Doyle J. Girouard
CEO and Senior Managing Partner
The Cypress Group
May, 2013
 Feedback from customers; they want/need
information to prepare/refine their budgets for the
year
 At present they are adjusting their spend on T&E in
2013, and are looking for pricing forecast assistance
 Provides advantage to buyers and planners who get an
early start on air, hotel, and ground service rate
negotiations and a general request from clients
 Consolidation means three things for customers:
 Fewer choices,
 Increased fees, and
 Higher fares
 Airlines for America (A4A) projects a 2.4% reduction
in scheduled domestic flights, a 1.3% decrease in
domestic seats and a 0.1% cut in domestic available
seat miles (ASMs) in 2013
Southwest Airlines in 2013…
 A "no show" fee will be charged to passengers who do
not cancel a ticket before missing a flight
 The first two bags will remain free, but the cost of
checking a third bag and overweight or oversize luggage
will increase from $50 to $100
 Travelers who want to board their flight early will be
charged $12.50 in 2013, an increase of $2.50.
 Spirit Airlines Inc. started the first carry-on fee three years
ago, followed by Allegiant Air
 In Q2 Frontier Airlines plans to start charging up to $100
for a carry-on bag and $2 for coffee, tea, soda, or juice
 Frontier began giving half as many frequent flier miles to
customers who bought through an online travel agency.
Last Wednesday it slashed the mileage award to 25% of the
miles of the trip
 RESULT: Frontier’s revenue dropped 9% and its flying
capacity shrank almost 13% in Q1
 American Airlines says it is also boosting connectivity as it continues
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investments to offer in-flight WiFi, in-seat entertainment and universal AC
power outlets at every seat
Supplying flight attendants, pilots and maintenance workers with tablets that
will offer real-time information
United is joining American Airlines in offering travelers the option of having
their checked bags delivered directly to their final destinations, allowing
customers to skip baggage claim upon arrival. Cost; starts at $29.99 for
delivery within a 40-mile radius of the airport
American Airlines has introduced packages of airfare upgrades available on
round-trip flights. Its Choice Essential tier will get you a checked bag, priority
boarding and no fee if you need to change your flight reservation. It costs a
flat $68 extra per round trip. Its next tier, for $88, includes those perks plus a
50 percent frequent-flier mileage bonus, same-day flight change, same-day
standby and a premium beverage, such as an alcoholic drink onboard
RESULT…The Department of Transportation is considering forcing airlines
to display optional fees alongside airfares everywhere tickets are sold, so
consumers can make an apples-to-apples evaluation of fares
 Airline expenses have increased by 6.2% year over year
 Offsetting a 5.6% increase in operating revenues
 Fares are typically driven by four main factors:
competition, supply, demand, and oil prices
 Domestic airline fares are estimated to increase by 3-
6% in 2013
 “Unbundling”…The top five U.S. carriers generated
more than $12 billion in fees in 2012, with even more
expected through 2013
 The year-to-date price of jet fuel averaged $3.08 per
gallon, exceeding the record 2011 level of $3.00.
 During 2012, fuel accounted for 34% of total airline
operating expense
 Strategic Competitive Advantage; Delta Airlines purchased
the Phillips 66 “Trainer” refinery outside of Philadelphia, PA in
2012 for $150mm
 Will spend $100mm to upgrade to jet fuel production
 Refinery will produce more than 52,000 barrels of jet fuel per
day, or 80% of Delta’s jet fuel needs in the Northeast
 "Acquiring the Trainer refinery is an innovative approach to
managing our largest expense," Delta CEO Richard Anderson
said. "This modest investment, the equivalent of the list price of
a new wide-body aircraft, will allow Delta to reduce its fuel
expense by $300 million annually and ensure jet fuel availability
in the Northeast."
 Revenue of $6.1 billion, the highest first quarter revenue in
company history
 AMR paid $3.26 per gallon for jet fuel in the first quarter of
2013 versus $3.24 per gallon in the first quarter of 2012, a
0.7% increase.
 Domestic capacity and traffic were 2.5% and 1.3% lower
year-over-year, respectively, resulting in a domestic load
factor of 85.3%, 1.1 points higher compared to the same
period last year.
 International load factor of 80.5% was 0.7 points higher
year-over-year, as traffic increased 4.4% on 3.4% more
capacity. The Atlantic entity recorded the highest load
factor of 83.2%, an increase of 4.1 points versus March
2012.
 Reported a $417 million first-quarter loss
 United's government passenger travel fell 25% in Q1
 Many of the company's problems became evident more
than a year ago when United switched to single computer
systems for handling passenger information. The result was
delays and frustration, especially for prized business
travelers.
 More than 24% of United’s ground equipment fleet is
electric or alternatively fueled
 United is investing in a modern, fuel-efficient fleet to
replace less fuel-efficient aircraft. In 2012, United ordered
150 brand-new Boeing 737 narrow body aircraft powered by
fuel-efficient CFM engines.
 Sold a record 250 million room nights
 Occupancy increased by 1.8% over last year, to 57.7%
 Average daily rate (ADR) rose 4.5%, to $108.31
 Revenue per available room (RevPar) shot up by 6.4%,
to $62.47
 The industry gains occurred despite "stubbornly low
group demand“
Source: STR
 Among the Top 25 Markets;
 New Orleans, Louisiana, reported the largest occupancy
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increase, rising 25.3% to 84.3%
Dallas reported 7.1% gain for the quarter
Double-digit average daily rate (ADR) increases were
reported by Oahu Island, Hawaii (up 18.3%)
Miami, Fla. (up 12.2%), led markets in RevPAR growth
Oahu was up 18.4%, and Miami increased by 16.7%.
 San Francisco/San Mateo, California (+27.4% to
US$181.11), and Atlanta (+25.2% to US$103.18)
 Three markets achieved RevPAR increases of more
than 30 percent:
 New Orleans, Louisiana (+55.6% to US$143.06);
 Atlanta (+48.2% to US$72.38); and
 San Francisco/San Mateo (+39.7% to US$151.64)
 Intermediary bookings are growing faster than
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property-direct booking
Digitizing the marketing and distribution approach
Moving more to “electronic wallet” approach for guest,
both social and mobile
In 2012 mobile represented 35% of all searches. In 2013,
it is estimated to be about 45%, and in 2014 60%
The search experience for consumers is finding
availability and pricing information
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Country
Australia
Brazil
China
France
Germany
India
Japan
Mexico
South Korea
United Kingdom
United States
Visitors
11,460
5,175
20,850
25,090
11,490
6,082
4,415
6,722
7,612
29,348
525,690
%
+6.3
+4.0
+79.7
-17.2
-7.5
-3.0
+7.6
-4.9
-6.8
-9.0
-1.8
• Declines in 2012 were in two areas
 border tourism (decreased 5.3% in 2012)
 cruise ship stopovers (decreased 3% in 2012 and more than 15%
over the past two years)
• Decreases contributed to a 1.2% decline in overall
international tourism to Mexico in 2012
• Income from International tourists rose 7.1% in 2012,
despite the decline in the number of visitors
• Cancun continues to be the second-most popular
destination among Americans
• Mexico’s tourism industry is the country’s largest
employer, providing jobs for 3.3 million people, and
accounted for 13% of its gross domestic product
 9% Increase in Hotel Occupancy (YOY)
 9% increase in total visitors (YOY)
 Leading countries;
 USA
 Canada
 South American Countries
 Russia
1. Caribbean (includes Bahamas)
2. Europe
3. Alaska
4. Bermuda
5. Hawaii
6. (tie) Panama Canal
6. (tie) Trans-Atlantic
8. South Pacific (Including Australia)
9. South America
10. Maritime Canada & New England
 The top five cruise destinations remain unchanged
from 2012 to 2013
 However, the Caribbean’s fell slightly, from nearly 60%
in 2012 to under 55% of total bookings for 2013 so far
 The difference is made up by Europe taking a larger
piece of the pie, climbing from 11% to 13% of the total,
and Alaska climbing from 6.7% to 8.5%.
262
days out or just under nine months
 2013 meeting demand is improving at an encouraging pace
 Across the country, booking pace is getting more encouraging for 2013
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and for 2014. Things are looking positive and headed in the right
direction - onward and upward
Education (particularly engineering & technology), medical, bio tech,
high tech, new media, association, not-for-profits, financial services
and the incentive segment are all showing strong signs of recovery in
2013
With increased demand, group rates are advancing commensurately,
depending on the location and the market. Meeting planning
professionals are still in the driver's seat
CMP = Expectations are heightened for the creative and unique
delivery of the industry's Complete Meeting Package
Healthy protein-nourished meeting attendees are attentive conferees.
Meeting attendees are demanding healthy, gluten free, sustainable
cuisine and refreshment break selections
 In general, per-attendee meeting costs worldwide to
rise more noticeably than prices in other travel
categories. In North America, a 4.8% increase would
coincide with an expected 6% jump in group size.
 Booking windows have increased 5% as organizations
feel more confident about the future.
 Given this, advance bookings for 2013 are already
strong."
 The United States and Canada will see the largest hike
in average airfares (2.8%), Latin America would lead in
hotel rate and per-attendee meeting cost increases
(6.5% and 11%, respectively)
Index of Optimism, which was conducted in March
2013, asked just over 400 North American respondents
(70% buyers and 30% suppliers) to share how they felt
about the meetings industry’s business prospects over
the coming months
 Asked to compare their current levels of optimism to
Q1 2012;
 67% of respondents declared themselves “more
optimistic” than this time last year
 58% of respondents expect to see the number of
meetings and events they organize increase slightly
throughout 2013 and into the first quarter of 2014
 Additionally 8.5% anticipate significant increases.
 When asked about budget levels;
 49% have seen their 2013 budgets increase slightly
compared to 2012
 8% experiencing a significant increase.
 25% have successfully held the line on budget levels.
 354 responding;
 “pressures, needs and requests to reduce costs” continue
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to dominate and are the single most important factor in
daily decision-making.
“Complying with new company meeting and expenses
policies” ranks second while
“continued uncertainty about the global economic
outlook”
“a need to plan green meetings”
“incorporating social media into meetings and events”
 The number of corporate meetings and attendance
is expected to be flat in 2013
 Meeting budgets will decline about 1% overall
 Hotel rates will increase 4.2%
 Meeting demand is expected to decrease at resort
properties (-0.9%) and luxury hotels (-1.8%), while
demand will rise at mid-tier hotels (2.4%)
 Airfares are expected to climb 3.3% for domestic group
rates and 4.1% for international group rates. Airlines
are not expected to increase capacity in order to
maximize revenue per available seat mile
 When asked to identify their top trends for the year
ahead, meeting planners say they expect budget
challenges, and a shift toward local meetings
 About half of the meeting planners (49%) predict no
change in 2013 to the difficulty in getting meetings
approved. However, 34% say it will be slightly more
difficult, and 10% say it will be significantly more
difficult
 About 52% of meeting planners say that the most
compelling reason to offer virtual/hybrid meetings is the
potential cost savings. The biggest obstacles, said 28%, are
to effectively engage the audience and monitor
participation
 40% of planners say they issue less than five requests for
proposal per meeting, 26% send between five and 10, and
15% send between 10 and 15
 According to data from the Cvent Supplier Network, the 10
cities with the most meetings activity for the one-year
period that ended July 31, 2012, were (in order, beginning
with the most meetings held) Orlando, Washington, D.C.,
Las Vegas, Miami, Chicago, San Diego, Phoenix, Atlanta,
Dallas, and New Orleans
Doyle J. Girouard
CEO and Senior Managing Partner
Suite 1101, 150 Creekway Bend
Southlake, TX 76092
817-421-4774 Office
817-307-7577 Cellular
Email: doyle@thecypressgroup.com
Website: www.thecypressgroup.com
Blog: www.TravelKeyNote.com
Twitter: www.twitter.com/doylejgirouard
LinkedIn: www.linkedin.com/in/doylejgirouard
Facebook: www.facebook.com/doylejgirouard
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