We began 2011 hoping for some economic progress, and it says something about the year that we're still not sure if we got any.
Some segments of the travel industry did OK, but even where a sector showed marked improvement, some prominent members or regions didn't. The year, in short, did not bring a tide that raised all boats.
But a review of the year's events illuminates a number of currents and trends that seemed to affect multiple industry segments, though never equally. It led our Maker of Lists to abandon the Top 10 approach in favor of this:
Year in and year out, across all industry sectors, we bear witness to mergers, acquisitions, divestitures and bankruptcies. In some years, they come like waves within a particular industry (think airlines), but in 2011, they were everywhere. Of course, Big Air stole the show when American finally bit the bankruptcy bullet. And because both its major rivals have combined a bankruptcy with a merger, talk immediately turned to the possibility of an eventual merger with US Airways. So far, it's just talk.
But restructuring and mergers weren't just an airline game this year. In technology, Google rang the bell with its takeover of ITA Software, enabling it to roll out the first iteration of its controversial Flight Search.
In retail, the big got bigger at the beginning of the year when Travel Leaders Group, the industry's largest franchisor, acquired the biggest consortium, Vacation.com. The deal created a family of franchise, hosting and consortia brands that embraces some 30% of North American agencies, accounting for $16 billion in sales. Vacation.com added to the portfolio at the end of the year with its acquisition of Cruise Shoppes, the small, cruise-only consortium in Weston, Fla. The Hickory consortium, meanwhile, was acquired by the closely held Traina Cos., owner of the host agency InteleTravel.
In the car rental space, Dollar Thrifty continued to flirt with the idea of being acquired by Hertz or Avis, but then decided -- for now -- to do neither.
And sometimes, restructuring is about letting go: Expedia decided to spin off its TripAdvisor brand to shareholders; Marriott divested its timeshare unit; and Lufthansa shopped its troubled U.K. subsidiary, BMI. Ambassadors International went into bankruptcy in April and let go of a key asset in Windstar. The brand emerged with a new owner, Xanterra Parks & Resorts, which is upgrading the line's three sailing ships. And, finally, the sale of the multilevel marketer YTB appeared, for now, to close the book on the controversies that dogged the brand and its founders, who are now out of the travel business. Former Hickory and Thor executive Jeff Scott, the new CEO, planned to change the name to First Travel Alliance.
In addition to global economic cycles, destinations continually face the ever-present risk of natural disasters, health scares and political events that can send travelers back to their couches. Those challenges bedeviled a number of major destinations in 2011, notably Egypt, Mexico and Japan.
Egypt grabbed headlines around the world when street demonstrations in Cairo rapidly morphed into a revolution that toppled longtime president Hosni Mubarak and led to the electoral process that is still ongoing. As much as the Arab Spring has been welcomed, the process has not always been pretty. Early on, the worst fears were put to rest: There were no crazed mobs looting the Cairo Museum or defacing the ancient monuments. Still, tourism came to a brief standstill, and while Egypt's attractions remain open for business, the visitor industry will likely continue to suffer until a stable, elected government emerges.
While Egypt's crisis was sudden and acute, Mexico endured another year of chronic image problems, the persistent result of gruesome reports of drug-related violence. But the visibility of President Felipe Calderon in addressing the issue and the country's ability to market its strengths suggest that the fate of Mexico's tourism industry is in its own hands. While arrivals from the U.S. are down, Mexico is hosting a steady stream of visitors from elsewhere in the world, particularly the emerging source markets of China and Brazil. The country's goal of moving from the 10th most visited destination in the world to the No. 5 spot might well be within reach.
Nuclear radiation may be even scarier than violence, and that was the grim aftermath of the earthquake and tsunami that crippled Japan's Fukushima nuclear plant, leading to the world's worst nuclear disaster since the 1986 Chernobyl accident in Ukraine. Japan has addressed the damage from the quake and tsunami, but the area around the damaged reactors remains cordoned off for 12 miles in all directions, a necessary precaution that casts a pall over the entire country. In the immediate aftermath of the disaster, arrivals from the U.S. fell by more than half. The numbers are beginning to come back, as consumers come to realize that Japan's major attractions are unaffected, but for Japan's tourism economy, it can't happen fast enough.
Elsewhere around the world, tourism to Greece felt some bad vibes in the wake of the country's economic crisis, and Jordan suffered a temporary decline from what might be called "regional unrest," as the country is paired on many itineraries with Egypt, Israel or other states. Thailand, meanwhile, endured yet another disaster when much of the country was inundated for months after a particularly wet monsoon season. Central Bangkok and its major tourist attractions were spared, but the disaster displaced 2 million people and now ranks as one of the costliest in recent history, with damages estimated by the World Bank at $45 billion, three times the estimate for the 2004 "Christmas tsunami."
Despite economic woes in the U.S., Europe and elsewhere, the travel industry had a fair year in 2011, and some sectors could only be described as hot spots: New York as always, Vegas once again and anything having to do with social media.
The hottest hottie might well have been river cruising, which continued to gain in popularity on several continents as operators continue to develop new itineraries and float out new vessels. Competition has inspired innovative amenities and cabin layouts that increasingly offer floor-to-ceiling windows and actual balconies.
One of the best indicators of how this market is buzzing was the decision by Viking River Cruises to accelerate its expansion program and put six -- yes, six! -- newbuilds into Europe in 2012. Even Mississippi cruising, which has virtually disappeared, is staging a comeback as two operators, American Cruise Lines and the Great American Steamboat Co., will be putting paddle wheelers into service on the Mississippi next year.
China, a global hot spot for tourism of all kinds, attracted a lot of attention from cruise lines last year. Encouraged by all the signs, Royal Caribbean International decided to put megaship the Voyager into the market next year alongside the Legend of the Seas, giving it an enormous capacity boost and a 2012 roster of 49 sailings from four Chinese ports.
Costa Cruises, which is pioneering the market for Carnival Corp., garnered what could prove to be a valuable advantage by becoming the first Western cruise line to establish a wholly owned distribution arm in China, enabling it to engage in direct marketing and to make sales in local currency rather that working through a general agent.
Travel promotes world peace, but the business of travel sometimes gives rise to endless wrestling matches within the industry. Two such contests continued off and on throughout 2011: the battle between airlines and GDSs over ancillary fees and new retailing strategies, and the widely scattered skirmishes between local governments and online travel agencies concerning the proper collection of lodging taxes on prepaid, merchant-model bookings. As we said a year ago, and two years ago, there's no end in sight.
The airline point man in the GDS wars has been American, which has been trying to sell the industry on its Direct Connect option. Direct Connect would give agents, including big travel management firms and OTAs, an enriched selling environment that would enable the airline, through its agents, to present customized options based on a traveler's profile. GDS operators say the rosy scenario won't work and will lead to fragmentation for industry distributors and a lack of transparency for consumers. Agents, meanwhile, are looking for technology that will enable them to view and book airline ancillary services, something the GDSs claim to be ready to do if those nasty airlines would only cooperate.
But technology is just one front in this war. American, Travelport and Sabre have been in and out of court, and American has been on and off various screens as the dispute raged on. Meanwhile, ARC quietly implemented the capability to process the EMD, an electronic document for miscellaneous and ancillary charges, proving that when the stars align, agents can book an ancillary service, collect the fee and send it through ARC. If only the stars would align.
Over in the lodging business, meanwhile, OTAs and local governments continued to battle each other in courts around the country over the question of whether local laws require hotels and OTAs to calculate lodging taxes on the wholesale rate paid by the OTA or the retail rate paid by the consumer. The lawsuits have been part of the landscape since 2006, and while OTAs win some, lose some and settle others, the issue shows no sign of going away.
Some industry sagas never seem to end, but some continuing stories reached important milestones in 2011. In the Bahamas, the long-delayed Baha Mar development project, funded by the Export-Import Bank of China, staged its ceremonial groundbreaking in February for the 1,000-acre resort complex, slated for completion in 2014. The opening will mark another milestone with the unveiling of a casino larger than a football field.
Also this year, Amtrak marked its 40th anniversary, happily celebrating the occasion during a time of record ridership. But the railroad still has its detractors, and continued federal funding remains a year-to-year proposition.
In Washington, the new Corporation for Travel Promotion, which began the year with zero employees, picked up momentum after the arrival in May of CEO Jim Evans. By year's end, the company unveiled the Brand USA logo at the World Travel Market in London and began developing a global marketing plan built around the Travel Industry Association's "Discover America" theme, which it acquired. The first ads promoting the U.S. are slated to appear in March.
Marriott International marked a milestone at the end of the year when CEO Bill Marriott announced his intention to step down from day-to-day management on March 31, retaining the title of executive chairman.
In Philadelphia, meanwhile, a donation from philanthropist H.F. "Gerry" Lenfest enabled the SS United States Conservancy to acquire the venerable ship from Norwegian Cruise Line and develop plans for reviving it as a shore-side attraction. In the Big Easy, where the reopening of the landmark Hyatt Regency in October marked the rebirth of New Orleans and its visitor industry after the devastation of Katrina.
Boeing marked the milestone to end all milestones in September when launch customer All Nippon Airways took delivery of the industry's most anticipated (and seemingly most delayed) aircraft, the 787 Dreamliner.
The world also achieved a milestone by adding a new country in 2011, the Republic of South Sudan. About the size of Texas and with a population of some 8 million, the new democracy achieved independence on July 9.
OUR TAX DOLLARS AT WORK
Uncle Sam again left his mark on the travel business in 2011, in ways good, bad and disruptive. The prime example of the latter was when Congress allowed FAA authorization to lapse at the end of July, throwing the industry into a spasm of uncertainty over tax collection and refunds.
More positive, despite some initial confusion, was the Treasury Department's decision in July to broaden the availability of U.S. citizen travel to Cuba as part of "people to people" programs. And while the Transportation Security Administration often takes two steps back for every one forward, the last year marked the beginning of a long-advocated move away from a one-size-fits-all approach to airport security as the TSA began to recruit frequent flyers from major airlines to join a "trusted traveler" program.
Also on the plus side was the Transportation Department's crackdown on unsafe bus operators after several fatal crashes, coupled with new rules prohibiting commercial truck and bus drivers from using hand-held phones while driving.
But the jury might still be out on some of the reforms that the Transportation Department has visited on the airline industry. The DOT extended its tarmac delay rules to foreign carriers in 2011 and launched its first enforcement action under the three-hour rule, fining American Eagle a whopping $900,000 for a Memorial Day meltdown at Chicago O'Hare that stranded more than 600 passengers on 15 aircraft. Critics say the harsh penalty could cause airlines to inconvenience even more passengers by canceling flights pre-emptively rather than risk a costly tarmac incident.
Critics are also fighting the DOT in court over its decision to flip its price advertising rule on Jan. 24, when all advertised fares will have to include all taxes and mandatory fees. For years, the DOT has allowed airlines and operators to state certain taxes separately from the base fare, but that policy is slated to be treated as inherently deceptive unless the DOT is overruled by the U.S. Court of Appeals. Unfortunately, the court might not act until after the rule takes effect.
At the State Department and on Capitol Hill, meanwhile, industry lobbyists are continuing to hammer away at the need for reforms that would ease the backlog facing visa applications in China, Brazil, India and elsewhere.
PORTS IN A STORM
As always, the building and positioning of ships and the marketing maneuvers of cruise lines are perennial newsmakers, but it seemed that in 2011 a big dose of cruise news was about ports, new and old.
Notable in the new category was Falmouth, the historical town on Jamaica's north coast, reimagined as a two-berth cruise port by Royal Caribbean. After some construction delays, the line began bringing its biggest ships into the new facility as renovations radiate outward from the port.
Carnival, meanwhile, launched a plan last year to develop a cruise port at Maimon Bay, on the north coast of the Dominican Republic, west of Puerto Plata.
Existing ports, especially in the U.S., were in the news throughout the year for their efforts to attract, retain or get rid of ships. New York did well, snaring Norwegian's 4,000-passenger Breakaway for its inaugural season in 2013. The Big Apple will also share, with Seattle and Galveston, Texas, pieces of Disney's expanding pie for 2012. Portland, Maine, christened its third and largest cruise berth in the hope of attracting bigger ships, while some residents of Charleston, S.C., noisily protested the presence of the Carnival Fantasy.
Meanwhile on the Left Coast, San Diego and other ports that serve the struggling Mexico market spent much of the year scanning the horizon for masts, an activity that could spread to Bermuda soon, as the island's port officials learned late in the year that several Carnival Corp. brands will be cutting back sharply, an unwelcome blow to the island's tourism economy.
Some familiar names returned in 2011 with new and improved ideas, and several companies struck out into new territories. Cruise industry veteran Bruce Nierenberg resurfaced in March with a proposal to operate an overnight ferry service from Tampa to Havana. Corporate travel pro Ed Adams teamed with a private equity firm to acquire New Jersey-based Directravel as the core magnet for a plan to roll up other midsize corporate agencies, much as he did with Navigant before its acquisition by Carlson. Dick West also staged a comeback with Explor Cruises, focusing on the Galapagos.
In October, boutique hotel impresario Ian Schrager opened the first hotel under his new Public brand in Chicago, even as his joint venture with Marriott for the Edition brand got a black eye in Hawaii, where the owner of the Waikiki Edition sued to get out from under the deal.
On the retailing front, ARC launched Helix, a service bureau and hosting option for small agents, while host agency Nexion and the V-com and Ensemble consortia each rolled out air-hosting platforms enabling non-ARC agents to book commissionable air. Orbitz went heavy into private labeling, displacing Travelocity as the Web engine for the consumer-facing sites of American Express and AOL.
Among the many brands finding new homes in 2011, Disney landed in Hawaii, opening the Aulani resort at Oahu's Ko Olina complex; Best Western arrived in Russia and Hong Kong; Hawaiian Airlines landed at Tokyo's Haneda Airport; Qantas landed in Dallas; and Pam Am returned as a TV series.
The saddest part of looking back is the memory of friends and colleagues who have died. In 2011, the industry lost a great research pioneer, Stanley Plog, whose decades-long career advanced the art of travel-related business and consumer research for numerous industry segments, including airlines, hotels, trade associations and destinations around the world. Among retailers, we noted the passing of former ASTA president Bill Hunt; Pro Football Hall of Famer-turned-travel agent Andy Robustelli; and Jack Guiteras of Lorraine Travel in Coral Gables, Fla., a leader in the Cuban-American community and outspoken advocate of the U.S. embargo against Cuba.
We also mourned the death of Darryl Thrasher, a longtime Avis sales executive who served on numerous industry panels, and John Bloodworth, whose career included tenures with Alamo, Delta and Pan Am, plus a stint as CEO of Thomas Cook U.K. and Ireland and most recently, Expedia CruiseShipCenters in Plantation, Fla.
Correction: Travel Leaders brands account for $16 billion in annual sales.