Consumer Confidence and Discretionary Spending

Historically, outbound international leisure travel is dependent on the confidence and discretionary spending of consumers, since many view traveling as a luxury and not a necessity.

As reported in the Wall Street Journal recently, the two major elements affecting consumer confidence and spending -- energy prices and the real estate market -- have been going through volatile changes. Currently opposing forces, the real estate market is experiencing a quick cool down -- making consumers more cautious with their spending -- while oil prices have been decreasing, keeping inflation in check, while increasing consumer confidence.

However, even with falling prices, the consumer price index is still expected to increase 2.9% year-over-year, a slight decrease from the original 3.3% increase forecast. With a lower interest rate, consumers are more ready to spend on luxury goods and services, including leisure travel.

Decrease in Retail Sales

Retail sales decreased by a seasonally adjusted 0.2%, the Commerce Department said Tuesday, November 14. September sales decreased by 0.8%, revised from a previously reported 0.4% drop. The median estimate of 22 economists surveyed by Dow Jones newswires had overall retail sales slipping 0.4% in October.

The retail sales report is a window to how Americans part with their money. And consumer spending is a pivotal part of the equation used to figure out how the economy is faring. Spending makes up about 70% of gross domestic product.

Improved Holiday Spending Before 2007 Slowdown

Thanks to lower energy prices, low unemployment and low inflation, retailers can expect consumers to spend more during the 2006 holiday season. But the nation's economy should then slow through the first half of 2007, due to factors such as the cooling housing market, according to the UCFI forecast.

Sean Snaith, director of the Thomas D. Garafolo Institute for Economic Competitiveness at UCF, says the gross domestic product growth rate should be about 2 percent in early 2007 before accelerating in the second half of the year.

With that in mind, Snaith predicts that consumer spending will grow about 2 percent during the fourth quarter of 2006, a jump from the 0.8 percent growth rate seen in the fourth quarter of 2005. Looking ahead after 2007's first-half slowdown, Snaith predicts that the GDP growth should climb to the 3 percent range in 2008.

In the past decade, the travel industry has been going through immense changes, mainly due to the emergence of the internet. With the vast amount of information at the consumers’ fingertips, travelers are educating themselves at the ease of a few clicks. These travelers are going to sites and blogs that are written by those that write and advise based on their personal experience. To further empower themselves with information, consumers are not limiting themselves to passive research and are reaching out to other travelers through communities and social networking sites.

In last week’s PR Newswire, an article outlined that “new trends in travel and tourism are emerging, and key markets are gaining momentum as consumers are focused on meeting their unique criteria when planning a trip. This year’s trends revolve around “experiences beyond the guidebook,” including:

-By Travelers for Travelers – Technology has given rise to countless websites and blogs that are geared to social networking. Travelers are embracing these vehicles to organize and shape a travel community for travelers, by travelers.

-Scarcity Drives Demand – Travelers are becoming more attracted to the scarce and the limited. The harder it is to get in, the more desirable the experience is becoming.

-At Home While Abroad – Many travel companies now employ people of the same visitor nationality to service their tours. Speaking the language is no longer sufficient and now many travel companies promote “travel with someone from your own country.” With so much knowledge at hand, consumers are fine-tuning their wishes and expectations on vacationing.

DEMA 2007

This year, the 30th Annual DEMA (Diving Equipment and Marketing Association) tradeshow and conference was held from November 8 – 11 in Orlando, Florida. Tahiti Tourisme North America (TTNA) was very pleased to welcome the following partners who participated with representation in the booth: Air Tahiti Nui, Bora Bora Diving Center, Classic Vacations, TOPdive, and Six Passengers, Rangiroa. We were also very pleased to welcome Tahiti Nui Travel and Pearl Resorts who had their own booth next to the TTNA booth, both located in the South Pacific section. Air New Zealand, Bora Bora Lagoon Resort, and Caradonna Dive Adventures also participated with collateral in the booth.

The show itself was off to a slow start on Wednesday, November 8, however, it picked up on Thursday and Friday and we were very happy to have constant foot traffic both of those days. The show wound down on Saturday, which was again rather quiet with foot traffic. Fortunately, this gave the representatives in attendance time to call on dive shops and other partners. There were approximately 10,000 attendees, 550 exhibitors, and about 400 industry professionals that called on our booth.

Although it has taken a lot of work, and quite a bit of time, Tahiti has definitely made strides in this market over the years. We were very pleased to discuss second trips that divers and dive shop owners are planning to Tahiti, and to discuss the various dives and locations that these industry professionals were already familiar with in our islands. The overall energy behind the Tahiti booth and the partnerships and cooperation among the dive and industry partners present was truly phenomenal. We are anxious to see more momentum in this niche market and would like to thank all of our Partners for their hard work and their support.

Caradonna Dive Adventures, Aggressor Fleet, several operators catering to Tahiti, and all of Tahiti’s media partners were also called on during the four-day show. For 2007, DEMA will be in beautiful Orlando, Florida once again. TTNA has already made our booth selections within the South Pacific Pavilion, as well as the desired location for next year.