Packagers' sales are growing faster than U.S. recovery

Major tour packagers and agency groups are reporting double-digit sales increases so far this year, and that growth is coming on top of recent record-breaking or near-record years

Significantly, these sales increases are not catch-up volume from the declines of 2008 and 2009, but rather strong, persistent, if anecdotal evidence that growth in the travel industry is far outpacing the larger U.S. economic recovery.

“2012 was our best year ever, and 2013 is on track to be even better,” John Caldwell, president of MLT Vacations, told agents attending the opening session of MLT University in Minneapolis at the end of September. (MLT University, too, set a record, attracting more than 3,000 agents this year, Caldwell said.)

The same week, the Nexion host agency cited a record number of agents with performance-based awards at its annual CoNexion meeting in Las Vegas, and company officials reported that 2013 sales are up by double digits in every sector except cruise, which is showing single-digit increases.

Tulum EnsembleEnsemble Travel Group’s sales in the U.S. are also up going into 2014, said its co-president, Libbie Rice. Land vacations have grown significantly, she said, while river cruises are showing double-digit increases.

Following a banner year in 2013 in the South Pacific, Ensemble is seeing bookings for that market continuing to grow, and Mexico is back on the radar as well, she said.

Fifty-six percent of agents under the Travel Leaders Group umbrella, which include about a third of the agencies in the U.S., said 2013 bookings were higher overall than in 2012.

American Express Travel is also seeing growth across all categories. It is seeing double-digit growth in tours, Europe and the Caribbean, according to spokeswoman Tracy Paurowski. It is seeing double-digit growth in air to London, Cancun, Tel Aviv and Athens.

In addition, optimism has been growing in recent years among Travel Leaders Group agents, with 79% now describing themselves as optimistic about their business outlook, compared with 59% in 2009. Looking at that trend from the opposite point of view, 5.7% said they were pessimistic, compared with 18.2% in 2009.

Mike Going, president of Funjet Vacations, said his company was getting some of the highest advance bookings it has seen in recent years, describing the growth as “phenomenal.”

MLT Vacations is seeing double-digit growth, with some markets, such as London, jumping as much as 40%, Caldwell said. But it’s not just Europe.

“Punta Cana is amazing,” he said of the Dominican Republic getaway. “Whatever we throw at it sticks.”

In comparison, the nation’s gross domestic product grew about 2.5%, year over year, in the third quarter.

Several factors are driving this growth, but the key driving force is growing consumer demand. Mexico, for example, has come back this year in spades after suffering from violence-related negative publicity.

“The more you go back — 2008, 2009 — most of that stuff from a volume standpoint had caught up with itself” before the current growth spurt began, Going said. “We see a good, strong demand curve.”

He said Funjet’s consumer research indicated that the number of Americans who intend to travel keeps growing. Those numbers are linked to consumer confidence, which has also continued to grow, despite a recent slight downtick in that growth.

Marketing efforts cited

In addition to the growth in consumer demand, the wholesalers credit at least part of the growth to the efforts they have put into creating products that resonate with both consumers and travel agents.

And marketing and organic growth, too, have played a role.

MLT is growing in part because what had long been a well-established brand in the Midwest is gaining traction and recognition on the West and East coasts. It is growing its offerings as Delta, which owns MLT, expands its footprint. That means that MLT now has increased capacity to destinations such as Mexico.

Between Delta and Aeromexico Vacations, which MLT also fulfills, the wholesaler now packages about 25% of the scheduled airlift into Mexico, it said.

As Delta adds flights to Mexico, the Caribbean, Europe and the Middle East, MLT adds products to those destinations. And the product they are adding sells.

Mike GoingBoth Funjet and Gogo Worldwide Vacations reported seeing major returns on new group programs.

Going said that Groups Your Way, a program Funjet introduced nearly three years ago, “is the perfect sweet spot” for multi-origin group trips such as girls’ getaways, destination weddings and family reunions. He reported that other group travel is also doing well.

Similarly, Gogo’s two-year-old GoGroups is seeing double-digit increases, and the company said the momentum is increasing. Gogo already had a group program, but GoGroups was created to meet the rising demand for group travel.

Apple Vacations, too, reports seeing “significant” double-digit increases in business, according to Sandy Babin, Apple’s vice president of marketing.

Part of that, she said, is due to an increase of capacity in its charter business; it added 15 new flights for 2014. But the company is also seeing significant increases in its scheduled air business and group business, Babin said. Most of its groups are destination weddings.

Still, the major factor in Apple’s growth, like that of other wholesalers, is rising consumer demand.

“We are really very positive about next year,” Babin said.

Follow Kate Rice on Twitter @krtravelweekly. 

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