Dr. Suzanne Cook presented the U.S. Travel Trends Outlook for 2011/2012 at the Indiana Tourism Summit on September 15, 2011 at the Indianapolis Museum of Art

1. The Long and Winding Road… U.S. Travel Trends and Outlook

2. Warning! This presentation may cause drowsiness. Presentation may even cause sudden loss of consciousness. Do not operate heavy equipment immediately following the presentation. If any of these conditions persist for more than four hours, seek help immediately. Rare but serious side effects may occur.

3. 2001 – 2011: A Decade of Disasters and Distress

5. But also a Decade of Rs…….…… Resilience Renewal Re-birth Recovery Resourcefulness (Self)-reliance

6. Today’s Agenda How far we have come – industry’s current performance Where we are going in 2011 and beyond Traveler trends and opportunities Digital media trends Staying ahead

7. On to the Outlook!

8. Why “uncertainty” for 2011 and 2012…Because this is still what we’re facing

9. You call this a recovery?

10. Turning the corner…What corner? Another “soft patch” – weaker than expected economic performance Housing market remains very weak Americans’ spending plans still on hold – stuck in 2009/2010 “new normal” range Labor market has weakened again – unemployment rate up to 9.1% Inflationary pressures easing but still high in travel Ongoing debt crisis Threat of higher taxes

11. It’s the Consumer, Stupid!

12. Consumer Confidence Plummets…Just can’t sustain consumer confidence Lowest since April 2009 44.5 as of August 90.0 is considered healthy 1985 = 100 Source: The Conference Board, August 30, 2011

13. Consumer Confidence…Heading in the wrong direction 90 considered “healthy” 44.5 25.3 1985 = 100 Source: The Conference Board

14. August Consumer Confidence Index for Past Five Years… 1985 = 100 Source: The Conference Board

15. Even upper-income Americans are concerned

16. Overall Traveler Sentiment IndexTMHas picked up modestly… Interest in travel Time for travel Money available for travel Affordability of travel Quality of service Safety of travel in U.S. March 2007 = 100 Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, July 2011

17. Younger Americans the Most Positive about Travel Source: U.S. Travel Association/YPartnershiptravelhorizons™

18. And their Positiveness is Gaining Source: U.S. Travel Association/YPartnership travelhorizons™

19. Affordability of Travel Index… Regains some ground March 2007 = 100 Gas price rise Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, July 2011

20. But travel prices still outpacing inflation Percentage change through July 2011 YTD TPI = +6.7% YTD CPI = +2.9% Does not include various fees Source: U.S. Travel Association Travel Price Index

22. Checked bags

23. Changed flights

24. Booking by phone

25. Preferred seating

26. Cut-the-line

27. Curb-side check-in

28. Change to earlier flight

29. Lavatory use (Ryan Air)$9.2 billion in fees to U.S. airlines in 2010 for checked baggage/other services. TSA estimates there were 59 million more carry-ons in 2010 than in 2009.

30. Gas prices up $0.93 from last year…Looking good for next few months Indiana = $3.72 Source: AAA Daily Fuel Gauge Report as of September 13, 2011 www.aaa.org

31. Gas prices and travel…Right up there with other necessities After pumping $60 of gas into his Chevy pickup, Chuck says he’s giving up cigarettes, beer and a vacation. “I’ll sit at home and cook out and won’t go anywhere.” Source: USA Today, Friday, March 11, 2001

32. Interest in Travel Remains Strong Source: U.S. Travel Association/YPartnership travelhorizons™

33. Travel PerformanceDigging out of the hole…..

34. Total Domestic Visitors… Up 3.5% in 2010 Millions of Person-Trips Ugh! Source: U.S. Travel Association

35. 2010 Travel Performance Domestic Business Volume Domestic Leisure Volume Domestic Volume Domestic Spending 3.5% 3.5% 3.7% (-3.4%) (-2.5%) (-6.3%) 7.7% Note: Numbers in parentheses are 2009 data Source: U.S. Travel Association and Tourism Economics (-8.8)

36. First Half 2011 Travel Performance Domestic Business Volume Domestic Leisure Volume Domestic Volume Domestic Spending 1.9% 2.6% 2.8% 7.8% Source: U.S. Travel Association and Tourism Economics

37. Leisure Travel Trends

38. Domestic Leisure Visitors…Exceeded the 2007 high last year Millions of Person-Trips Bah! Source: U.S. Travel Association

39. 56% of U.S. adults planning at least one leisure trip between August and January 7 million more travelers

40. Leisure Travel Intentions Highest in The West Plan to take a leisure trip between August 2011 and January 2012 Source: U.S. Travel Association/YPartnershiptravelhorizons™

41. And among Gen Xers and Matures Plan to take a leisure trip between August 2011 and January 2012 Source: U.S. Travel Association/YPartnershiptravelhorizons™

42. Financial factors influencing leisure travel…Most not really travel related Q: To what degree is each of the following financial issues currently affecting your leisure vacation plans over the next 12 months? (Somewhat to much less likely to travel) Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, July 2011

44. Relieve stress/need to relax (34%)

45. Break from home/work routine (26%)

46. Have put off traveling due to economy – feeling housebound (25%)Q: Why are you planning on taking more leisure trips during the next 6 months? Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, July 2011

47. Opportunities exist to entice over 42 million “not sures” to take a leisure trip Not Sure 18% 42 Million No Plans to Travel 26% 60 Million Q: Over the next 6 months, do you plan to take any leisure trips of at least 50 miles one way from home or that will include an overnight stay? Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, July 2011

48. Outlook through January 2012 Still willing to travel, but making adjustments in spending Still traveling close to home Overnight leisure trips shorter in duration More day trips More long weekend getaways Plans can change, but…..

49. Vacations Are Needed Now More than Ever!

50. Business travelers – on the road and in the air again…..

51. Incidence of Business Travel Down 14 Points Over Past 5 Years, but Stabilizing Percent taking business trip in past year Source: U.S. Travel Association/Ypartnership, travelhorizonsTM

52. Millions of Person-Trips Source: U.S. Travel Association Domestic business travel improves…But still well below 1998 record high Ouch!

53. Business travel intentions – soft but steady Percent planning to take a business trip during next six months Source: U.S. Travel Association/Ypartnership, travelhorizonsTM

54. Business travel – the province of the young Plan to take a business trip between August 2011 and January 2012 Source: U.S. Travel Association/YPartnershiptravelhorizons™

55. Lodging Trends

56. Hotel demand… Stronger than expected Percent change in room-nights sold over prior year 2010 2011 Source: Smith Travel Research, August 2011

57. Revenue Per Available Room positive…Driven primarily by rising demand 2011 Percent change over prior year 2010 Source: Smith Travel Research, August 2011

58. Top down recovery for lodging% change in RevPAR through July 2011 by tier Source: Smith Travel Research, August 2011

59. % change in RevPAR through July 2011 -Getting better 7.2 11.2% 8.3% 5.6% 8.8% 10.0% or more 7.5% to 9.9% 5.0% to 7.4% 0.0% to 4.9% Decrease Source: Smith Travel Research, August 2011

60. Indiana Hotel Performance through July 2011Indiana performing somewhat below contiguous states 2011 versus 2010 Source: Smith Travel Research, August, 2011

61. STR Forecasts for 2011 and 2012ADR drives up RevPAR Source: Smith Travel Research, July 2011

62. Air Travel Faces a Bevy of Challenges

63. Transportation demand “unsettled”

64. International air enplanements growth outpacing domestic

66. Stay longer (18 nights in U.S.)

67. $31.7 billion trade surplus

68. Stay in hotels (78%)

70. New record high for overseas arrivals… But, back to where we were in 2000 Source: Office of Travel and Tourism Industries

71. Nearly all top origin markets posted gains in 2010U.K. only country to see a decline from 2009 Caution: Impressive gains, but small base Source: Office of Travel and Tourism Industries

72. 2011 Booming! International visitation up 5% and spending up 12% through June (% change through June 2011) Source: Office of Travel and Tourism Industries

73. Percentage Change in International Arrivals Through June, 20118 of 10 top countries showing increases Source: Office of Travel and Tourism Industries

74. Overall change masks issues with top marketsU.K. and Japan still in recovery mode Impressive gains for largest int’l origins Troubling declines for largest overseas origins Source: Office of Travel and Tourism Industries

75. U.S. losing share of lucrative international travel market Long-haul travel around the world grew by 31% between 2000 and 2009 31% -9% But, long-haul travel to the U.S. fell by 9% Source: Office of Travel and Tourism Industries

76. The “Lost Decade” Had the U.S. simply kept pace… 68.3 million more international visitors $214 billion in new international visitor spending $295 billion additional secondary spending 441,000 additional jobs $32 billion more in tax revenue Source: U.S. Travel Association/Tourism Economics

77. Promoting the U.S

78. Forecasts Through 2013

79. Total domestic visitors *Forecast Source: U.S. Travel Association; Tourism Economics

80. Total Domestic Visitors…Should set new record this year In billions * Forecast as of May 20, 2011 Source: U.S. Travel Association and Tourism Economics

81. Domestic leisure visitors *Forecast Source: U.S. Travel Association; Tourism Economics

82. Domestic Leisure VisitorsWill continue to set new reocrds In billions * Forecast as of May 20, 2011 Source: U.S. Travel Association and Tourism Economics

83. Domestic business travelers *Forecast Source: U.S. Travel Association; Tourism Economics

84. In millions Domestic business travel improves…But still well below 1998 record high * Forecast as of May 11, 2011 Source: U.S. Travel Association and Tourism Economics

85. International and Overseas arrivals continue to recover as well *Forecast Source: U.S. Travel Association; Tourism Economics

86. Sustained, but slow growth expected in 2011 Domestic Leisure Volume Domestic Business Volume Domestic Spending International Visitors International Spending* 1.2% 2.4% (3.7%) (3.5%) 5.8% 7.3% (8.7%) (7.4%) Note: Numbers is parentheses are 2010 data 10.0% *Excluding international airfares Sources: U.S. Travel Association; Oxford Economics/Tourism Economics; U.S. Department of Commerce-Office of Travel and Tourism Industries (9.8%)

87. In this travel environment…“If you’re not at the table, you’ll be on the menu.”

88. Funding often at the whim of elected officials

89. Most State Tourism Office funding still tied to the public sector Source: U.S. Travel Association, Survey of State Tourism Office Budgets

90. “The Power of Promotion” Travel and Tourism…An economic engine Question: How can we fund something like tourism promotion when we have to cover essential services like teachers, safety and highways? Answer: Tax revenue generated by travelers is immediate and are critical to financing essential services. 2010 state/local travel tax revenues more than covered all wages paid to police and firefighters nationally Almost half of all wages paid to elementary and middle school teachers

91. The Rise and Fall of State Tourism Office Budgets…Too much uncertainty from year to year Total State Tourism Office Budgets in Millions Source: U.S. Travel Association, Survey of State Tourism Office Budgets

92. “The Power of Destination Marketing”What happens when you stop marketing…The Colorado Case 30% loss in market share of overnight leisure trips $1.4 billion in lost traveler spending in first year $2.4 billion lost traveler spending per year within four years of closing $134 million in lost state and local tax receipts Tourism office back in game in 2000 Funding increased to $19 million based on ROI of 12:1 “The Rocky Mountains were there long before the Colorado Tourism Board and they’d be there long after. Surely, the tourists will keep on coming.”

93. Today’s Consumer

94. 2010 Census and Beyond Profound Population Shifts in Past 20 Years Bigger Older More Hispanic and Asian More cognizant of multiracial identities More accepting of non-traditional living situations – multi-generational households, unmarried couples, same-sex couples, living solo Less enamored of kids Redefined gender roles More suburban, and less rural Leaning more to the South and West

95. Diversity Reigns

96. Projected Growth in Travel for Ethnic Markets, 2010 – 2020 Sources: Suzanne Cook Consulting, LLC and U.S. Travel Association estimates based on U.S. Travel Association’s travel economic impact data bases; U.S. Travel Association’s/Ypartnership’stravelhorizons™;TNS Travels America; Community Marketing LGBT research; and Bureau of Labor Statistics, Consumer Expenditure Survey, AHLA Report

97. About the travelhorizonsTM Survey Looking forward instead of back Designed to measure travel intentions in the six months following the survey Quarterly online national survey of U.S. adults since March 2007 Current survey conducted between July 19 – 30th Total of 2,200 responses from U.S. adults age 18+ and capturing 1,600 past year travelers per survey wave Respondents representative of the total U.S. population of adults age 18+ Joint program between the U.S. Travel Association and Ypartnership

98. August 8, 2011 ©2011. All rights reserved. ©2010. Ypartnership, LLC./Harrison Group.

99. Methodology Adults (>18 years of age) Reside in the United States Have an annual household income >$50,000 Active Travelers: Have taken at least one leisure trip of 75 miles or more from home requiring overnight accommodations during the previous 12 months; Online interviews with 2,539 active leisure travelers conducted during February and March 2011.

101. Faster Boot Ups

102. Faster Downloads

104. Last-Minute travel is in…Must be constantly in the market place Source: Ypartnership/Harrison Group, 2011

105. The New Resourcefulness

106. The Rise of the Resourceful Shopper Rational Exuberance: … cutting back is more likely to have made them feel smart and prideful than deprived. And while they see many difficult challenges unfolding for society, remarkably, they have maintained their optimism ... and actually gotten happier.

107. Smarter Shoppers 48% of leisure travelers feel they are smarter shoppers thanks to the economic situation Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, February 2011

108. The New Resourcefulness Gen Pop

109. Travelers Demanding More for Their Money More leg room Upgraded guest room More bountiful breakfasts Free Internet & Wi-Fi

110. The New Thrift…Generations and marketing implications

111. The “Great Recession”…Telling it like it is Percentage of U.S. adults who agree with the statement: “Although the recession is technically over, I don’t feel like it is.” 57% Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, July 2011

112. Generations… Recovery is not equal Danny— Have a great day sweetie! xoxo Mom

115. Born in 60s to early 80s

116. Post Vietnam

118. Expected to have time and $$$

119. Juggling act between work and home

120. Retiring or thinking about it

122. Age 65+

123. Many retired or will be soon

125. Younger more positive about having money available for travel… Mom & Dad? Positive Negative Q: Perceptions of travel compared to year ago? Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, July 2011

126. Differences in Frame of Mind…Boomers less positive % agreeing strongly/very strongly with statement Numbers shown in red are significantly different from one or more other generations Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, February 2011

127. Differences in Buying Behavior…Doing less of than before Extent to which shopping behavior has changed from a year ago (% less) Numbers shown in red are significantly different from one or more other generations Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, February 2011

128. Differences in Spending…Doing less of than before Extent to which your spending has changed compared to a year ago (% less) Numbers shown in red are significantly different from one or more other generations Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, February 2011

129. Differences in Leisure Travel Behavior…Older Americans lagging behind More likely to do during next 6 months compared to last year Numbers shown in red are significantly different from one or more other generations Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, February 2011

130. Experience Based-Traveler

131. Types of Leisure Trips and Vacations Over the Past Year

133. One-Third of American Travelers Report Sustainability-Relevant Motivations Experientials Enthusiastic travelers interested in exploration and discovery. 22.4 million, 18% of leisure travel market Quintessential Travelers Want to do it all. 8.6 million, 7% of leisure travel market Trail Blazers Outdoor enthusiasts; interest in experiences and adventure. 12.2 million, 10% of leisure travel market

134. Other Travel Motivation Groups Family-Focused Travelers in this segment value family togetherness 16% of leisure traveler market (19.6 million) Casual Travelers Not particularly travel-oriented; looking for rest and relaxation 14% of leisure traveler market (17.2 million) Affluentials A younger group looking for a mix of relaxation, adventure, and luxury 10% of leisure traveler market (12.3 million) Reconnectors Want to spend time with their significantother on vacation trips to reconnect through a slow-pace and a great deal of downtime while on vacation 12% of leisure traveler market (14.7 million) Back to Basics Expects little from their vacation, and is satisfied with what they get 9% of leisure traveler market (11.1 million)

135. Burgeoning of Multi-Generational Travelers 1/3 of grandparents have traveled with grand-kids; 70% of those trips also included grandkids’ parents

136. The Cultural & Heritage Traveler Study Lead Sponsor Study Commissioned by In Partnership with Research Conducted by October 2009

137. What is Cultural & Heritage Travel? Travel to experience the places, people, activities, and things that authentically represent the past and present, including cultural, historic, and natural resources. Source: Mandala Research, LLC 3

138. 118.3 million leisure travelers (or 78% of all leisure travelers) participate at some level in Cultural & Heritage activities while on a leisure trip. U.S. Adult Total Leisure Traveler Population (152 million) Five Cultural & Heritage Traveler Segments (118.3 million leisure travelers)

139. Important factors in choosing leisure trip activities. Base: Cultural & Heritage Leisure Travelers n=815 Q34. How important are each of the following factors when choosing the types of activities you do on a leisure trip? 22

140. Civil War Sesquicentennial… View from 30,000 feet

141. 72 million U.S. adults “very/extremely” interested in engaging in Civil War sites/trails 72 million 114 million 47 million Q26. How interested are you in engaging in Civil War sites/trails while traveling on a future leisure trip? Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, 2010

142. Interest in Civil War sites/trails…Knows no geographic boundaries Northeast 30% Midwest 32% West 30% South 33% Source: U.S. Travel Association/Ypartnership, travelhorizonsTM, 2010

143. The Power of Technology and Media

144. Travelers are Technology Users * Among users

145. The Ubiquity of Social Networking --> Daily Use of Social Networking is Highest Among Millennials --> Share of Hours Spent Online is at Parity by Generations

146. Elusive value of social media…Not yet a trusted source for travel information But can bring about revolutions.

147. 6% 2010 9% 2011 Influence of Social Networking Growing Have made a travel decision based primarily on research or feedback received on a social networking website 11% among $125,000+ HHI

148. Visited a Collective Buying Site for Travel Deals Source: U.S. Travel Association/Ypartnership

149. Visited a Collective Buying Site for Travel by Generation Source: U.S. Travel Association/Ypartnership

150. What Purchased on a Collective Buying Site Source: U.S. Travel Association/Ypartnership

152. Make decisions while on the trip

153. Adjust their routes to go off the beaten path

155. There is light at the end of the tunnel

156. U.S. Travel OutlookTo keep you in the know

157. 2011 U.S. Travel Marketing Outlook Forum October 26 – 27, 2011 Ft. Worth, Texas

158. Or, you can rely on the old standby…. “You will meet millions of tall, dark, handsome strangers with lots of money to spend in Indiana"-Suzanne Cook

159. “Risk comes from not knowing what you're doing.” --Warren Buffet

160. Better words of advice. “It’s five o’clock somewhere.” --Jimmy Buffet

161. Suzanne D. Cook, Ph.D. President, Suzanne Cook Consulting scook@suzannecookconsulting.com