Roll Another One For the Road

Marijuana’s place in the tourism industry

America is blazing today. Cannabis aficionados across the continent are gathering to celebrate 4/20, the unofficial, counter-culture holiday enjoyed annually by millions. So many revelers observe this holiday, in fact, that here in our beloved hometown of San Francisco a capacity crowd of over 15,000 is expected to converge on Hippy Hill in Golden Gate Park to partake, and enjoy our beautiful Spring weather.

Much has been said in recent years about marijuana legalization and its impact on tourism. Most of this talk has been simply the personal opinions of those who (for either political or monetary reasons) have an agenda and interest in the conversation’s outcome. As devoted seekers of the unvarnished truth, our tolerance here at Destination Analysts for opinion unsupported by data is low. So, we’ve done a little exploration, and in the free-wheeling spirit of the day, we thought it would be fun to look at some pot stats we’ve collected from our The State of the American TravelerTM survey.

As it turns out, not a huge proportion of tourists actually visit marijuana dispensaries while traveling. Only 3.4 percent of all American leisure travelers have visited a marijuana dispensary while traveling for in the past year, making this niche a relatively small one. Given the size of our traveling population, this means about 6.3 million persons participated in pot-related activities while traveling last year. This small market makes sense, of course, as few states have actually taken the steps to legalize. As of today, only Colorado, Washington, Oregon, Alaska and the District of Columbia have taken the step, leaving most of the country out of the game.

The Current Legalization Map

pot2

For the destination marketer, the million dollar question is, of course, how legalization effects the flow of visitor volume and spending. The picture here is actually quite murky, with more people finding the practice of a destination legalizing pot as unappealing than appealing. In a recent wave of The State of the American TravelerTM , we asked leisure travelers to think about destinations where marijuana is legal (i.e., where they could buy marijuana-related products in a dispensary.) Respondents were then asked how appealing they generally find this practice to be when evaluating such destinations for travel. Nearly 38 percent of leisure travelers fell into the unappealing camp, saying the practice was either “Unappealing” or ” Very unappealing.” About one quarter of American travelers (24.7%) say the practice is either “Appealing” or “Very appealing.” Strong sentiments at both ends of the appeal spectrum point to the negative–as travelers are nearly twice as likely to find legalization to be “Very unappealing” than “Very appealing.”

How Legalization Impacts Destination Appeal
(Legalization makes a destination…) 

pot3

Chart source: The State of the American Traveler, Destination Analysts, Inc.

How pot legalization will play out in terms of the overall economic impact in a given destination obviously can’t be divined from a national survey like this. However, it’s clear that marijuana tourism has appeal in certain segments, as well as the potential to turn other visitors off. Given the unfortunately controversial nature of this topic, we’ll be surprised if a comprehensive and credible study emerges examining the economic impact of these laws on specific destinations.

We’ll remain hopeful, though, and leave you with a few fun marijuana tourism facts to inhale:

  • Marijuana tourism is clearly more popular with the young. Our survey shows that 6.3 percent of Millennial travelers visited a marijuana dispensary while on a leisure trip in the past year. They were three times as likely as Baby Boomers (2.1%) to do so. Among travelers rating legalization as “Appealing” or “Very appealing” fully 46.0 percent were Millennials. Only 15.8 percent of those who find the practice on some level “unappealing” are from this younger generation.
  • In fact, pot tourism appeals to a different overall demographic. Comparing travelers who find marijuana legalization to be an appealing destination attribute to those who don’t, those in the appealing camp tend to be more diverse (ethnically), more likely to be single, less likely to have completed college and have somewhat lower annual household incomes.
  • The naysayers also have bigger travel budgets, and report they expect to spend 17 percent more on leisure travel in the upcoming year than those who find legalization makes a place more appealing.
  • Yet people who approve of pot travel more. Those finding legal marijuana appealing took an average of 4.6 leisure trips in the past year. Travelers who find the practice unappealing took only 4.1 trips.
Destination Analysts

The State of the American Traveler, Destinations Edition

If you’ve worked with us, you know that the Destination Analysts team is passionately devoted to helping destination marketers understand the modern traveler. For nearly a decade, every six months we’ve produced our flagship domestic study, The State of the American Traveler TM , and have provided it on a complimentary basis to our industry. This research is been widely used and helps our team shape our thinking around the ever-emerging industry topics of the day. With this rapid pace of change in the industry, our sense now is that conducting this study every six months is no longer enough. There are just too many questions floating around and too few answers available to continue on in this format. So, we’re changing course. We’ll still be partnering with our friends at Miles, but will now be conducting the survey every quarter, greatly expanding its potential.

With this good news looking forward, we present to you the first of our quarterly studies, the Destinations Edition. If you’d like to review the summary report, you can download it here. Of course, if you have questions or need extra detail, just call us. Additionally, we also gave a webinar earlier this week in which our President & CEO digs deeper into the edition’s findings. We think you’ll enjoy it.

The State of the American TravelerTM Webinar, March 10th, 2016

Webinar Screenshot

If you have questions you would like to have us explore in the next edition, send them to us!

Destination Analysts

Love, American Traveler Style

If you’re reading our blog on this beautiful Saint Valentine’s Day, we think you should stop immediately (like 5 seconds ago), step away from your iPhone and go snuggle up with your love connection.  Seriously, do it.  Our musings on romance and travel can wait.  If you’re reading this sometime after the great lover’s holiday, please enjoy these few fun stats for the destination marketer about finding new love and the modern traveler.

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Just for the heck of it, we asked a few questions about romance and travel on our soon to be released The State of the American Traveler Survey.  The results paint an unexpected picture of Americans hitting the road in search of love.

As it turns out, if you’re an American looking for a new romance on a vacation, we have some discouraging news for you.  Your chance of success isn’t all that good.  While we may all have secret dreams of “things happening in Vegas that stay in Vegas,” finding a new partner on the road seems to be a little harder than expected.  Our survey shows that last year a little over twenty percent of us have left on a vacation in hopes of making a new romantic connection.   But, alas, only about one quarter of these impassioned travelers (26.3%) found success in meeting a special someone.

Traveler Hook-ups
(Travel Activities in the Past 12 Months)

Romantic vacation

 

 

 

 

 

 

 

 

 

 

 

 

To be blunt, in most of life this success rate would be considered abysmal.  If a high school student scores 26 percent on a Calculus test, they fail.  Remedial Algebra here we come.  In Major League Baseball, a player batting .263 is sent down to the minors, or dumped completely.  On Tinder, whose ego would not be bruised if they knew they got only one out of four right swipes?

We don’t mean to take the wind out of your romantic sails, as there is good news in our research.  We all know travel is a powerful aphrodisiac, and despite the fact that three out of four traveling romance seekers strike out, serendipity isn’t dead.  Coincidental romance  still happens, as overall, 13.7 percent of us met a new romantic partner while on the road last year. This means that over 10 percent of those with no expectations at all for travel romance got lucky (with a new person) on the road last year.  From a purely numerical standpoint, with hundreds of millions of travelers exploring our great country, we declare this to be very Happy Valentine’s Day news.

As an aside, it should come as no surprise that romance and travel is still, for the most part, the domain of the young.  Millennial Generation travelers are nearly three times as likely to meet a new partner on the road as are Baby Boomers.

Where do we go for romance?

Overall, the top destinations we think are romantic are not tremendously surprising.  We asked American travelers in an open-ended question (meaning they could write in any answer they wanted) what single American destination was the most romantic. The list of top destinations that emerged is sprinkled with fabulous cities and traditional honeymoon spots. The top twelve destinations are shown below.

Most romantic destinations

 

 

 

 

 

 

 

 

 

 

 

Who wouldn’t get lost in the romantic possibilities of any of these fantastic places?  Wherever we go looking for love, though, hope does spring eternal; and travel romance can be a new start as well as a cure for a bad relationship.  Amazingly, nearly one fifth of American travelers (17.2%) took a leisure trip “specifically to get away from someone” last year.  While some may find this unsettling, to the hopeful romantics here at Destination Analysts, this only confirms the old folk wisdom that you don’t need magic to disappear, just a destination.

Destination Analysts

Super Bowl in our Super City

The staff here at Destination Analysts has had a lot of fun these last few weeks watching our beloved town prepare for its part in hosting a very successful Super Bowl 50.   But alas, all good things must end.  The party has wrapped.  Workers are taking down the last remnants of Super Bowl City and the last straggling, high-rolling visitors have taken off from SFO.

The circus isn’t all over yet, though, as the media and several of our grandstanding local politicians now seem hell bent on branding the event as a financial failure.  Television news stories are pleased to hand the microphone to any business owner who perceives the event did not fill his or her pockets.  Businesses benefiting from the hundreds of millions in visitor spending are nowhere to be seen.   A small cadre of chotchkie vendors who sell their art on the public streets near at the Ferry building were displaced by Super Bowl City.   A movement to spend half a million bucks making them whole is now the cause célèbre of San Francisco’s fringy political elite.

SUPER-BOWL

 

 

 

 

 

 

 

 

 

This local silliness will hopefully end, but when we saw the national media start piling on, it seemed time for a response.  Take a minute and read this interesting take on the Super Bowl’s economic impact from Mother Jones.

Read Article Here

This is a disappointing piece of journalism.  Yes, the economic impact numbers around this type event are often overstated, but the Super Bowl was without any doubt a huge net benefit to our city’s governmental coffers.  Given the numbers floating around in the media, it seems likely that whatever San Francisco city government spends (the part not reimbursed by the NFL) will be returned at least 4-5 fold when all taxes generated by the event are tallied.

The article is full of factual errors.  The February occupancy rate in San Francisco does not hover around 90 percent–try 77% for the last three years. The displacement effect these “experts” talk about is way overstated. This line of thinking would only make sense to someone who thinks one-dimensionally and knows little about traveler behavior.  Of course there will be some displacement, but ask yourself this. If you wanted to visit San Francisco, would you be likely to completely cancel your trip because room rates were high on a particular five day period in February?  No, you would most likely visit during a different week.  Additionally, many of San Francisco’s hotel guests (especially in the off-season and during mid week) are business travelers.  If they need to come meet with clients or do sales calls in the city, will they simply cancel the trip due to the Super Bowl?   No, of course they won’t.  They will simply work around the issue and come do their business before or after the event.  This is common sense.  Demand for a destination does not express itself the way the naysayers suggest.  The Super Bowl will strongly and positively impact hotel occupancy (and rates) far out on both sides of the event.

The number of hotel rooms filled is, of course, only half of the story.  Room rates soared during the week and the 14 percent hotel tax goes straight back to the city, as do taxes and fees related to all the other spending that went on in town.  When these taxes are submitted, San Francisco will have millions of new incremental dollars waiting to support vital city services.  These would not be there without the game, and are far in excess of what we paid out as hosts.

In a rational conversation, we’d call that a good investment.

Please keep in mind, I’m not saying the city negotiated well with the NFL.  Maybe the terms of the deal could have been better.  That’s an entirely different issue.  However, arguing that the Super Bowl didn’t benefit the city financially (and in a big way) is ridiculous.

Erin Francis-Cummings

Applying Big Data to Destination Marketing

As with anything, treating big data as a magic bullet can lead to wounds

This piece was inspired by a recent feature on NPR’s Science Friday that I consider a must-listen to for anyone who relies on or otherwise uses big data in their business processes: http://bit.ly/1Ymx6ap (the title is a perfect summation: “Why Machines Discriminant and How to Fix Them”).  As more big data services compete for voice in decision-making and the band-wagon types rally around the newest with the easiest supplied “answers,” perspective is desperately in order. As anyone that actually has substantial experience working with data knows, data is messy. As such (and pointedly illustrated in the Science Friday piece), it is critical to apply the same analytical and intellectual rigor to our interpretation of big data that we do with survey and all other data. If we don’t, we risk making major decisions on data that may not be entirely appropriate to the questions being asked. 

 

big-data

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Exhibit A: Credit Card Conundrum

Tourism research is awash in exciting, new big data solutions, many of them fantastic and many to-be-seen. All share a promise to answer pressing destination marketing organization (DMO) questions. DMOs frequently reach out to us for advice on these products:  Is the value worth the financial commitment?  How can my DMO use the information, given my staffing resources?  How reliable and overall meaningful is data aggregated from one set of sources about my visitors? What truthful insights can truly be drawn?

Big data can be extraordinarily valuable.  In fact, in its proper place it is invaluable.  Where would we be without Google Analytics to help understand our website users’ behaviors?  How relevant would our community building efforts be without Facebook’s audience insights?  Online retailers have irrefutably proven that their big data sets can be harnessed to improve practically every aspect of their online targeting and sales.  The march toward integrating big data into our decision making is powered by countless success stories.

It is important to note, however, that these success stories are very typically internal solutions, using corporate customer data to solve the problems of that same corporation.  What they aren’t is a re-purposing of internal data to solve problems external to the company.  The most successful solutions are not simply an attempt to monetize an internal data set to solve problems unrelated to the corporation collecting the data.

To understand, we need to step back into the world of survey research for a moment.  While the rules of survey methods and statistics might seem arcane and unapproachable to some, they need not be. The essence of a good survey is surprisingly simple.  What makes or breaks a survey depends on two things.  How good is your questionnaire?  And, how well does the sample collected represents the population you’re trying to study? Everything depends on these two things, and a good researcher will go to any length to ensure his/her sample is “representative.”

In short, survey data needs to look like the population studied.  We call this a representative sample; one that accurately reflects the members of the group you seek to understand.  Basically a sample should be an unbiased indication of what the overall population looks like.   For example, if half of your visitors are day-trippers and half are hotel guests, a representative sample might include 200 day visitors and 200 hotel guests.  When a sample is not representative, we get results with what researchers call sampling error, which is bad. Sometimes it’s really bad and leads to bad decision-making.  Going back to the visitor example, if we have a sample of 100 day trippers and 300 hotel guests, whatever conclusions we might draw from this sample will not translate to the entire population of visitors studied.

We urgently need to apply this same line of thinking to the monetized big data sets we use.

We need to be asking and thinking about whether a big data set (no matter how massive) really reflects the larger population of visitors examined.  The thoughtful analyst will carefully consider whether he/she can make generalizations about the destination’s visitor populations from the big data set of just one company, even if the company has a large market share.  As example:

  • Can we use data from one credit card company to make generalizations about the entire population of visitors to a destination?
  • Are subscribers to one mobile carrier significantly different from other carriers? If so, does using the data set from a single mobile carrier’s subscribers create an unbalanced look at visitors and their behaviors/activities in-market?
  • How about online travel agencies (OTAs)? Are people who use these services the same as travelers who book directly?  If not, can we really make generalizations about our visitor population based solely on data from people who book through OTAs?

The answers to these questions are, of course, shrouded in mystery, as proprietary data sets are often impenetrable and/or not comparable to other big data sets.  We can, however, look to other sources for clues as to whether or not a specific big data stream might be representative of the typical population of travelers.

With this in mind, we recently added several questions to our (now quarterly) The State of the American TravelerTM  survey to look for answers for our industry peers.  This study collects travel opinion from a nationally-representative sample of 2,000 American leisure travelers every three months. Let’s take a look at American leisure travelers who say they will be likely to use one of two major credit card brands while traveling for leisure in the next 12 months.  For each card, we compare the travelers likely to use it while traveling to those who are not likely to use that card for trip purchases.  The results show an immediate and striking picture.  Leisure travelers who say they are likely to use either of these cards while traveling differ in significant ways from their non-card using traveling counterparts.

The table below shows a several pertinent examples.  We are not naming the card brands, but they are ones we all know.

 

bigtdata table

SOURCE: The State of the American TravelerTM, Destination Analysts, Inc.

 

The picture is clear.  We see that travelers likely to use either major brand are very different from other travelers:

  • Compared to other leisure travelers, those who are likely to use credit card “BRAND A” are less likely to be baby boomers, take more leisure trips annually than other travelers and are more likely to travel by air for leisure. Further, they are more affluent and have significantly higher annual travel budgets.  That is, they are bigger travel spenders.
  • Likely credit card “BRAND B” users differ even more strikingly from non-users. Those who say they are likely to use “BRAND B” are far more likely to be male and also take far more leisure trips (especially by air).  They are more affluent and their annual travel budgets are far, far larger than those travelers who do not use this card.

 

Application: Where the Rubber Meets the Road

In fairness, these groups do have some similarities.  Their opinions on many travel-related subjects line up neatly.  In the DMO world, however, where the rubber tends to meet the road is in visitor spending and, based on this data, we have reason to suspect that these groups of travelers may spend quite differently.  That needs to keep that in mind when using data about these credit card holders and applying it to a generalization about a destination’s visitor population.

This is but a cautionary tale.  DMOs should think very carefully about how they plan to use big data sets before accepting them as appropriate for their needs. A simple first consideration is how truly representative of visitors the data is.  If this thoughtfulness is not applied, it risks poor decision-making and inaccurate reporting, and the consequent deleterious effect that can have on communities.  None of us want that.

 

Leisure Travel Outlook: Our Forecast for 2016

outlook-image

 

The U.S. travel industry will continue to grow in 2016, fueled by a strong domestic travel market.   While regional performance will vary and the strong dollar and economic challenges abroad will test our ability in the short-term to grow international markets, overall the picture looks positive. In the absence of unexpected shocks, our model suggests that we will see the number of leisure trips taken by Americans to grow by 2.1 percent in 2016.  Overall leisure travel spending will climb 4.0 percent in the coming year.

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The American tourism industry deserves a gold medal for its performance in the post recession world, consistently growing and generating taxes and jobs in an environment fraught with uncertainty.  We expect a winning performance to continue in 2016, driven in part by strong demand for the nation’s varied and compelling leisure travel products. In what follows, we have sketched our thoughts and expectations for leisure travel performance in the coming year.

 

THE UPSIDES

Strong Traveler Optimism

American optimism about their future leisure travel reached record levels last summer, and consumer confidence has continued to push further forward.  As 2015 drew to a close, the University of Michigan’s consumer sentiment index rose to 92.6. That’s just below the year’s average of 92.9, the highest annual average in 11 years. Consumers’ moods have been boosted by steady job growth and lower gas prices which have improved their overall buying power.

An Expanding Economy

U.S. economic growth continues to be positive, if unimpressive by historical standards.  In 2016, we expect the global economy to follow a slow growth path but, barring unforeseen circumstances, America’s GDP will grow by at least 2.8 percent. This growth means more income in travelers’ pockets and more jobs.  Recent moves by the Federal Reserve reveal its confidence in our economy’s near-term prospects, as well.

Job Growth Continues

The labor market continues to improve, with the most recent national unemployment rate trending consistently downward to a seven-year low of 5.0 percent.   Many analysts expect that, if these trends continue, the domestic economy will reach a full employment level some time the next year.  There are also indications that businesses are offering higher pay to attract and keep workers.  Wages and salary growth showed signs of strength at the end of last year.

Travel Costs Flat

Gas prices grab most of the headlines, with national averages below $2.00 per gallon.  But airfares are also expected to see only moderate growth this year. Unfortunately, the bonus travelers will feel from lower transportation costs will likely be absorbed by increased hotel room rates.  Even with the additions provided by sharing economy services, continued elevated demand for rooms in a marketplace with relatively little increased hotel inventory will push lodging costs up this year.

 

THE DOWNSIDES

International Woes

America’s travel industry has been buoyed in recent years by big spending international visitors. Change is in the wind though, driven by weak foreign economic performances abroad and a very strong dollar.  As recently as December, the US dollar index (which measures the greenback against top currencies) was up 10 per cent for the year, after gaining nearly 13 per cent in 2014. Foreign exchange impacts can often take time to be realized, and we already seen drops in foreign travel spending.  At best, we expect this segment to remain stable in the upcoming year.

Safety Concerns

The biggest source of uncertainty is, of course, the potential for terrorism and a resulting decline in travel demand.  American traveler concerns about safety while traveling has been relatively stable in recent years.  Over the past several years, only about 1 in 10 Americans reported cutting back on the number of leisure trips taken due to safety concerns.  However, recent terror attacks in Paris and San Bernardino cast a shadow. Since its tragedy, Paris has seen sharp declines in demand and a wave of painful cancellations.  At present, our domestic industry has not been so touched, but the destructive potential must once again be on our radar.

 

THE BOTTOM-LINE

If you are amongst our fellow travel industry professionals, get ready to enjoy another positive year.  Despite the real and potential challenges we face, the good times much of the travel industry has been experiencing should continue to roll in 2016, buoyed by increased domestic leisure travel volume and spending and strong consumer confidence and optimism.

Erin Francis-Cummings

American Travelers Just Keep Wanting More

A Travel “Epidemic” Is Here

A strong optimism is pervasive amongst American leisure travelers, suggesting continued good times—or likely even better ones—are in store for the travel industry.  In the latest Destination Analysts’ The State of the American Traveler survey, which tracks traveler sentiment, expectations for near-term leisure travel have soared quite beyond what has been seen in the past nine summers, and may have reached an all-time high.  In typical summer waves of this survey, enthusiasm for travel is muted compared to January.  At this point in the year, travelers have been quite possibly satiated from recent summer adventures, or they might also be in the midst of planning for an impending trip.  Whatever the cause, travel expectations have been invariably lower. However, this July, more than a third (34.3%) of American travelers said they expect to increase the number of leisure trips they will take in the upcoming year. This marks an increase from 31.1 percent in January and significantly above levels seen in previous summer waves of the survey, in which only 29 percent of travelers expected to travel more in the upcoming year.

American travelers are in the mood to spend, too, with spending expectations sky high.   Fully 35 percent of travelers say they expect to spend more on their leisure trips in the coming 12 months. This again breaks with the summer norm, where in the last three years an average of just 29.8 percent of travelers expected to increase their trip spending.

The table below illustrates this upward bounce in American’s demand for increased travel volume and spending.

Recent Historical Perspective
American Leisure Travelers Planning to Travel and Spend More (% All Travelers)
SATS-IMAGE
Source: The State of the American Traveler, Destination Analysts, Inc.

These results fit nicely with national sentiment trends which show that consumers feel significantly better about the economy overall this summer.  The Conference Board recently reported that its index of consumer confidence jumped to 101.4 in June from 94.6 in May.   Nothing drives demand like consumers feeling positive about the economy and their personal economic situation.  This coupled with the increased social value being placed on travel, and the outlook for leisure travel demand in the near term is rosy. The remainder of this year should be a great one for the industry.

Download your copy of the summary The State of the American Traveler report here.

A Day with IRIS Adventures

20150312_GCortez_1135

 

Thank you Bogdan and the team at IRIS Adventures! We had a blast riding GoCars through Golden Gate Park, going on a treasure hunt, solving puzzles, and most of all learning about ourselves and each other. We can’t wait to go an another team adventure! For a day filled with fun teambuilding and challenging yet fulfilling exercises, we highly recommend IRIS Adventures. See more photos of our teambuilding day here.

Destination Analysts

Which Content Types Matter Most in the Destination Decision. Plus Other Insights from our Latest The State of the American Traveler Report.

The early 2015 edition of our The State of the American Traveler report is now out. As always, this edition explored several topics relevant to travel marketers and uncovered some fascinating insights about American travelers.  One of the most interesting included the types of content that travelers feel is most relevant to their ultimate destination decision.

Travel resource usage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long time followers of The State of the American Traveler may recall a similar question asked one year ago. This time, we removed the concept of cost—something most of our destination marketers cannot control–in order to really look at what content motivates the desire to visit. Interestingly, hotel and lodging information still reigns supreme.  However, this is closely followed by restaurant and dining information. People are most interested in where they sleep and what they eat when it comes to picking the destination.