dollars. That won over a lot of fiscal conservatives.
The matching formula could make available up to $200 million a year, and that could win over a lot of travelers if it's wisely spent on good marketing and market research.
The U.S. is still attracting a fair number of foreign visitors, but as a destination it has been losing market share to other, more welcoming nations. The corporation is still in its formative stages, but it expects to hit its stride in 2011 and reverse that trend.
Here's hoping.
BIG SHIPS
Rock-climbing walls, skating rinks, surf machines, real grass, actual trees, ziplines. What's next?
Whatever it is, the cruise lines will find it.
We've come to expect a certain degree of one-upmanship when it comes to cruise ship designs, and recent ships have been no exception. What made things even more interesting, not to mention risky, in 2010 was the arrival of nearly a dozen new ships in an uncertain economy, a tougher test than the industry is used to.
Royal Caribbean International faced the ultimate acid test a year ago when it introduced the Oasis of the Seas, then the world's largest ship, in the middle of a recession -- a challenge that was to be compounded in 2010 with the arrival of its sister, the Allure.
But similar challenges befell other lines, albeit on a smaller scale. Seabourn, for example, introduced the 450-passenger Odyssey last year, then the largest ship in its fleet, followed by the Sojourn this year.
It was also the inaugural year for the new Queen Elizabeth and Norwegian Cruise Line's Epic, its first ship to top the 100,000-ton mark.
Most of the year's new tonnage is based on previous designs. The Allure, for example, is basically a tweaked Oasis. NCL's Epic, however, is unique (there won't be a sister), and it offers an innovation that is sure to be copied: a block of inside studio cabins for solo travelers, built around a common area and priced without the dreaded single supplement.
Will it be the biggest thing in cruising since the balcony?
SECURITY OR THEATER?
The year began with images of the Christmas underwear bomber, whose clumsy failure by year-end had ushered in fresh controversy over imaging, pat-downs, opt-outs and "Don't Touch My Junk." The hassle factor is back.
The Transportation Security Administration seems determined to make whole-body scans a routine part of airport life, at least at major airports. Opponents have tried to whip up public opinion against invasive searches, but an attempted "National Opt-Out Day" fizzled.
A number of opinion polls suggest that people believe the intrusions are justified to maintain security, but privacy advocates aren't giving up. The Electronic Privacy Information Center went to court, arguing that the TSA has run afoul of constitutional safeguards against unreasonable searches. According to one widely cited legal standard, the TSA should only go into body-scan/pat-down mode if the passenger triggers an alarm or otherwise arouses suspicion.
Meanwhile, the U.S. Travel Association, ASTA and others are calling for a Trusted Traveler program that would entitle certain travelers to less intensive scrutiny if they undergo stringent background checks. Such a plan, supporters say, would enable the TSA to focus its resources more strategically.
The TSA bent the rules for flight crews, who had complained about repeated exposure to body scans, but seems unwilling to bend any further.
Assume the position.
MEXICO'S MESSAGE
Our southern neighbor's tourism industry struggled to stay on message in a year when it had hoped to leverage the country's bicentennial celebration to bring in visitors.
But it's hard to sell Mundo Maya when you have to add "and it's 1,500 miles away from Juarez."
Last year's headlines about swine flu were pushed aside by repeated outbreaks of drug-related violence. Then came the embarrassing incident of a group of tourists locked out of their Mexico City hotel by a labor dispute. Mexicana's temporary shutdown and financial restructuring only made matters worse. It seemed that no headline from Mexico did its image any good.
Cruise lines started shying away.
The U.S. Commerce Department reported an 11% decline in U.S. citizen air travel to Mexico in 2009, and 2010 started off badly. But things began to turn around in the spring, and by the year's midpoint, U.S. air arrivals had grown to 2.8 million, up 8% over 2009 and rising.
Travelers, it appeared, just needed to be reminded of the destination's historic strengths and historical value, and they got lots of reminders as the Mexico Tourism Board ramped up an aggressive, multifaceted campaign to turn things around.
As often happens with headline-induced traveler jitters, surveys showed that guest satisfaction remained high among people who actually make the trip, suggesting that the country's fundamentals remain sound.
And in a particularly encouraging validation, British Airways returned to the London-Cancun market in November after a long absence, offering two weekly flights. Sales boomed, and within weeks the airline pledged to add a third weekly flight in March. Hola!
THE GULF COAST
The Deepwater Horizon spill in the Gulf of Mexico dominated headlines for weeks during the spring and summer, ruining the Memorial Day kickoff, or the entire season, for numerous beach communities and threatening thousands of businesses, even though comparatively little oil came ashore.
What made the spill particularly damaging to tourism was the prominence of the event and its staying power; it dominated the news from April to August, creating cumulative "misperceptions" about conditions along the gulf.
Travel businesses and visitor bureaus responded with advertising, price cuts, no-oil guarantees, webcams and other tactics, but some promotions were simply overwhelmed by relentless news coverage.
U.S. Travel estimated that Gulf Coast communities could lose up to $22.7 billion in visitor spending over a three-year period without aggressive marketing and information campaigns to counter the negative impressions.
Early on, BP provided $70 million in grants to Florida, Alabama, Mississippi and Louisiana for campaigns to promote tourism, but industry efforts to get additional support came to naught.
The Gulf Coast Claims Facility, set up to distribute $20 billion in compensation, determined early on that funds for remedial promotional campaigns were outside its purview, but it later made one important concession: to ignore geographic proximity in determining if a business had been damaged. In other words, a hotel or travel company could file a claim even if it was not located on an oil-stained beach.
CHANGING OF THE GUARD
By pure coincidence, 2010 turned out to be a turnover year for many travel organizations.
It began in March when ASTA's long-time executive, Bill Maloney, departed in what was described as a contract dispute. Two months later, the industry was shocked and saddened by the death of Bob Whitley, who had been president of the U.S. Tour Operators Association for 32 years.
In rapid succession, ARC's David Collins, after 22 years at the helm, set a retirement date for mid-2011, as did IATA Director General Giovanni Bisignani.
Air Transport Association President James May announced his retirement, as did the World Travel and Tourism Council's Jean-Claude Baumgarten; CLIA President Terry Dale also stepped down.
Nobody could remember a time when seven such important slots had become vacant in such a short time, but the industry wasted little time fretting. By year-end, a slate of replacements with reassuringly impressive credentials had been selected.
Industry veteran and ARC Vice President Michael Premo, for example, will take over for Collins next year, and IATA tapped Cathay Pacific's highly respected top executive, Tony Tyler, to be its next CEO and director general. The ATA, meanwhile, tapped Citicorp executive and former White House congressional liaison Nicholas Calio to replace May on June 1.
Terry Dale, who has years of experience representing the interests of agents and cruise lines, has already taken the reins at the USTOA, and former Virtuoso executive Tony Gonchar will soon be doing the same at ASTA.
That whoosh you hear is the sound of power vacuums being filled.
THE TARMAC TWIST
Consumer advocates got what they wanted this year: a rule from the Transportation Department that limits tarmac delays to three hours. Even before the rule became effective on April 29, the number of horrendous tarmac delays was trending down. In the six months since the rule went into effect, they have plummeted, hitting zero in October.
The DOT claims the rule is working as intended, noting that the overall flight cancellation rate is holding steady. There are persistent claims, however, that the DOT isn't looking at the right data and that airlines are canceling many more flights in order to comply with the rule, creating far more inconvenience for passengers than the DOT admits.
Whichever side of that argument you believe, there's no denying that the airlines managed to get through a calendar month with no long tarmac delays for the first time in two years, something that might not have happened without the DOT rule.
Whether the airlines will do as well during the winter months remains to be seen, but the DOT is not resting on its laurels.
It has a bundle of other consumer rules on the table for discussion, such as extending the tarmac delay rule to foreign carriers, beefing up denied-boarding rules for oversale situations and adopting tougher standards on pricing transparency and disclosing ancillary fees.
ASTA would like that rule to include a mandate to put the fees into the GDS for agents to search and book, but that looks like one of those open questions that will be with us next year -- and maybe even the year after that.