Even though consumers are besieged by rising prices, job losses and soaring foreclosures, they nonetheless will line up and even camp out to buy a product that no one really needs. We're talking about the iPhone, of course.
Interestingly, Apple's iPhone has something very much in common with leisure travel: The iPhone, like a vacation, is a "want" rather than a "need."
More interesting still is that even though the iPhone is a product that every consumer can easily live without, Apple nonetheless was able to create an insatiable, almost cult-like demand for it. This leads me to think that the travel industry can draw a very important lesson from the iPhone.
It's helpful to keep in mind that the iPhone overcame a major problem associated with being a want rather than a need. As much as we might hate to admit it, leisure travel, much like a glorified cell phone, is a purely discretionary expenditure. Unlike the mortgage payment, the car payment, buying gas, buying groceries, paying college tuition or plenty of other nondiscretionary items in the household budget, a vacation can be deferred. And increasingly, with consumers pummeled from so many directions, vacations are indeed being canceled or scaled back.
The discretionary nature of leisure travel didn't matter all that much for most of the past two or three decades, when the "normal" level of underlying demand growth was fueled even further by expansionist airlines, easy credit and cheap oil.
But now, that's all changed. Today, airlines are contracting, credit is tight and high-priced fuel makes travel more expensive. Some of the headwinds currently facing leisure travel will die down or even reverse course at some point. But the days of $12-a-barrel oil (the price as recently as 1999) are over, just as there won't be another credit-fueled consumer spending spree anytime soon.
Compounding the situation further is the likelihood that the travel industry probably grew lazy in some respects during all those years of plentiful airlift, easy credit and cheap fuel. As long as demand grew organically and picked up an extra boost from external drivers, there was little incentive to invest in stimulating demand.
But going forward, the travel and tourism industry cannot rely on favorable external factors to supplement organic demand growth, as it has in the past. The new, more challenging reality calls for forceful and sustained investments to stimulate demand and grow the industry's share of consumers' discretionary income.
In many industries, ongoing efforts to stimulate demand are a given. But the task for travel will be especially challenging, and not just because the industry may have become complacent. The U.S. travel and tourism industry is highly fragmented, with many competing interests. There is no unified voice, no national tourism ministry, no natural mechanism for raising the enormous funding that would be required to mount memorable, industrywide campaigns like "Got Milk" or "California Raisins" or "The Other White Meat."
Furthermore, branding -- the centerpiece of most demand creation -- is diluted in the travel industry, with few travel-related companies spending large sums on image-building advertising in the mass media.
Industry groups including the Travel Industry Association and the National Tour Association have been saying the right things about efforts to grow demand, including trying to inject the issue into the presidential campaign. But many more voices must join, and the tone must become both more insistent and more unified.
Government assistance would be helpful, but I don't think we can expect Uncle Sam to ride to the rescue. So here are five things the industry should do, besides appealing to government officials and politicians, in order to help stimulate demand for leisure travel:
• Reduce the cost of travel in every way possible.
• Advocate any responsible policy or action that will put more money in the pockets of consumers and increase their discretionary income.
• Increase investments in marketing and advertising, both image-oriented and promotional.
• Strive in every way possible to promote the benefits of travel to the economy, to individuals and to the community of nations and peoples.
• Make travel cool, interesting and highly desirable. Like the iPhone.
Steve Jobs got people to line up to purchase a "want." Why can't we?
Contact Lester Craft at [email protected].