Long Vacations Vol 1 - The Market - US - February 2005

SUMMARY

The U.S. vacation and leisure travel market reached $115.3 billion in 2004, the highest rate forthe reporting period of 1999-2004. Economic woes and the terrorist attacks of 2001 caused declinesin the market in 2001 and 2002, but with the economy stabilizing and the threat of terrorismdiminishing consumers are returning to travel. Baby Boomers are recognized as the biggest targetdemographic, and as they age into retirement so increases the time available for them to take longertrips.

The main challenge the industry faces is getting consumers to take trips longer than 5 days, withmany of the promotions currently available being geared toward the last minute, short breaktraveler. The Internet presents the ideal opportunity for this, with an increasing number of U.S.households connected. Continual advancements in technology will enable a greater level of ease forresearching and booking travel online. Competition among online providers will keep pricing down, aplus for the budget conscious traveler.

Another challenge is the perceived image of the airline industry. While price wars keep costsdown, with that comes the risk of flight disruptions due to factors such as labor disputes. Low-costcarriers continue to be a threat to major airlines, and consumers have indicated that they arewilling to pass on perks in order to save money on flights.

Mintels report includes a thorough analysis of the leisure traveler. This includes an evaluationof top concerns and priorities when choosing arilines, a breakdown of preferences and behavior bydemographic characteristics, and statistics of purchasing frequency. A five-year market forecastestimates the future of the market, with a statistical forecast of market performance until 2009 andan outline of demographic and travel trends.

For the purpose of this report, vacation or leisure travel is defined as a domestic trip of fiveor more nights away from home with at least one night of paid accommodation (i.e. staying in a hotelor bed and breakfast or cruise ship). The analysis focuses mainly on commercial accommodation forhotels, motels and bed and breakfasts. In addition, where applicable, self-catering accommodationswill be discussed (cabins, camping).

TABLE OF CONTENTS

INTRODUCTION AND ABBREVIATIONS

• Introduction
• Other relevant reports
• Definition
• Abbreviations & terms
• Abbreviations
• Terms

EXECUTIVE SUMMARY

• Leisure travel on the rebound
• But competition from short breaks continues
• Internet continues to grow
• Baby Boomers are key demographic
• But Gen X a promising segment
• Advertising reflects rise in tourism
• Cruising: the traditional long vacation
• Continued improvement anticipated for long vacations

MARKET DRIVERS

ECONOMY TRENDING UP

• Travel expenditures
• Figure 1: Travel expenditures in the U.S., at current and constant prices, 1999-2004
• Graph 1: Travel expenditures in the U.S., at current and constant prices, 1999-2004
• Unemployment
• Figure 2: U.S. unemployment rates, 1999-2005
• Graph 2: U.S. unemployment rates, 1999-2005
• Discretionary income
• Figure 3: Households with discretionary income, 2000
• Figure 4: Per capita PDI, in current dollars, 1999-2004
• Figure 5: Amount spent in total, last domestic trip, 2001-2004
• Graph 3: Amount spent in total, last domestic trip, 2001-2004

DEMOGRAPHICS

• Boomers dominate, Gen X travel spending up
• Figure 6: American generations, 2000-2010
• Attitudes about retirement
• Figure 7: Pre-retiree hopes and expectations for retirement, 2001
• Catering to Gen X
• Figure 8: U.S. population projections, by age, 2000-2010
• Shifts in the family and household composition
• Figure 9: U.S. households, by type, 2004
• Figure 10: Distribution of households by type across age groups, 2004
• Single moms a burgeoning market
• Solo travelers
• Household composition, presence of children
• Kids influence on the family vacation
• Intergenerational travel
• Honeymoons a key niche market for long vacations
• Figure 11: Estimated median age at first marriage, by gender, 1968-2002
• Figure 12: Profile of engaged couples, 2002
• Travelers taking shorter trips
• Figure 13: Attitudes about short breaks, February 2004
• Online booking grows
• Figure 14: Total U.S. retail sales of Internet travel, at current and constant prices, 1999-2004
• Last-minute travel
• Figure 15: Last-minute travel, May 2004
• Incidence of and reasons for last-minute travel
• Figure 16: Reasons for last-minute travel, May 2004

MARKET SIZE & TRENDS

• Sales of domestic long vacations
• Figure 17: Total U.S. sales of long domestic vacation and leisure travel, at current andconstant prices, 1999-2004
• Graph 4: Total U.S. sales of long domestic vacation and leisure travel, at current and constantprices, 1999-2004
• Incidence of taking long leisure vacations
• Figure 18: Incidence of long leisure vacations*, May 2003-April 2004

MARKET SEGMENTATION

• Figure 19: Sales of long vacation travel segmented by transportation, accommodation and longcruises, 2002 & 2004
• Transportation
• Figure 20: Sales of transportation for long vacations, 1999-2004
• Accommodation
• Figure 21: Sales of hotel accommodations for long vacations, 1999-2004
• Cruises
• Figure 22: Sales of cruises of 5 or more days, 1999-2004
• Tours

TRAVEL SUPPLIERS

AIRLINES

• Figure 23: Vacation and leisure travel revenue by major airline in the U.S., 2002 & 2004
• Figure 24: Vacation and leisure travel revenue for discount airlines in the U.S., 2002 &2004*
• Figure 25: Airlines used for long vacations, May 2003-April 2004

MAJOR AIRLINES

• American Airlines
• Delta Air Lines
• United Airlines
• Northwest Airlines
• Continental Airlines
• US Airways

LOW COST CARRIERS

• Southwest Airlines
• America West
• ATA
• JetBlue
• AirTran
• Frontier
• Spirit Airlines

HOTELS/MOTELS

• Figure 26: Hotel/motel revenue, 2002 & 2004
• Figure 27: Hotels/motels used for vacation/personal reasons, by type of hotel, April 2003-May2004
• Hotel brands used by long vacation travelers
• Economy hotel/motel brands
• Figure 28: Economy hotel/motel brands used by long vacation travelers, April 2003-May 2004
• Mid-range brands
• Figure 29: Mid-range hotel/motel brands used by long vacation travelers, April 2003-May 2004
• Upscale brands
• Figure 30: Upscale hotel/motel brands used by long vacation travelers, April 2003-May 2004
• Hotel profiles
• Marriott International
• Accor Lodging
• Hilton Hotels
• Cendant Corporation
• InterContinental Hotels
• Choice Hotels International
• Best Western International
• Independents/B&Bs
• Campgrounds
• Resorts/Disney

CRUISE LINES OVERVIEW

• Figure 31: Total operating revenue by major cruise lines in the U.S., 2002 & 2004*
• Figure 32: Type of cruise taken in last two years, January 2005
• Cruise brands used
• Figure 33: Cruise line brands used by long vacation travelers, April 2003-May 2004
• Carnival Corporation/plc
• Royal Caribbean Cruises
• Norwegian Cruise Line

TRAVEL AGENT PROFILES

ONLINE TRAVEL AGENTS

• IAC/InterActive
• Expedia
• Hotwire.com
• Hotels.com
• Sabre
• Travelocity
• Cendant
• Orbitz
• Priceline
• Other online travel suppliers

TRADITIONAL TRAVEL AGENCIES

• American Express
• Carlson Wagonlit Travel

ADVERTISING & PROMOTION

• Introduction
• Website/Email
• Airlines
• Hotels
• Cruise lines
• Loyalty programs/Co-branding
• Airlines
• Hotels
• Cruise lines
• Rental cars
• Alliances
• Figure 34: major alliances and major U.S. airlines, 2004
• Giveaways
• Cruise lines
• Airlines
• Rental cars
• Experiential travel
• Hotels
• Cruise lines
• Airlines
• Bargain travel
• Sports affiliations
• Seasonal/holiday themed travel
• Airlines
• Cruise lines
• Rental cars
• Attracting the group and family traveler
• Airlines
• Hotels
• Resorts
• Cruises
• Attracting the luxury traveler
• Cruises
• Resorts
• Air travel
• Marketing to women
• Promoting flexibility, range of travel options
• Vacation deprivation?

TRAVEL PLANNING AND METHOD OF BOOKING

• Introduction
• Method of booking
• Figure 35: Method of travel booking, January 2005
• Airlines
• Figure 36: Method of making airline reservations, November 2004
• Hotels/Motels
• Figure 37: U.S. sales of hotel rooms, by channel, 2001 and 2003
• Cruise bookings
• Figure 38: Use of travel agents when booking cruises, 2004
• Figure 39: Use of travel agents when booking non-cruise vacations, March 2004
• Timeline of travel planning
• Figure 40: Timeline of travel planning, January 2005

FUTURE & FORECAST

FUTURE TRENDS

• Travel spending on the rise
• Figure 41: Travel expenditures in the U.S., at current prices, 2001-2006
• Figure 42: Number and projection of domestic, inbound and outbound travel person trips,2001-2006
• The "hassle factor" in the aftermath of 9/11
• Economic growth
• Pent-up demand
• Gas prices
• Internet and self-directed travel
• Figure 43: U.S. retail sales of Internet travel bookings, at current and constant prices,2003-2008
• Baby Boomers head into retirement
• Figure 44: American generations, 2000-2010

MARKET FORECAST

• Domestic long vacations
• Figure 45: Forecast of total U.S. sales of domestic long vacation and leisure travel, at currentand constant prices, 2004-2009
• Graph 5: Forecast of total U.S. sales of domestic long vacation and leisure travel, at currentand constant prices, 2004-2009
• Forecast factors

APPENDIX: TRADE ASSOCIATIONS

APPENDIX: RESEARCH METHODOLOGY

• Consumer Research
• Sampling & Weighting
• Presentation & Definition
• Further Analysis
• Trade Research
• Informal trade research
• Formal trade research
• Desk & Internet Research
• Sources
• Definitions
• Forecasts

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