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

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

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. 

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