With 2016 nearly behind us, we take a look at how travel trends have shifted in the last year and what to expect from your customers and the industry next year.
Travelers in the U.S. are expected to continue to spend and take more trips than ever before. A 2.8 percent rise in U.S. travel expenditures is forecast for 2017, along with 29 million more domestic person-trips, according to the U.S. Travel Association. If travelers are spending more, they’ll likely be more interested in protecting their trip costs by purchasing travel insurance.
The U.S. Commerce Department predicts that 2016 will end with about 700,000 fewer international visitors than the year before, but 2017 is looking up, with an expected 2.4% increase year over year. For a longer look at expectations for where international visitors will be originating from, five countries—Mexico, China, Canada, India and South Korea—are projected to account for 64% of visitor growth between now and 2021.
An AARP survey shows that 99% of Baby Boomers plan to travel for leisure in 2017 and about half plan to travel internationally, with an average of five or more trips expected throughout the year. The same report indicates that Millennials plan to take more trips than Generation X or the Baby Boomers.
The importance of travel to Millenials is clear, and though online travel purchasing is on the rise, they aren’t shying away from travel professionals. According to the 2016 Portrait of American Travelers by MMGY Global, 34% of that generation used a travel agent in the last year and 39% expect to use one over the next two years. That’s a good sign for the future of travel professionals, considering the overall use of a travel agent was pegged at 19%.
Over the last year, current events have shaped the travel insurance landscape. Here is a brief summary.
- Illness: The U.S. Travel Insurance Association (UStiA) issued a press release explaining the relationship between the Zika outbreak and travel insurance. As the press release indicates, travelers must do their homework to determine if their travel insurance would provide coverage for a trip cancelled due to the Zika outbreak. We suggest that travelers call CSA with coverage questions of this type.
- Extreme Weather: Although weather events can range from a winter storm to flooding, Hurricane Matthew was an extreme weather phenomenon that affected travelers in 2016. Weather.com recapped Hurricane Matthew’s destruction toll. Travelers who bought travel insurance well in advance of Hurricane Matthew could have been covered, but those who purchased policies after the storm had been named probably were not.
- Current Events and Acts of Terrorism: From Brexit to the New York City bombing, there were numerous world events, bombings, shootings, attacks, and acts of terrorism both domestic and abroad in 2016. Frommers.com reported that Brexit meant temporary lower costs for American travelers, which may have encouraged travel to Britain. Travel insurance policies vary in coverages for these types of events. If deemed an “Act of Terrorism,” then an event could be covered. Fear of traveling to an area affected by an event may not ensure travel insurance coverage.
“The outcome is that travelers want to know more about travel insurance and what it covers in situations like these. Travel professionals and travel insurance companies are doing more to educate consumers to help them not only feel better protected while they travel, but better understand the protection they have in place,” said Bob Chambers, vice president of operations at CSA Travel Protection. “This growing awareness may be one reason why travel insurance companies are seeing an uptick in policies sold.”
In 2016, CSA Travel Protection reported an increase in travel insurance bookings up nine percent year over year.
Flight fares are projected to increase 3.7% in North America next year, but only 2.5% worldwide, according to the Global Business Travel Association.
The Advito 2017 Industry Forecast highlights the fact that the number of flights from Canada to the U.S. jumped 10% in the last year and the number of available seats rose 20%. This follows a global trend of “more routes, more frequencies and bigger aircraft.”
Concerning what your customers might experience in 2017, the Advito report says “airlines are expected to test the market with fare hikes to see what customers will accept, and they’ll become less generous with ‘waivers and favors.’”
Consumer complaints to the U.S. Department of Transportation about airlines rose 38% percent year over year, according to the Airline Quality Rating 2016 report. Of the 15,260 complaints, 73% were for flight problems, baggage problems, reservation, ticketing and boarding issues, or customer service problems.
“These results clearly show that the air traveling public is not happy,” report co-researcher Brent Bowen said. “Passengers are reaching out and letting us know exactly that, based on the number of complaints filed with the Department of Transportation. The human element of air travel is obviously deteriorating, and passengers are fed up.”
While that doesn’t sound great, the report goes on to say that the rate of complaints is most likely rising because more people are flying—a good sign for most travel businesses.
In fact, other key airline statistics in the report indicate a better traveler experience. The rate of mishandled baggage saw a 17% drop and on-time performance for flights was about 80 percent, compared to 76 percent the year before.
The Cruise Lines International Association’s (CLIA) Travel Agent Cruise Industry Outlook report highlights trends that agents have noticed and expect to see in the near future.
A continuing trend—river cruising is expected to show the most growth among cruise types, with 64% of travel agents saying they expect to sell more river cruise packages.
“In an uncertain world, cruisers seem to be looking for destinations that are closer to home,” the report stated, backed up by statistics that show Alaska as the top growth destination, with 62% of agents anticipating growth there, and California and the Pacific Coast making the top five destinations.
“The trend is also for them to come already informed with what they want, and securing the space more than nine months out,” as an agent that responded to the CLIA survey was quoted.
The popularity of “in-destination” travel experiences is growing and travelers want more than ever to get a taste of local life at their destination. With the majority of tour and activity operators being small and local businesses, they are perfectly positioned to gain from this trend.
The National Park Service Centennial celebration this year led to more park visits, and TravelAgeWest suggests that factor combined with concern over international terrorism will lead to more domestic tour bookings and road trips in 2017.
Stephen Joyce, a travel and tourism technology consultant, points out that the tourism industry is poised to jump from the manual inefficiencies of paper and pencils that predominate the market to better integrate technology in their reservation, marketing and management systems and flourish as a result.
“Fortunately, times are changing. With new tools and technologies, these predominantly small businesses are increasingly able to take advantage of global distribution through larger firms…” Joyce wrote.
While it’s difficult to foresee the complete travel insurance landscape for the next few years, CSA Travel Protection expects continued interest from consumers and travel industry professionals, and predicts that travel insurance will remain in high demand.
One thing is certain: as long as people travel by air, land or sea and seek the ultimate vacation destinations, they are making a trip investment. Travelers are becoming increasingly aware of unexpected circumstances that can arise during their trip. As a result, you might see more of your customers asking about travel insurance and we encourage you to educate about how a CSA plan could help them on their trip.
Travel insurance plans are administered by Customized Services Administrators, Inc., CA Lic. No. 0821931, located in San Diego, CA and doing business as CSA Travel Protection and Insurance Services. Plans are available to residents of the U.S. but may not be available in all jurisdictions. Benefits and services are described on a general basis; certain conditions and exclusions apply.
Travel insurance plans are underwritten by: Generali U.S. Branch, New York, NY; NAIC # 11231. Generali US Branch operates under the following names: Generali Assicurazioni Generali S.P.A. (U.S. Branch) in California, Assicurazioni Generali – U.S. Branch in Colorado, Generali U.S. Branch DBA The General Insurance Company of Trieste & Venice in Oregon, and The General Insurance Company of Trieste and Venice – U.S. Branch in Virginia. Generali US Branch is admitted or licensed to do business in all states and the District of Columbia.
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