Tour ops stake Europe recovery on strong dollar, value-adds

|
Airplane in Paris
Terror attacks took a toll on tourism to France this year. Photo Credit: Shutterstock

Following a challenging year for travel to Europe, tour operators have at least one selling advantage heading into 2017: a strong dollar. Many 2017 Europe tours are being priced lower than their 2016 versions, and tours are also being enhanced with more and better experiences, tour operators said.

For example, Trafalgar lowered its 2017 Europe tour prices by between 4% and 12% compared with last year's rates. That followed an average decrease for Trafalgar’s Europe tour prices of 4% in 2016 compared with 2015. The Globus family of brands said it, too, was able to bring down prices slightly in a few European destinations, such as the U.K. and Northern Europe.

"The Brexit situation is now allowing us to renegotiate both on the currency and on product because there are some genuine fears of uncertainty," said Trafalgar president Paul Wiseman. He said the greatest price drops for 2017 were for the U.K., where Trafalgar tour prices have come down at least 10% for 2017.

Following the Brexit vote, the pound fell about 10% in a span of a few hours, dropping to an exchange rate below $1.35. It has continued to drop, dipping to $1.22 as of mid-October.

While the impact of the vote on currency-exchange rates landed a little late in the pricing cycle for it to be felt uniformly across the tour landscape, some operators were able to renegotiate their rates and incorporate savings into their 2017 brochures.

"We recently launched our first-ever trip to Great Britain after locking in very favorable post-Brexit exchange rates," said Greg Geronemus, co-CEO of SmarTours. Geronemus said any further drops in the value of the pound won't impact SmarTours' 2017 pricing but will make shopping and other out-of-pocket costs less expensive for travelers.

Other tour operators didn't bring down prices but instead focused on using a more favorable negotiating environment in Europe to enhance the product.

Paula Twidale, executive vice president at Collette, said, "Overall, the pricing for Europe 2017 [tours] remains attractive in comparison to 2016 as a result of enhancing the product and upgrading brand standards. Although the savings may not appear as transparent initially, the guest will benefit from increased product value for the money that they have invested."

Tauck, too, said the company was focused on investing in enhancements such as including private, after-hours tours of the Louvre on selected departures of the company's "A Week in Paris and Provence itinerary, as well as hotel and meal upgrades on multiple tours. Consequently, Tauck actually inched up its Europe prices for 2017 a few percentage points above 2016.

While the euro's exchange rate has remained below $1.15 this year, giving operators a potentially favorable pricing environment, there are other factors at play when it comes to Europe prices. For one, competition from emerging source markets such as China and Brazil remains an issue in sought-after destinations.

Additionally, while France, for instance, was hit pretty hard due to the terror attacks in Paris last November and Nice in July, other European destinations in fact saw an increase in demand, such as Eastern Europe, Spain, Italy, Iceland and Ireland. Consequently, in those destinations, pricing often remained the same or rose for 2017 compared with 2016.

Recognizing that travelers to Europe might need some pricing incentives to be motivated to head across to the Continent, Globus also introduced 15 tours in Europe priced at $200 a day or less.

"The idea is that we have a price-sensitive European travel market right now," said Steve Born, Globus' senior vice president of marketing. "But at the same time you can't keep feeding discounts or you compromise the product."

Instead, Globus created the $200-a-day tours by getting creative with the product and, for instance, including better accommodations in less crowded European cities. So instead of three nights in Florence, the lower-priced Globus Italy tours might include two nights in Padua and one in Siena.

"The hotel is as good if not better," Born said. "And you're still including that Florence experience."

Favorable flights

Another factor that is helping tour operators to re-inspire travel to Europe is competitive airfares.

"The flights are one of the first things people consider when they look at destinations," Wiseman said. "If the air rates go up, that is absolutely a killer of business." 

But currently, tour operators said, flights to Europe are considerably cheaper, as much as 40% lower than at this time last year, and they are hoping that the attractive airfares will help get some 2017 business on the books earlier in the season.

Even so, Wiseman said, reduced land and air prices by themselves are not going to stimulate demand. He said the favorable pricing environment helps, but ultimately travelers' confidence is going to need to return in order for Europe to rebound from a softer year in travel following the terror attacks in Brussels, Paris and Nice.

"It's going to take an effort from all of us to portray the truth, which is it's absolutely fine to travel to Europe," Wiseman said. "It is fine, but the perception is that it's not. Our message to our agents is all about confidence."

As for how much and whether the favorable pricing environment is influencing clients, travel sellers said they are seeing movement in Europe bookings.

"Our agents have noticed an increase in interest the last two weeks with all these excellent deals for 2017," said Michelle Weller, operations manager for Houston, Wis.-based Travel Leaders. "Just today, one agent told me they sent out quotes on Italy and Greece." decrease for Trafalgar's Europe tour prices of 4% in 2016 compared with 2015. 

Comments
JDS Travel News JDS Viewpoints JDS Africa/MI