2011 So. Cal. Visitor Industry Conference

Outlook on U.S. Travel and Tourism

Lauren Schlau

Acknowledgement to

Suzanne D. Cook, Ph.D.Marketing Outlook Forum General Manager and

Senior Advisor, U.S. Travel Association

Looking back…2001 – 2011… A Decade for the Record books!

•Resignation•Resilience•Renewal•Resourcefulness•Reevaluation (priorities)•Roller-coaster ride•RECOVERY

… but how strong and for how long?

and of many other Rs…….……

Looking ahead – A confusing economic and consumer environment!

Turning the economic corner…Really? When?

• Weak housing market• Lack of recovery in labor markets• Real median HH incomes down 7%

from 2000 • Shrinking middle-class • Inflationary pressures still high in travel• Ongoing debt crisis and political stalemates• Higher taxes?• Threat of a double-dip recession• Americans’ spending plans still on hold

7

U.S. Economic Factors are inconsistent and theconsumer is reluctant to spend

While short term indicators do not indicate stall speed

Companies are in strong position

And Housing is recovering in parts of the country

With highly expansionary Monetary policy

Spurring New growth sectors…

The U.S. consumer is complex, uncertain and lacking confidence.

Most likely scenario in 2012 = growth slowdown

Consumer Confidence…Remains very depressed

Jan '08 Jul '08 Jan '09 Jul '09 Jan '10 Apr Jul '10 Jan '11 Apr Jul '11 Oct0

25

50

75

100

125

150

Percent Change

* January-MaySource: National Park Service

1985 = 100

Source: The Conference Board

25.3

39.8

90 considered “healthy”

Traveler Sentiment IndexTM Down again…

Mar 07

Apr 07

Jun 07

Aug 07

Oct 07

Dec 07

Feb 08

Apr 08

Jul 08

Oct 08

Feb 09

Apr 09

Jul 09

Oct 09

Feb 10

Apr 10

Jul 10

Oct 10

Feb 11

Apr 11

Jul 11

11-Oct

60

70

80

90

100

110

120

100.0

78.2

95.2

83.9

88.5

85.0

Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, October 2011

March 2007 = 100 Interest in travelTime for travelMoney available for travelAffordability of travelQuality of serviceSafety of travel in U.S.

Affordability of Travel Index… Again heading in the right direction

Mar 07

Apr 07

Jun 07

Aug 07

Oct 07

Dec 07

Feb 08

Apr 08

Jul 08

Oct 08

Feb 09

Apr 09

Jul 09

Oct 09

Feb 10

Apr 10

Jul 10

Oct 10

Feb 11

Apr 11

Jul 11

Oct 11

30

40

50

60

70

80

90

100

110

120

130

100.0

124.095.2

66.9

95.0

39.1

Source: U.S. Travel Association/Ypartnership, travelhorizonsTM

March 2007 = 100; the indices run counter to costs

Gas prices rise

But…travel prices continue to outpace overall inflation

Led by still-high gas prices and rising air fares

Motor Fuel Airfares Lodging Food Away from Home

Recreation0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

29.6%

10.1%

2.6% 2.2%0.1%

Source: U.S. Travel Association Travel Price Index

Percentage change through September 2011YTD TPI = +6.9%YTD CPI = +3.1%

excludes various fees

Travel Spending : Will exceed $800 billion for first time ever in 2011

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011p0

100

200

300

400

500

600

700

800

900

$585.8$555.7 $544.9 $560.1

$606.9$653.7

$695.7$738.0

$772.5

$704.4$758.1

$815.2

Source: U.S. Travel Association and Tourism Economics

Billions of Dollars (in nominal terms)

Good News: Travel spending will continue to rise at about 5% over next two years

2006 2007 2008 2009 2010 2011f 2012f 2013f0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

$695.7$738.0

$772.5

$704.4$755.6

$794.9$834.7

$878.8

Source: U.S. Travel Association and Tourism Economics

Billions of Dollars

Recovery began in 2010 and continued in 2011… but is growth softening thru 2011?

Domestic Leisure Volume Domestic Business Volume International Volume-8

-6

-4

-2

0

2

4

6

8

10

-0.4%

-6.7%

3.5%

-2.6%

-5.3% -5.1%

3.4% 3.4%

8.8%

2.2%

1.4%

5.0%

2008 2009 2010 First Half 2011

Source: U.S. Travel Association and Tourism Economics

% Chg. Over prior year

Domestic Visitors… 2011 Volume to slightly exceed 2007 record. Slow but positive 1.5% - 2.5% growth in next 1-2 years.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011* 2012* 2013*1500

1600

1700

1800

1900

2000

2100

1,8921,870

1,9191,890

1,953

1,992 2,000 2,004

1,965

1,901

1,966

2,0052036

2072

Forecasts as of October 2011Source: U.S. Travel Association and Tourism Economics

Millions of person-trips

Leisure travel: intentions soft…but opportunity to entice 45 million “not sures”

Oct 07 Oct 08 Oct 09 Oct 10 Oct 110

10

20

30

40

50

60

70

55% 56%53%

56%52%

Source: U.S. Travel Association/YPartnership travelhorizons™

Plan to take a leisure trip between November 2011 and April 2012

Moderate gains in domestic leisure travel

00 01 02 03 04 05 06 07 08 09 10 11 12 13

Visitors 2.2 -0.1 6.2 -1.3 3.8 2.9 0.6 1.2 -0.4 -2.6 3.4 2.2 1.5 1.8

-3

-1

1

3

5

7

Source: U.S. Travel Association and Tourism Economics

Forecasts

Domestic Leisure VisitorsWill continue to set new records

1,325.4

1,510.2 1,503.8

1,464.2

1,514.2

1,547.01,570.0

1,598.2

1300

1350

1400

1450

1500

1550

1600

1650

1700

2000 2007 2008 2009 2010 2011* 2012* 2013*

* Forecast as of October 2011Source: U.S. Travel Association and Tourism Economics

Millions of Person-trips

Total International Inbound Visitor Volume Will peak again this year after record in 2010

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011p0.0

10.0

20.0

30.0

40.0

50.0

60.0

51.2

46.943.6

41.2

46.149.2

51.0

56.057.9

55.0

59.862.3

Forecast as of October 2011Source: U.S. Department of Commerce; U.S. Travel Association and Tourism Economics

Millions of Visitors – includes all overseas, Canada and Mexico

Overseas Visitors - The Lost Decade: We are now where were in 2000 as US lost market share

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011p0.0

5.0

10.0

15.0

20.0

25.0

30.0

26.0

21.8

19.118.0

20.321.7 21.7

23.925.3

23.8

26.427.9

Forecast as of October 2011Source: U.S. Department of Commerce; U.S. Travel Association and Tourism Economics

Millions of Visitors

International and Overseas arrivals - slowing growth expected

2010 2011* 2012* 2013*0.0

2.0

4.0

6.0

8.0

10.0

12.0

8.8%

4.1%3.4% 3.5%

11.0%

5.9%

3.8%4.3%

International Overseas

*Forecasts as of October 2011Source: U.S. Travel Association; Tourism Economics

China Brazil Australia France Korea Germany Canada UK Mexico Japan

Arrivals 38 27 21 18 7 6 6 2 -1 -7-5

5

15

25

35

45

Percentage Change in International Arrivals Through July 20118 of 10 top countries showing increases

Source: Office of Travel and Tourism Industries

Attraction Trends – Domain of US and Int’l leisure travelers, seeing a recovery (versus public parks)• Attraction attendance +1.2% and average rates +3% in

2011• Forecast for 2012 = +0.5% • Larger attractions that lost attendance over past few years

experienced greater rebound – driven by families with children

• Growth in “grandtrippers” • Offering increased value

Source: Herschend Family Entertainment

Business Travel.…Not what it used to be

Incidence of Business Travel Down 15 Points Over Past 5 Years, but Stabilizing

Source: U.S. Travel Association/Ypartnership, travelhorizonsTM October 2011

Percent taking business trip in past year

Oct 07 Oct 08 Oct 09 Oct 10 Oct 110

10

20

30

40

50

40% 39%

29%

23%25%

Per

cen

tag

e

Business travel intentions…Stability reigns

Oct 09 Feb 10 Apr 10 Jul 10 Oct 10 Feb 11 Apr 11 Jul 11 Oct 110

2

4

6

8

10

12

14

16

18

20

18%

15%16% 16%

17%16%

17%16%

18%

Source: U.S. Travel Association/Ypartnership, travelhorizonsTM

Plan to take a business trip in next six months

567

494461

437 452 458 466 474

0

100

200

300

400

500

600

2000 2007 2008 2009 2010 2011* 2012* 2013*

In millions

US business travel improves…But still well below 1998 record high

* Forecast as of May 11, 2011Source: U.S. Travel Association and Tourism Economics

Business travel… Increasingly the province of the young

Gen Y Gen X Young Boomers Older Boomers Matures0

5

10

15

20

25

3027%

24%

16%

20%

7%

Plan to take a business trip between November 2011 and April 2012

Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, October 2011

Changing Households: fewer kids, more intergenerational, more singles

Four 2010 Census Findings

Aging Population

Shrinking Wallets

1

43

Growing Diversity: ethnicity, lifestyle2

There is light at the end of the tunnel… but will it be as bright as we’d like in the next 2 years?

Thank You!