Monday, December 5, 2022

Tour operators don’t want budget travelers

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The new CEO of Six Flags was on it.

Explaining the decision to raise prices at the amusement park chain, Selim Bassoul told financial analysts earlier this month that the cheap tickets turned the parks into “a cheap day care center for teenagers”. Attendance fell as the company ditched small spenders in favor of customers with bigger budgets.

“I’m migrating a little bit from what I call Kmart, Walmart, to maybe the Target customer,” said Bassoul, who took the top job in November.

His voice was just one in a chorus of tour operators and tourism officials who have recently been free-skating among their customers. Sacrificing total consumer volume in favor of quality spenders? Don’t mind if they do.

Cheaper travel is finally making a comeback

Disneyland regulars were hurt earlier this month when a quarterly financial report described an “unfavorable attendance mix” at the California resort. And New Zealand’s tourism minister drew backlash by saying the country would “shamelessly” target “high quality” visitors instead of those who post on Facebook that they “can travel around our country on $10 a day by ate two minute noodles”. according to local and international media.

“It’s one thing to say ‘We want to be a premium brand,'” said travel analyst Henry Harteveldt, president of Atmosphere Research Group. “It’s another thing to be elite.”

In this season of rising costs, economic uncertainty and growing crowds, many travel-related businesses are looking to their best customers to keep the cash flowing. Experts point out that wealthier people tend to be less affected by recessions – and as a result more attractive to travel companies.

Delta Air Lines President Glen Hauenstein said in July that the shift to premium business was “key” to weathering inflation and economic booms and busts.

“Historically, more price-sensitive products like ‘Basic Economy,’ which is currently less than 10 percent of our selling prices, have struggled to keep up with inflation,” he told analysts. “While premium value offerings high performing much better and have proven to be much more resilient during the pandemic.”

Low-cost airline Spirit Airlines agreed to be absorbed by low-cost airline JetBlue, although the deal still needs to be approved. Even European budget carrier Ryanair says its cheapest fares – like €10 cheap – are going away.

“There’s no doubt that at the end of the market, our really cheap promotional prices … I think you’re not going to see those rates for the next few years,” CEO Michael O’Leary told the BBC earlier this the month.

In an earnings call this month, Norwegian Cruise Line Holdings CEO Frank Del Rio said the company’s cruise lines — recovering from an extended pandemic shutdown — would not follow the example of other operators that cut prices “to levels ridiculous” during the recession in 2008 and 2009.

Taking a cruise can cost less than filling up your gas tank

“We could, like others, go after short-term housing and sell cruises for crazy prices, but we don’t want to do that,” he said.

The price hike strategy comes at a time when many travelers are looking to downsize amid record inflation.

“Right now, I think consumers are very focused when it comes to travel and entertainment to get the best possible value they can,” Harteveldt said. He said travel companies that shun budget travelers risk alienating those customers forever.

“What will it take for them to win back what may now be former guests who feel alienated and perhaps even insulted?” he said.

Disney is insanely expensive. Super fans gave their top 7 tips for saving.

There are still budget options, of course: destinations where costs are lower; hostels with bunk beds and cramped quarters with foreigners; and budget airlines with business models that cater to leisure travelers. Tourists can take public transportation, travel off-season, hit up deal sites, and, yes, eat the occasional two-minute noodle meal to save money.

It’s the tone and language of the leaders and places that has rankled some travelers and even industry experts.

Disney — not known for its budget friendliness — said this month that average ticket revenue per person was up thanks to fewer promotions in Florida and the addition of skip-the-line services, but No. thanks to Disneyland’s “unfavorable attendance mix.” While the company did not point fingers, visitors holding so-called “Magic Key” annual passes identified themselves as targets.

“At first I was like, wait a second. Are they talking about me?” said Mindy Marzec, a Disney blogger and content creator who runs the site This Fairy Tale Life. She said the reaction “pervaded Twitter” for a day, eventually becoming an inside joke with some Disneyland fans adding “unfavorable” to their profiles.

Marzec, who has been an annual pass holder at Disneyland for more than 20 years, said she is not offended by the term. But she also points out that without her permit, she wouldn’t be visiting the parks as often as she does — and she definitely wouldn’t be dropping the same amount of money on food, drink and merchandise.

Matt Kepnes, author of How to Travel the World on $50 a Day and founder of NomadicMatt.com, said companies are supposed to maximize their profits, so he can’t begrudge the Norwegians and Deltas of the world for wanting to premium customers. But he was less understanding of the countries that prioritize wealthier tourists.

“It’s kind of a goal in itself,” he said.

New Zealand’s tourism minister, Stuart Nash, told a travel association conference that the country would still welcome backpackers but needed to attract “the world’s most discerning” visitors, according to New Zealand news site Stuff .

Government officials in Thailand have also urged businesses to avoid discounts for tourists, but instead promote it as a premium holiday destination.

“We cannot allow people to come to Thailand and say because it is free,” Deputy Prime Minister Anutin Charnvirakul said in July, Reuters reported.

Kepnes said backpackers tend to stay longer than affluent tourists, use public transportation to get around and spend money with more local restaurant and business owners.

Chekitan Dev, a marketing professor at Cornell University’s School of Hotel Administration, said in an email that brands are “short-sighted” if they turn away their lowest-paying customers.

“Every brand needs to think of ways to engage their poorer customers in some way so that they can build a relationship with them, keep them from the competition and one day pay for the offers of their premium,” he said.





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