Arnie Weissmann
Arnie Weissmann

I spent a fair amount of time last week interviewing CEOs in many travel verticals, asking what they expect in 2017 across the globe, across their sector and for their company. Their views will appear in our 2017 Preview Issue, which will be distributed and posted during the last week of 2016.

But to fully understand where we're going, it's important to see where we've recently been. Jack Ezon, president of Ovation Vacations, prepares occasional trend reports, well-written and brimming with insight, which he distributes to his industry friends. In his most recent installment, which is 45 pages long, he takes a look at what he feels were the underlying trends that had the most impact on travel in 2016, then makes predictions about what trends he feels will gain traction.

Of course, although the exact day that we humans decide that one year ends and another begins has its foundation in astronomy and horology, it's somewhat arbitrary with regards to business. Impactful events and trends operate on cycles that are completely independent of calendars. Still, the end of the year provides a good excuse for self-examination, and Ezon's report and the CEO interviews provided a bridge of sorts for me, connecting where we've just been to where we may be headed.

Ezon's clientele is extremely high-net-worth -- $100 million or more -- and primarily Gen X and millennial, which means that not everyone will be seeing the same things he's seeing. Still, I found that in many instances this focus reveals some trends that might be missed by others but that impact their businesses nonetheless.

Looking first at the environment in which we operate, he notes the combined impact of a strong dollar, Zika and terrorism had several consequences. They benefitted "far-flung" destinations that had previously been considered expensive, such as Japan, Africa, Australia and New Zealand, but also the U.K., which was on sale after Brexit.

Canada, too, which as a destination has the triple benefit of a weakened currency, proximity to the U.S. and the perception of safety, did well.

The result was that, while certain destinations might have suffered, travel as a whole benefitted, and he saw transactions rise 18%.

But there were other factors whose impact was subtractive to an even greater extent, at least for Ezon. Much of his clientele is international, and low oil prices created enough uncertainty for his wealthy clients from the Middle East to curtail their spending. New monetary regulations in Brazil, plus the strength of the dollar, reined in travel spend in that country. In all, spending from clients in the BRIC countries (Brazil, India, Russia and China) was down.

If American travelers weren't heading to far-flung destinations, they were traveling domestically, where as a rule luxury prices are considerably lower than in Europe.

And warm weather, attributed to climate change, nearly wiped out the ski season for northeastern U.S. resorts.

The bottom line was that although transactions were up 18%, rates overall were 20% lower, leading to a very active but ultimately flat year.

Also contributing to lower rates, he noted, was the addition of 100,000 more luxury rooms, as well as the impact of Airbnb, which increased the number of villas and mansion listings.

Airbnb also was on his list of the top 10 trends that he identified as gaining strength in 2016.

Dubbing it the "Airbnb Effect," he pointed not only to the elevation of standalone luxury listings, but the inclusion of hotel residence units. In some cases, Ezon writes, one could get an apartment in a luxury hotel residence for 20% less than an equivalent suite on the hotel side, with the only difference being the absence of turndown service. For the difference in price, he notes, one could hire a private maid to turn down the bed, and more.

He is also concerned that hotel companies' focus on technology that minimizes human service contact reduces the differentiation between hotels and Airbnb offerings, and that Airbnb's turn to air and tours brings it closer to offering one-stop shopping for consumers.

He finds other changes in hospitality business models disconcerting. The shift of focus toward real estate management, distribution and technology rather than hospitality gives owners who are focused strongly on dollars and cents more control of the properties, eroding brand pillars.

He sees hotels further challenged by what he dubs "OTAs gone wild," with OTAs deploying new strategies including buying inventory on spec and selling it at a loss, frustrating both hoteliers and travel advisers who sometimes truly can't match rates.

Another factor Ezon believes contributed to defining travel in 2016 includes the enhancement of artificial intelligence as an aid to Big Data, which in combination "will continue to erode humans in transactional capacities" but which he believes is still a tool used by humans, not replacing humans.

Finally, he notes the rise of "influencers" as a consumer-information source, coupled with rising distrust of established media. In polling his own clients, however, he noted something interesting: They regard print as more credible than digital information, citing the higher barrier to get something in print vs. posting it on the web.

That's one man's view of the forces that impacted his travel business in 2016. Next week, I'll share some of Ezon's predictions for 2017 and beyond.

Comments

From Our Partners

2020 Elite Island Webinar
More Family Fun in St. Lucia @ St. James’s Club Morgan Bay
Register Now
HAL_AlaskaCruising_Hero
Capitalizing on a Peak Year for Alaska Cruising
Read More
2020 Expo 2020 Feb
The World’s Greatest Show - EXPO 2020, DUBAI & ABU DHABI
Register Now

JDS Travel News JDS Viewpoints JDS Africa/MI