Tourism Trends Relevant to Escambia County

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1 Tourism Trends Relevant to Escambia County Destination Trends Travel Research, Planning and Purchasing Traveler Profile Trends Overall Travel Trends Facts About Our Visitors

2 Destination Trends The Robust Growth of Escambia County s Tourism Economy Over the past four years, Escambia County s tourism economy has grown at a significantly above average rate. Tourism Development Tax generated in CY 2014 was 10.9 percent over CY 2013 and a whopping percent over CY Total TDT Collections: $5,209, $8,660,429 Smiths Travel Research (STR) Reports Escambia County CY 2010 vs. CY 2014 Average Occupancy % ADR % RevPAR % Demand % Revenue % In 2014, average hotel occupancy in Escambia County was 62.5 percent, representing an 8.6 percent gain over National average occupancy in 2014 was 64.4 percent, up 3.5 percent over Escambia County 2014 ADR was up five percent while nationally ADR was up 4.6 percent RevPAR in Escambia County was up 14 percent vs. 8.6 percent nationally In June and July of 2014, average hotel occupancy rates in Escambia County exceeded 80 percent for the first time since STR reports have been conducted. Escambia County s Tourism Economy Growth Exceeds Neighboring Counties STR Report - Calendar Year 2013 vs % change* OCC ADR RoomREV REVPAR Pensacola +10.3% +6.8% +19.9% +17.8% Fort Walton Beach/Destin +3.2% +7.4% +17.7% +10.9% South Walton - 0.8% +3.4% +5.0% +2.5% Panama City +6.6% +6.6% +13.1% +13.7% Gulf Shores - 1.1% +5.2% +4.1% +4.1% * Based on STR Emerald Coast Report December 2014 Destination 2020 Implications: The BP Factor: In the four years following the BP oil spill, BP distributed over $40 million to Gulf Coast counties and businesses to provide support for tourism development and marketing. Visit Pensacola received an additional $4 million for tourism marketing during this time. This significant increase in marketing spending no doubt contributed to the exceptional growth rate in tourism experienced by many Gulf Coast counties over the past four years will be the first year since the BP oil spill that marketing budgets will not be enhanced by additional BP or state funding. This could result in a leveling off of the growth rate experienced over the past four years. Capacity for growth: If Escambia County s tourism economy continues to grow at the rate it has experienced over the past four years, there will come a point in time when an increase in the capacity of tourism-related products and services will be required to support growth. Adding an M to DMO Destinations such as Cleveland and Lee County, Fla., are taking responsibility for managing their customers experiences and ensuring product matches the promise of their marketing. Hallmarks of the most innovative DMOs will be establishing an expanded role in the community on the broad economic development issues of tourism, training, infrastructure investment, capitalizing on smart technology to engage travelers, industry and markets and a having a greater community voice.

3 Destination Trends Destination Trends Opportunity for Growth The vacation attributes desired by most travelers are beautiful scenery, having enough time to relax and unwind, visiting a new place, a beach experience, visiting a historical site and the safety of a destination. 85 percent of travelers desire beautiful scenery, 68 percent desire a historical site and 65 percent desire a beach experience. Florida was the most visited destination over the past two years. Florida is the second highest ranked state travelers are interested in visiting over the next two years. The annual Portrait of American Travelers study measures the difference between interest in a destination and actual visitation. The difference is an opportunity gap DMO s should explore. In the 2013 study, 41 percent of travelers were interested in visiting Florida, yet only 29 percent visited in 2014, resulting in an opportunity gap of 12, the fifth highest opportunity gap ranking for a state in the U.S. National Parks are ranked second in specific destinations travelers are interested in visiting over the next two years. 62 percent of travelers are interested in visiting a National Park, yet only 10 percent visited a National Park in This represents an opportunity gap of 52, ranked only behind the Hawaiian Islands in specific destinations travelers are interested in visiting. Destination 2020 Implication: Appealing to travelers interests, Visit Pensacola should emphasize its Florida beach experience, the Gulf Islands National Seashore and its historical attributes in marketing communications. Destination Awareness Pensacola is not ranked in the top 75 destinations visited by travelers during the past two years, nor is it ranked in the top 75 specific destinations travelers are interested in visiting over the next two years. Regionally, Panama City Beach, the Alabama Gulf Coast and the Mississippi Gulf Coast are all ranked in the top 75 of specific destinations travelers are interested in visiting over the next two years. Destination 2020 Implication: Visit Pensacola must continue to emphasize building awareness of Pensacola as a desirable vacation destination. In addition, Visit Florida has recently indicated their belief that other areas of the state have reached their capacity for growth; therefore the future growth of tourism in Florida will come from Northwest Florida. With this in mind, Visit Pensacola should be proactive with Visit Florida to ensure Pensacola is prominently positioned in Visit Florida marketing channels. Ease of Access Ranked just below the vacation attributes desired most by travelers of beautiful scenery, having enough time to relax and unwind and a beach experience is the overall ease of getting to the destination. Over 68 percent of travelers consider ease of access a primary vacation attribute, illustrating the continued importance of improving non-stop air service into Pensacola International Airport. Tourism Impact on Escambia County s Economy Total Direct Visitor Spending $700,000,000 Total Hotel Revenue in Escambia County for 2014 was $170,856,566* * Based on STR Escambia County Report December 2014 Sales Tax revenue from direct visitor spending generated $61,100,000 to fund local government services, education and tourism development. $42 Million State Sales Tax $10.5 Million Local Option Tax $8.6 Million Bed Tax Beach Tourism is responsible for over 20,000 jobs in the Pensacola SMA.

4 Travel Research, Planning and Purchase Trends The Four Stages of Vacation Planning There are four stages of vacation planning and purchasing when travelers utilize various information sources seeking high-level ideas and inspiration; looking for specific advice and ratings; comparing service providers features and prices; and making reservations. During the ideas and inspiration stage, travelers consider an average of 21.2 sources of information (quality content on video and photo sharing websites is vitally important in appealing to travelers during the ideas and inspiration stage). This falls to 13.3 sources when seeking advice and ratings and 14.7 when comparing features and prices. At the reservation stage, travelers consider only 5.2 sources of information, confirming that as travelers move through the decision cycle they consider fewer sources of information at each stage. Travel Inspiration - Sources Considered when Selecting a Destination The top ranked sources considered when selecting a destination, in order, are: Friends and Family, internet search results, printed visitor guides, destination websites, travel review websites, professional travel guide books, magazine articles and airline/hotel promotions. Family and friends influences are primarily offline 58 percent vs. online channels at 32 percent. As noted, quality content on video and photo sharing websites is vitally important in appealing to travelers during the ideas and inspiration stage. TripAdvisor 74 percent of all travelers used TripAdvisor for vacations ideas, reviews and comparing prices. Top Websites Used to Obtain Pricing Information TripAdvisor, Expedia, Travelocity, Orbitz, Hotels.com, Kayak and Priceline. Top Travel Related Apps Maps/GPS services, Airline/Flights, Hotels, Destination Guides, Travel Reviews. With the exception of Map/GPS apps, travelers in general prefer to use web-based travel information sources to travel-based apps. This illustrates the importance of responsive destination web content or web content that is congruent with any device format. Social Media s Influence on Travel Decisions is Minimal. While we live in the age of social media, its impact on the travel industry may not be as strong as perhaps perceived. Only seven percent of travelers select a destination based solely on information primarily from a social media source. Social media content is low on the list of sources of inspiration, and although it moves up in terms of influence, it still trails review sites such as TripAdvisor, word-of-mouth and content generated on other travel websites. Despite this, businesses invested more in social media in 2014, perhaps responding to its seemly growing presence in commercial marketing. Findings point to the management of online reputation as the key driver to engage with guest via social media, which links back to the importance of online reviews to both businesses and travelers.

5 Travel Research, Planning and Purchase Trends Changing Booking Patterns In 2014, 16 percent of travelers booked their hotel accommodations by phone or through a traditional travel agent, a significant increase over previous years. Over eight in 10 travelers went to at least one Online Travel Agent (OTA) to check information and prices during 2014, yet only 31 percent actually booked their travel services with an OTA. 48 percent booked online directly with travel service providers. This represents a significant decline in travelers booking directly through OTAs as well as a significant increase in the use of travel service provider websites for booking. Travelers are increasingly using OTAs for research but actually booking with travel service providers, indicating travelers now consider travel service provider websites to be more convenient and dependable. Fueling this trend is a recent change Google has made to its Hotel Ads unit that brings hotel metasearch right into Google search results. While Trivago, Kayak and TripAdvisor are spending millions of dollars to introduce travelers to their metasearch services, Google is moving in on them with zero spend. Google, with all of its search engine traffic and power, has become a metasearch player without a metasearch site, allowing travelers to reach a hotel or OTA website with just one click.

6 Traveler Profile Trends The U.S. Travel Market 80 percent of all travel expenditures is spent by just 50 percent of U.S. households. This basically represents all households with income above $50, percent of all travel expenditures are by the 10 percent of U.S. households with incomes above $125,000 per year. Millennials On The Move Millennials (ages 25-34) boosted their travel spend by 19% in 2014, significantly more than any other age group. This new generation of travelers is also using its increasing earning power to travel more often. Millennials plan to take 4.6 vacations in 2015 while the average American plans to take four trips. Six in 10 Millennials would rather spend their money on experiences than material things. 33 percent take at least one vacation within 75 miles of their home and 24 percent are planning to take more overnight trips in the year ahead. Destination Attributes Desired by Millennials Destination vacation attributes desired by Millennials ranking higher than ranked by other age groups: Beautiful scenery... 87% Place never visited... 81% Beach experience... 75% Historical site... 71% Opportunity to eat different cuisines... 70% All-inclusive resort package... 66% Nightlife and entertainment... 52% Shopping... 54% Space museum... 48% Performing Arts event... 46% Xers and Boomers Matter Although we tend to focus on Millennials because they are boosting their travel frequency and spend more than any other age group, all age groups are important to a destination s success. Xers and Boomers travel nearly as much as Millennials, and older Boomers spend more on travel than any other age group. Mobile Comes of Age 2014 was the first time in history people booked less, not more, on their desktop computer. Mobile is clearly the go-to device for local information while traveling. The responsive web experience will continue to evolve in 2015 and beyond. Mobile will become more pervasive in social, CRM and advertising channels. In a multi-device era, where the most frequent travelers are carrying three or more devices, all travel brands should be moving quickly to a mobile-enabled form of information sharing. The Last Minute Weekend Traveler 53 percent of all domestic travel was booked within 30 days of travel, and extended weekend trips account for 46 percent of all leisure vacation travel. Visit Pensacola research indicates the average booking time for those visiting Pensacola is 40 days, which is significantly above the national average.

7 Traveler Profile Trends Staycations 33 percent of travelers took one overnight trip within 75 miles of home. Groupaways Groupaways are the new family vacation. As the freelance economy and flexibility in the work culture are growing, Millennials are increasingly building friend networks and the ability to pool money together for travel experiences. Grandparent Travel 33 percent of grandparents took at least one overnight trip with their grandchildren in Kids Rule According to MMGY s annual Portrait of American Travelers study, children under the age of 17 are having a growing influence on destination choice, accommodations and activities. Leisure-oriented brands must be speaking to these younger audiences in the right channels at the right time in the travel planning process. Off The Beaten Path A trend favoring Visit Pensacola, travelers are increasingly seeking new destinations that offer unique local flavor.

8 Overall Travel Trends Leisure Travel is Healthy Leisure travel has grown over 7 percent annually for the past two years, roaring past the U.S. economy as a whole. The number of visitors to Florida grew by 3.9 percent in Overall Southeastern region travel indicators are up for 2015 as 34 percent of all travelers are indicating an interest in Southeast destinations. Reflecting recent gains in consumer confidence, the current U.S. travel sentiment index continues to be positive and indicates a robust travel economy for the foreseeable future. Travelers spent an average of $4,429 on travel in Boomers and Matures will spend $1,359 more on travel than the average American. Leisure Travel Outlook Remains Positive, but increasing demand is driving up travel cost. The percentage of American leisure travelers expecting to travel more in the upcoming year (compared to the previous twelve months) is up by 16 percent. Travel spending expectations are also robust; Americans plan to spend an average of $517 more on 2015 vacations. Concerns regarding increasing transportation costs have dropped from a year ago; however, transportation costs continue to be the most cited reason for reducing travel plans and travel distance. With the economy rebounding, Americans are taking vacations in near record numbers again. But the surge in demand is driving up prices for travel costs such as airfare and hotel cost, making it challenging for many to afford that much needed respite from the daily grind. Recent surging demands in overall travel have increased average airfares to top U.S. destinations to $425 for a round trip ticket, according to a recent report by travel website Orbitz. The average hotel room rate hit $115 in 2014, up 4.6 percent. The blending of Business and Leisure Travel Companies are dispatching workers on more trips and conferences. This puts high spending business travelers in competition with the vacationing family for hotel rooms and airlines seats, putting additional upward pressure on prices. Airlines have been cautious about adding more seats and planes in response to the increased demand. This means airlines do not need to offer as many discounts to keep their planes full. Business travelers are taking one to two trips per year with a leisure extension. This is an increase of 18 percent over the past two years. Hotel Rates and Air Fares are Rising More Than Demand. While demand generators will contribute to grow in 2015, it is expected that more of the industry s growth will come from higher hotel, air and rental car rates as well as higher prices from ancillary travel providers. Travelers will pay more, and according to research, are willing to pay more for good experiences. But there is a risk that increased costs could curtail travel in some segments of the population and it may mean a flattening demand curve over the next 24 months.

9 Overall Travel Trends Looking for Value As enhanced demand for airline seats and hotel rooms takes hold, the challenge for many Americans will be how to break away without breaking the bank. As economist Robert Kleinhenz recently noted, Americans are in better shape financially than they have been in recent years. They are also more willing to spend their hard-earned dollar, but they are doing it cautiously and looking for value. Multiple market assessments indicate travelers are continuing the recession-driven trend of being frugal. Consumers have shifted from buying more to getting more out of what we buy. A value phenomenon has unfolded in practically every category of the travel industry. The value phenomenon is a reflection of the macro shift from consumer materialism to a life of meaning. Interactive media is clearly the traveler s weapon of choice. Although travel cost has exceeded the overall inflation rate over the past 24 months, much of the increase is simply a rebound from significantly discounted cost during the recession. Most Americans continue to view leisure travel as a right and are willing to forego spending on other items in order to travel. MMGY research shows people not only seek value when they research travel, but they brag about their deals too. Even affluent segments of the travel economy, while becoming wealthier, are still proud of the deals they can secure through smart shopping, loyalty programs or third party leverage. Utilization of Travel Agents Grows The resurgence of the travel agent is making an impact in the industry as 16 percent of travelers used the services of Travel Agents in Affluent travelers in particular are willing to spend more on an enhanced travel experience, and many are relying on travel agents to customize this experience. Research also shows that Millennials are using traditional travel agents at a surprisingly high rate. Alternative travel is continuing to gain steam worldwide Companies like Uber, Airbnb and Homeaway are cultivating and mainstreaming the sharing economy lifestyle. Its growth is fueled by the marketplace model, which has taken the best of online, mobile and social to create travel products that allow people to find rides or alternative accommodations with previously unheard ease, says Samantha Shankman.

10 Overall Travel Trends Brands adopting Instagram as a travel influencer boost Brands are looking to Instagram personalities to reach Millennials interested in visual content far beyond just travel. Instameets are becoming more popular and brands are hoping to capitalize on volume of content and focus of messaging through weeklong events. How these brands measure success with these insta-fluencers is still not ironed out. Alternatively, some brands, such as Disney, are choosing to focus on sharing user generated material and give individual Instagramers a boost in their following. Seasons of Travel Summer... 72% Fall... 59% Spring... 55% Winter... 49% Winter Season Growth Recent travel trends indicate winter travel is growing at a faster pace than other seasonal travel. Unused Vacation Days 29 percent of American vacation days were not used in 2014, an increase of five percent over the previous year. This represents an average of 5.6 days of unused vacation days for each American traveler. As had been the case for the past decade, the maximum utilization of vacations days presents a significant growth opportunity for the U.S. travel industry.

11 Facts About Our Visitors 2014 Visitors to Escambia County Average Age Average Household Income... $81,768 Advance Planning Days Advance Booking Days Average Party Size Average Length of Lodging Stay...7 Days Average Spend Per Day... $155 Average Total Spend...$1,127 First Time Visitors... 40% Visitor Profile & Behavior Drive... 74% Fly... 26% Travel with Children... 24% Stay in Paid Accommodations... 66% Pensacola is Primary Destination... 87% Will Recommend Pensacola... 98% Plan to Return... 93% Purpose of Visiting Leisure... 88% Business... 10% Reunion/Wedding...6% Sports...2% Visitor Spending Lodging... 46% Dining... 22% Shopping... 10% Gasoline...8% Grocery...7% Activities...5% Other...2% Top Origin Markets Mobile, Ala. Atlanta, Ga. New Orleans, La. Birmingham, Ala. Dallas-Ft. Worth, Texas Nashville, Tenn. Baton Rouge, La. Houston, Texas Tallahassee, Fla. Gulfport-Biloxi, Miss. Top Origin Markets by Spend* Atlanta, Ga. Norfolk, Va. New Orleans, La. Dallas-Ft. Worth, Texas Houston, Texas Birmingham, Ala. Washington-Baltimore, District of Columbia, Md. Baton Rouge, La. Chicago, Ill. Jacksonville, Fla. * VISA VisaVue Travel 4th Qt 2014

12 Sources A. U.S. Travel U.S. Domestic Travel Market Reports B. Visit Florida 2014 Visitor Quarterly Reports C. STR Smiths Travel Research Destination Reports D. Google 2014 Traveler Study E. MMGY Global 2014 Portrait of American Travelers F. Visit Pensacola 2014 Majority Opinion Research G. Parago Inc. The Great American Vacation Study. How Travelers Seek, Shop and Save H. Ipsos Trip Barometer 2014 Global Report the world s largest traveler and accommodation survey I. AARP Boomers and Vacation Plans 2014 J. ComScore Consumer Purchase Patters in Online Travel K. MMGY Global Preferred Hotel Group Multi-Generational Travel Survey L. Miles Marketing Destinations State of the American Traveler 2014 M. PhoCusWright Consulting 2014 U.S. Traveler Survey N. US Travel/American Express The Ideal American Vacation Trip, An In-depth Analysis of American Leisure Travelers Aspiration and Motivations