Brett Tollman, the Travel Corporation

Six executives from six sectors of the travel industry  hotel, cruise, aviation, tours, retail and destination marketing  are making assumptions about the year ahead as they plan for 2017. The interviews were conducted by Travel Weekly editor in chief and senior vice president Arnie Weissmann. 

Brett Tollman

CEO, The Travel Corporation

It's angry, uncertain times, from the populist vote to some uncertainty around economic issues in many places.

That said, the U.S. is a remarkable economy, and we project ongoing strength here. Politically, post our national election, I would hope and expect that calmer heads will prevail. President-elect Trump has shown, to date and to some extent, that he is putting a relatively impressive cabinet together that, I hope, will be approved. He's obviously going to have a very muscular defense and foreign-policy approach, and that has to help if it means we sort things out in Syria. That would have impact on the migrant issues in Europe, as well as in keeping America strong and proud overall.

We believe interest rates will start going up based on what president-elect Trump has said. If he changes some economic policies that he has spoken about, from his investment plans to tax rates, that should certainly put some pressure on inflation and therefore interest rates. That'll benefit some and not others, but hopefully, the swings and roundabouts make the American economy continue to grow at 3% or 4%. That's important, as it's such a strong outbound market for us.

It's an inbound market, as well, so equally important is the issue of freedom to travel and visa facilitation. And that's still uncertain. Likewise, open skies issues, and it's good to see Norwegian Air get its approval through. The strength and opportunities for travel and tourism come with open borders and the desire and ability for people to move between countries.

Canada, I think, will continue to be weak. Canada, Australia and South Africa outbound travel will continue to see ongoing relative softness, though South Africa continues to improve post-Ebola.

We don't do a lot of outbound travel from South America, but some of the salespeople we're hiring in the U.S. will have a focus on territories there. It's certainly a mixed bag. We do have a good presence in Brazil, and it's been a tough year there, and it's hard to know where it will go next year, given what the government's facing. But we certainly have plans for growth from there, Mexico and a few of the other markets. Mexico's one of our key opportunities.

In Europe, it's a mixed bag in terms of the pluses and the minuses. Post-Brexit, we see inbound to the U.K. to be quite strong and we certainly project that to continue throughout the negotiations [with Europe] next year, which may have further impact on the pound.

At the same time, outbound from the U.K. is an important market for many of us. I think it will continue to be fairly robust as it has been post-Brexit, despite the softening of the pound. It's bounced up and down a bit, but has been very strong over time, and I think it's still a reasonable value for the Brits to travel outbound, particularly to Europe, being that the euro is quite soft. Upcoming elections will probably create continued weakness and uncertainty, but we don't project any breakup of the [euro] or anything that precipitous.

We've had a small presence in India for some time, but we're building a stronger sales presence there for outbound travel. And we've had offices in China for over 12 years. We've seen some ups and downs, but there were more than 100 million outbound travelers last year, and I think the Chinese economy will continue to generate strong demand for outbound travel. That's phenomenal, and it's for the taking by anyone who is enterprising and has the opportunity to find a way to do business in China.

That can be a challenge. Market share there has been plagued over the last couple of years by the likes of CTrip. It's hard to fathom companies selling air for less than it costs and incurring millions in losses on the basis of the market-share play. You wonder where that will go.

We expect some reasonable growth and some degree of strength and stability in other key markets in Asia, depending on the economy and the country, from Indonesia to Malaysia to Taiwan to Thailand. There is still great uncertainty in North Africa, areas of the Middle East, Libya, Sudan, Turkey and Tunisia, but at the same time, we're cautiously optimistic that each of them will rebound.

I was in Paris on Nov. 13 last year. I was in and around Nice, France, in July this year and was in New York on 9/11. We've seen the impact of that as regards to people's concerns and desire to travel. Having been in Paris recently and talking to hotels and operators there, the business continues to be down significantly. Twelve months on, you're not seeing a strong demand for Paris yet, but one knows it's going to come, as it did in New York post-9/11.

The World Travel and Tourism Council and United Nations World Tourism Organization have reported that it takes about 12 months for a destination to recover. But as the head of the police force in the U.K. said, it's not a matter of if [another terrorism event will occur] but when. They're very much on top of these things, so if the police force can make that kind of statement, I think it is an informed one.

So, yes, we do expect there will be more events. The interesting peculiarity is that post-San Bernardino, post-New York, where there was a bombing a couple of months ago, post-Orlando, there has not been a terrible backlash about those specific cities nor America in general, whereas in the psyche of people, France is still a terrible no-no.

We're launching a new river cruise ship in France in March, and we're certainly seeing soft demand, not just on river cruising but on our trip series across Trafalgar, Insight and Contiki, as well. So we are certainly concerned about France having continued softness next year. But it's one of the most unique and amazing places that one can visit  you can't replicate it anywhere else  so one has to expect it's going to come back at some point, and we're certainly desirous that it comes back sooner than later.

We're doing all we can, and we decided to stay the course in keeping the ship there whereas others have pulled out. We believe in committing to France and being a part of its recovery, as we were after we went to Sendai and we made the commitment that we were going to help bring people back to Japan.

And since then, Trafalgar and Contiki are doing sellout programs, growing at 100% a year since 2012, when we started bringing travelers to Japan for the first time from those brands. Even now, prices are not lower in France. We've certainly pushed for that, and the hoteliers in particular said, "No, we want to hold out. We'd rather sell fewer rooms and maintain our price integrity," and there's been very little break.

We've been finalizing our contracting, not just for 2017 but for 2018 as well. We've seen our contracting needs go further and further up because of corporate travel, incentive travel, meetings. The Chinese traveler certainly soaks up a lot of inventory. We have somewhat been surprised that we've not been able to get better pricing to pass on to our travelers, but we certainly tried and asked for it. Still, our pricing for next year has come out to be slightly less than 2016 as a result of currency movements but not from contracting improvements, unfortunately.

Looking at forward bookings, 2017 looks to be our best year ever for the key brands  Trafalgar, Insight, Contiki and Uniworld  with all of them looking at substantial double-digit growth over the same time last year. I think it's a result of our positive momentum and our relationships with our travel-trade partners. We believe our products and experiences are very much oriented to being sold by travel advisers. Trafalgar and Insight don't have the wherewithal, like a cruise line, to offer discounts, so the commissions that a travel agent can earn are very high.

The complexity of our products is hard to convey digitally or in a printed brochure, and does need support from a trusted adviser or travel counselor.

It's wonderful to see how strong and vital agents are, and equally, it's great to see how they are a good match for our drive for innovation and providing the kinds of experiences we believe are very much in lockstep with what travelers are looking for today.

We're seeing more and more of our travel-trade partners wanting to engage with Contiki, and that's why we saw the opportunity to bring out a new sub-brand of Uniworld  U by Uniworld  which is a new adventure youth cruising that we'll be bringing to markets in 2018. We'll have one ship in France for a start and one ship on the Danube and the Rhine.

We're opening a new office in New York, and we're going to hire 15 to 20 additional salespeople who will all be focused on growing and building stronger relationships with our travel-trade partners, and that'll be all the way from New York down to Florida and then across to Illinois. It all reinforces both our excitement and our optimism for forward growth for the company.

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