This article presents a profile of the US travel market, and looks at trends in US travel to Europe. The article brings together data from a number of sources to provide a profile of US travellers, their prefered travel patterns, the purpose of their visits and they ways they tend to book. It looks in depth at US outbound travel to Europe, and presents the latest data from 2007.
Finally the article presents a prediction of travel trends for 2008. US travellers represent the most important long-haul inbound market to Europe, and represent the largest long-haul market for many European countries. Americans remain enthusiastic about Europe but given the unstable economy and weak dollar, growth in 2008 is likely to be slow.
Further information on the US travel market is available in the VisitBritain, United States Market & Trade Profile (available free of charge at www.tourismtrade.org.uk).
US travellers are amongst the biggest spenders in the world with US$72 billion expenditure on travel abroad in 2006. 63.3 million trips were made in 2006, of which 30.1 million were trips to overseas destinations. The latest data for 2007 indicate growth of around 3.3% in travel to overseas. Over 30% of the American population currently hold a valid passport and the percentage is expected to rise significantly in 2008. Passports are now required for visits to Mexico and Canada.
The population is aging. The 65+ group is forecast to double in size within the next 25 years. The 55+ age group is the fastest growing segment. The internet is becoming a very powerful tool for researching and purchasing travel, and the older generation is increasingly spending time online and less time with offline media sources.
Europe remains the most popular overseas destination for US travellers but its market share amongst world regions has decreased since 2000. In 2006 travel to Europe grew by 3.5%. In 2007 the growth was less, at 1.97%. Americans remain enthusiastic about Europe but given the unstable economy and weak dollar, growth in 2008 is likely to be slow. Data for 2007 indicate strong growth in travel to Mediterranean countries with cruising becoming increasingly in demand.
ETOA carried out a survey of its tour operator members in February 2008. Results show that bookings for 2008 in the escorted tours sector are static while independent travel is down by approximately 6%. Destinations currently most in demand are Italy, France and Eastern Europe. The UK and Ireland were cited as least popular.
Since 2000 the population of the United States has been growing by 1% a year. This growth is mainly due to immigration. In 2006, the population stood at 299.7 million. The 2007 estimate is 302.5 million. (International Monetary Fund (IMF), 2007 .)
Also, the US population is growing older; improvements in health and living conditions are leading to an increase in longevity.
Source: US Census Bureau, 2006. American Community Survey
The population aged 65 and over is forecast to double in size within the next 25 years. By 2030 almost one out of five Americans will be 65 years or older (some 72 million people).
At the moment, the over 85 age group is the fastest growing segment. The average age has been increasing, a trend bucked only by the Baby Boomers of the 1950s and 1960s. In 1980 the median age increased to 30 years, and then to 35.3 years in 2000. Currently it stands at 36.6 years and is expected to increase to 37 years in 2010 and then to 39 years before levelling off (US Census Bureau, 2005 ).
According to the 2006 American Community Survey published by the US Census Bureau, English is spoken by about 80.3% of Americans and Spanish is spoken by 12.2% of the population.
The exchange value of the US dollar is regarded as weak at present and has been continuously falling against the euro and sterling in recent months. The graph below shows changes in the exchange rates of the US dollar with euro and sterling since 1996.
A large and sustained nominal appreciation in 1996-8 led to a serious and continuing overvaluation of sterling which has been associated with severe pressure on the manufacturing sector. In 2007 when the scale of the crisis in the US mortgage industry started to become clear, the US$ fell below parity even with the Canadian dollar. Record lows were hit against the euro through the autumn as warnings about a US recession became more frequent and the US Federal Reserve started to cut interest rates. This policy is still in place at the time of writing.
The United States has the largest economy in the world.
Source: IMF, World Economic Outlook Update, July 2007
In 2006 GDP was $13.194 billion. During 2007, the US economy was slowing down, with consumer debt rising and the housing market cooling. Americans now owe an astounding US$ 16 trillion (US$ 2.4 trillion in personal loans and US$13.6 trillion borrowed through property mortgages) . The US economy remains unstable and its prospects for 2008 are uncertain. According to estimates by the IMF, GDP is expected to increase by 1.9% in 2008.
The unemployment rate remains low. It increased in 2001 but it has been recovering since 2004. Most current figures show that the unemployment rate held steady at a relatively low 4.7% in November 2007, which is a reassuring sign for the current wavering US economy. In 2008, it is estimated to increase to 5.7%. (IMF, 2007 .)
Source: US Labor Department (2007)
According to the US Labor Department consumer prices rose by 4.1% in 2007, up sharply from a 2.5% increase in 2006. The US economy is also facing major inflationary pressures because of record energy prices which jumped 17.4% in 2007. However, core inflation has been more controlled, and asset prices like housing and shares have been falling.
Data from the US Department of Commerce, Office of Travel and Tourism Industries (OTTI) for the 1996–2000 period shows steady growth for the US outbound travel market peaking in 2000 when 61.3 million travellers headed abroad.
In 2001, the US outbound market was in decline before the events of September 11th, affected by recession.
In the aftermath of the events of September 11th, the number of travellers in 2002-03 dropped by 2-3%. In 2004, the market recovered with a 10% increase, reaching 61.8 million outbound travellers so exceeding the 2000 peak. Since then it has maintained a steady growth.
Source: The US Department of Commerce, Office of Travel and Tourism Industries (OTTI, 2007). Note: travel to Canada and Mexico includes both air and land travel
63.6 million Americans travelled abroad in 2006 compared to 63.5 million in 2005 . The main factor behind this minimal growth was the increase in overseas travel by 5% to 30.1 million. Travel to overseas grew by 3.3% in 2007. The total US outbound volume to overseas destinations rose by 4.7%. Travel to Mexico and Canada bucked this trend, declining by 4% and 3%, respectively.
Source: OTTI and IMF (2007)
The fall in people's incomes and decrease in GDP prompted by the 2001 recession meant that there was less money available for foreign or even domestic travel. The dollar continued to be defeated against major foreign currencies, including the euro and the Japanese yen. Even with the declining dollar, American outbound travel grew: the number of international travellers improved by 13% to over 27 million.
A look at the US outbound travel market share amongst world regions reveals a shift in travel preferences. The pie charts in figure 4 illustrate this shift.
Source: OTTI (2007)
Europe's share has decreased from 42% in 1996 to 38% in 2006. Destinations in Asia Pacific (particularly to Northeast Asia) have become increasingly popular over the recent years and its share increased from 17% to 20%. For the Americas, shares of Central America and the Caribbean both increased by 1%.
The top countries for US travellers' spending were Mexico (US$10.9 bn), UK (US$10.5 bn), Canada (US$7.7 bn), Germany (US$5.2 bn) and France (US$5 bn) (OTTI, 2007).
The top origin cities of US citizens travelling to overseas destinations in 2006 were:
The UK's International Passenger Survey (IPS) shows that the top three origin US states of visitors to the country in 2006 were California, New York State and Texas (OTTI, 2007).
The following data comparing the characteristics and profile of the US traveller (leisure and visiting friends and family) visiting overseas destinations in 2006 and 2005 were researched by OTTI .
The main 10 departure airports (and their % share of overseas departures in 2006)
The following tables show the seat capacities from the US to Europe.
Source: ETC, Market Insights (2006)
The US travel market is largely a leisure and visiting friends and relatives (VFR) market as opposed to business or meetings, incentives, conferences and exhibitions (MICE). According to the US outbound travellers' survey which is shown in table 6, 42% of respondents stated leisure or holidays as the main purpose of their trip. 31% of them stated that their main purpose for travel was to visit their friends and family.
*Figures include multiple responses.
Source: OTTI (2007)
The following table shows different ways of booking travel. Americans' booking patterns were transformed dramatically by the emergence of the Internet.
The first data collected by OTTI shows the use of personal computers to book travel for 1999. They illustrate that online bookings increased from 3% of all bookings in 1999 to 29% in 2006. Hence, bookings through travel agents and directly with airlines decreased from 58% to 39% and from 21% to 16%, respectively. The share of bookings through company travel departments and tour operators remained more or less the same.
The Internet and emerging technologies are becoming very powerful instruments in researching and purchasing travel. The rush of travel consumers to the internet has resulted in an online marketplace estimated at $68 billion . The Consumer Travel Trends Study by PhoCusWright reports that 51% of U.S. travel was booked online in 2007 and is projected to increase to 56% in 2008 and 60% in 2009 (ETC New Media Review, 2008 ).
According to the Internet World Stats (2007), the United States has the highest number of internet users in the world (211 million or 67% of the total population) followed by China (162 million). It is a 120% increase on 2000 and is forecast to expand even further. According to projections from eMarketer (March 2007) 65 million households subscribed to broadband in the US: 53.6 % of all US households. eMarketer estimates that the number of households with broadband will increase to 89.9 million by 2011.
Data from Pew Internet & American Life Project (survey of 2,200 adults in Feb-Mar 2007) shows that 71% of men and 70% of women (as a % of respondents in each group) use the Internet.
Even though the top internet users are still the ones at the younger end of the age scale, the older generation is increasingly catching up.
A study carried out by BURST Media  reveals that online users over the age of 54 are spending more time on the internet and less time with offline media sources. Despite this fact they remain the heaviest consumers of offline media, 57.9% of responding adults (55+years old) taking part in research by BURST say that internet sources provide them with 'content I cannot find on television, radio, magazines or newspapers.' Other findings show that:
Close to 100 million Americans are defined as 'heavy users' (a person who accesses the Internet at least 11 times in a week), according to a study by Universal McCann . Almost 90% of 'heavy users' shop online and research further purchases. Consumer reviews, blogging and podcasting are receiving a lot of attention in the media. Only 13% of heavy users downloaded podcasts. Blogging activities, on the other hand, attracted some 62% of heavy users.
Another survey by online market researchers Compete shows that 56% of respondents consider 'consumer-generated content' to be credible while 36% trust descriptions created by a hotel or other travel supplier .
Search engines continue to be the main way for internet users to navigate key industry categories. Comparing May 2007 to May 2006 – travel, news and media, entertainment and business and finance categories received double digit increases in the share of traffic they receive directly from search engines. Search engines accounted for 31.2% of traffic to travel sites; Google alone accounted for 19.9%. (Hitwise .)
Google accounted for 65.1% of all US searches in the four weeks ending May 26, 2007, according to Hitwise. Yahoo! Search, MSN Search and Ask.com each received 20.9%, 8.4% and 3.9% respectively.
Each city has its own newspaper(s) and most of them have online editions that are read across the country. Some of the biggest titles are USA Today, Newsweek, Wall Street Journal, Los Angeles Times, New York Times and Washington Post. In 2005, there were 2,366 daily and Sunday newspapers in the US (Plunkett Research).
Travel & Leisure is the leading monthly travel publication for consumers, others include Travel Holiday, National Geographic, Conde Nast Traveler (specialising in luxury travel) and quarterly issue Vacations. Some newspaper circulations fell between 5-10% between 2005-07, partly because of the availability of online editions which have no restriction on space.
78.6% of US travellers, however, still report that they read the travel section of the Sunday paper .
Non-travel magazines reach a broader spectrum of international travellers than travel magazines. According to Mento Consulting this is because US travellers feel that travel magazines offer more expensive products. Only 26.1% of international leisure travellers read any of the eight main general circulation travel magazines on a regular basis (Menlo Consulting, 2006) .
Of those interested in visiting Europe, some spend 7+ hours per week:
Figure 7 shows a breakdown of US outbound travel to overseas destinations.
US travellers represent the most important long-haul inbound market to Europe. It is the largest long-haul market for many European countries. Americans are keen to explore European cultures, historical attractions and gastronomy, and they simply enjoy observing the 'European way of life'.
13.4 million US travellers came to Europe in 2000. As a result of the recession and 9/11 this figure fell to its lowest 10.1 million in 2002. It then began to recover slowly, reaching 12.2 million in 2004. By 2006 the number reached almost 13 million but was still short of the record figure in 2000. Latest data for 2007 show minor increase of 1.97% in air traffic to Europe totalling 13.3 million travellers. Total air travel to overseas destinations reached 31 million, a 3% annual increase on 2006.
Figures 9 and 10 below show the correlation of US travel to Europe and the UK with euro/dollar and sterling/dollar exchange rates. The increase in the dollar's value against the euro is reflected in an increased travel volume. Since then, the dollar has fallen about 40% against the euro . Despite the unfavourable exchange rates, Americans have continued to travel to Europe. It appears that Americans are attracted to Europe when the US dollar is strong but they are not dissuaded when the dollar is weak.
US travel to the UK follows the exchange rate relatively closely at times, as indicated in the graph below. Since peaking in 2002, the US dollar has been falling against the UK pound. With the exception of 2004 when the increase in travel did not follow the exchange rate, there is a noticeable correlation between the two otherwise.
As shown in table 9 below, the UK and France received the highest volume of American visitors in 2006. The greatest growth between 2005 and 2006 was experienced by Ireland and Switzerland (both 22%), Italy (8%) and the Netherlands (5%).
Table 10 shows the number of US citizens' arrivals, and in the case of Finland, bednights in Europe .
Sources: TourMIS, Hungarian National Tourist Office, Central Bureau of Statistics Croatia, Note: Care has to be taken when comparing this data as individual countries use different measures to collect this data
The statistics show the difference in arrivals in many European countries (and most notably in Western Europe) in 2000 and 2005 following the 2001 recession. Arrivals in 2002-03 dropped significantly and only in 2004 did the Americans return in greater numbers and the trend grew upwards. But in 2005, the numbers were still short of the 2000 level. Figures for 2006 were up for most countries in Western Europe, particularly in the UK (13.3%), Ireland (10.9%) and Austria (10.8%). France posted a decrease of 10.3%.
Central and Eastern Europe have become increasingly popular. Estonia (48.7%) and Slovenia (36.1%) achieved record increases in American visits in 2004/05 following their accession to the European Union. In 2006 Croatia, which is not in the EU posted a 33.9% increase. There was particularly strong demand for travel to Greece (51.5%), indicating recovery from its Olympic-induced slump.
Hungary (10.6%) posted a good result, and Montenegro saw an outstanding increase in visits by Americans of 74.3% .
Despite the soft economy and weak dollar Americans continued to visit Europe during 2007. There were contrasting performances in visits from the US to European destinations in 2007. According to the latest available statistics from TourMIS, some countries, particularly euro-zone destinations (and the UK with its strong pound) saw minor increases or declines in visits. Other non-euro zone countries achieved good growth.
Source: Croatian Bureau of Statistics, National Statistics (UK), TourMIS (2008)
Denmark (-13%), Poland (-9.1%), Latvia (-8%) and the UK (-5.5% est.) experienced the most noticeable drop in US visits in 2007. Greece attracted an estimated 30% more American visitors in 2007 and other Mediterranean countries – Montenegro (25.5%), Spain (20.5%), Malta (20.6%), Cyprus (18.4%), and Croatia (18%) posted strong annual increases. According to the latest 2008 Travel Trends Survey carried out by Carlson Wagonlit  'cruising in the Mediterranean' is heading the American wish list and takes the number five spot in the list of top ten international destinations.
As to the popularity of European destinations for American travellers, the annual informal poll of USTOA members carried out in December 2007 shows that for five years in a row Italy has been the most popular destination for packages and tours. Eastern Europe was named as the hottest up-and-coming area and Croatia as the hottest up-and-coming country .
Data for length of stay in European countries is shown in Table 12.
Sources: Czech Tourism, Hungarian Central Statistical Office, http://portal.ksh.hu Visit Britain (2007)
As Figure 11 below demonstrates, the peak time for visits to Europe is the summer. Both the March and June figure are boosted by demand from American student groups.
Paid holiday entitlement in the US is two weeks. The US has a number of national holidays, and in 2008 these fall on the following dates .
Most states also have their own additional holidays.
Activities undertaken by Americans while on holiday have a very similar pattern across Europe. The most popular activities of Americans visiting Germany in 2006 were :
According to a February 2008 survey of ETOA members, leading tour operators bringing tourists to Europe, the countries currently in most demand are Italy, France and those in Eastern European countries. The least popular countries cited were the UK and Ireland. The responding tour operators indicated that bookings in the escorted tours sector for 2008 are static whilst bookings for independent travel have declined by about 6%. When asked about the effect of the weak dollar on demand for Europe, most respondents considered the effect to be marginal. But the impact of a worsening economy was deemed to be crucial if it happened.
TripAdvisor recently conducted a survey of more than 2,500 travellers offering an outlook into travel in 2008. Highlights of the survey reveal that :
In another survey, conducted by USTOA in December 2007, more than 50% of member tour operators serving Europe revealed that their bookings dropped in 2007; for some by as much as 20%. They expect the bookings to be similarly affected in 2008 and predict a move to inclusive products that bundle more features into a single price, as value for money is becoming a more important element in holiday decision making.
Industry experts now predict that domestic travel could benefit from the weak dollar, as people are looking for ways to spend less money. Shortened trips and stays with friends are also envisaged. Italy, countries in Eastern Europe, Lithuania, Latvia and Slovenia were cited to be 'the European hot spots for 2008'. Lisbon in Portugal – 'the last affordable European city' – had the biggest gains in page views on Yahoo! in 2007 .
The US aging population has a positive effect on travel abroad and its demand for travel is being driven by the Generation X age group. They are less anxious about travelling and are surprisingly intensive users of the internet when booking travel. The oldest baby-boomer generation are now in their early 60s, and combined with the growing interest in cultural tourism, could further boost travel to Europe.
An estimated 27% of Americans had a valid passport in 2006, and 12.1 million new passports were issued by the US State Department that year. The number of passports issued rose to 18.4 million in 2007 as a result of the new passport rules within WHTI, thereby increasing the percentage of passport holders to 30% (the Department of State, 2007 ). Currently over 74 million Americans hold a valid passport and the number is expected to rise significantly in 2008 . Some in the industry believe that there may be a positive long term impact on travel to Europe as Americans forced to obtain passports may be tempted to travel further afield.
Americans continue to be enthusiastic about visiting Europe. The overall growth of US travel to Europe in 2007 was small even though a few European countries, particularly in the Mediterranean, achieved strong growth. The growth of the market is likely to be slow in 2008. Whilst the uncertain economic situation and weak currency may lead to greater demand for dollar-based destinations such as the Caribbean, the increased risk of recession in the US (and thus the increased likelihood that Americans will spend less on travel) may mean lower demand for travel to Europe.
Irena Smith has worked in the Research Department of ETOA since January 2006. Before this, Irena studied at the University of Westminster and graduated with a first class honours in BA Tourism and Planning in 2004. Irena then embarked on several internships in the tourism industry such as working at Dubai Department of Tourism and Commerce Marketing and tour operator Hotels and More.
Since its foundation in 1989, ETOA has grown exponentially to include over 400 member organisations, of which more than a hundred are tour operators. Collectively, ETOA represents over €7 billion spending on accommodation and travel services annually. ETOA provides representation at the European government level for companies involved in bringing tourists to Europe. The Association promotes greater awareness of the benefits provided by the group travel industry in Europe – particularly increased income and employment. ETOA also influences European tourism policy and legislation.
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