Regional airlines were supposed to find profits flying small planes on short routes. That strategy might have worked – except that the high cost of fuel followed by the steep drop in business travel during the recession changed everything.  According to a Businessweek article, these airlines are overloaded with 50 seat regional jets which are no longer able to deliver profits.

Operators in this position have a couple of different options. Some such as Republic Airways have tried to become large quickly by purchasing competitors.  Other operators are trying to continue their contracts and associations with legacy carriers. For example, SkyWest is flying some routes under its own banner and other routes under the AirTran Airways banners.  Increased competition and tight profit margins mean that large carriers are  only signing short-term (2-3 year) rather than traditional (10-15 year) contracts with regional carriers. Analysts expect turmoil in the industry to continue until the 50-seat jets reach the end of their economic life and are replaced with more financially viable 84 or 100 seat aircraft.

In the meantime, operators of all sizes will be increasing their marketing expenditures. Factors driving these increases range from announcing new partnerships to small independents trying to win market share from competitors.

[Source: Bachman, Justin. Regional airlines: Scrambling for New Strategies, Businessweek, 12.07.09]

Ad-ology Research recently updated their Industry Marketing Insights report for Airline Services. The following are the predicted Top 5 Opportunities/Challenges from the report for this industry for the upcoming 12 months:

• E-tickets make up over 90% of purchased tickets, and industry officials estimate paper tickets may be obsolete in the near future.
• Over the past two years, the number of mishandled bags dropped by 40% , while customer complaints dropped by 25 percent.
• Many airlines plan to begin offering free in-flight Wi-Fi service to fliers.
• Airlines are increasingly imposing or expanding fees for passengers to offset losses.
• Fuel prices continue to rise, causing airlines to not fill planes to capacity and cancel longer routes.

The Industry Marketing Insights report for Airline Services is available on Ad-ology.com (Research Store) for $195 USD with local market data for any U.S. market.

[Source: Ad-ology Research. December 16, 2009]

Vacation rental homes will continue to grow in popularity among travelers in the coming year, according to a new report by HomeAway, Inc.  In fact, 87% of travelers who looked into a vacation rental in the past say they plan to stay in a vacation rental in 2010 – a significant increase from the 67% who stayed or plan on staying in a vacation rental in 2009.  Of those travelers who stayed or will stay in a vacation rental in 2009, 75% previously stayed in a vacation rental – 25% were first-time renters.

“The fact that so many travelers who’ve stayed in a vacation rental home are returning to rent again shows the high satisfaction they had with their experience,” said Brian Sharples, chief executive officer of HomeAway. “And in this economy, vacation rentals are also attracting many first-time renters who are looking for greater value from their travel dollar. We expect this trend to continue even as the economy improves, as there has been a significant shift toward value in the overall consumer mindset.”

Travelers Look for Value and Ways to Still Get Away in 2010

While more than one-quarter of travelers (28%) say the economy will not impact their vacation plans in 2010, most travelers will look for ways to save when it comes time to get away next year.

When travelers were asked how the economy will affect their 2010 vacation plans:

• 41% plan to look for specials or deals on vacation rentals

• 40% plan to stay in a vacation rental to save or split on the costs of accommodations

• 21% will look for hotel specials or deals

• 17% will vacation at a destination within driving distance from home

• 7% will shorten the length of the vacation

The average booking window (how long travelers book a property before their trip) has begun to climb to its pre-recession pattern. Travelers are booking an average of 94 days out in the third quarter – up from an average of 76 days during the second quarter of the year.

In 2010, only two percent of travelers say they will be unable to take a vacation due to the economy — a decrease from the eight percent who were affected in 2009.

Not surprisingly, the “HomeAway Vacation Rental Marketplace” report shows beach destinations continue to draw travelers, with eight out of the top 10 most popular destinations booked in the third quarter located in coastal areas. New York and Las Vegas stand as the two exceptions. The HomeAway Vacation Rental Marketplace report also identifies some emerging and reemerging vacation destinations among travelers. Demand for vacation rentals in the Big Easy is up by more than 300 percent in the third quarter.

The top five destinations with the largest percent increase in traveler interest from the third quarter of 2008 to the third quarter of 2009 include:

  1. New Orleans (307%)

  2. Estero, Fla. (149%)

  3. Austin, Texas (141%)

  4. Wear Valley, Tenn. (129%)

  5. Manhattan Beach, Calif. (121%)

"HomeAway Vacation Rental Marketplace Report," conducted by HomeAway Inc., November 10, 2009. 
Website: www.homeaway.com.

For aficionados of the white fluffy stuff, the best season of the year is upon us.  But ski areas and resorts suffered along with almost every other sector of the U.S. economy last winter. Both visits and ticket sales were down. For the upcoming season, industry experts predict that mountain resorts will face revenue declines ranging from 3-5%. Only a small percentage of the population skis regularly, especially given the general difficulty and expense associated with the sport.

So what changes  are ski resorts planning with respect to marketing? Operators will follow some of the same strategies they implemented last year. This means advertising discounted season passes to both local and regional skiers. To lure skiers from further away, resort operators are discounting lessons or amenities such as meals.

Overall, the industry seems to be trending toward larger resorts that offer a range of activities. By marketing services such as tubing, snowshoeing and ice skating, resorts can appeal to a broader consumer group and secure a steadier revenue stream. Even family members who do not ski or snowboard may want to spend a weekend enjoying a spa or fine dining at a resort.

Resorts are expecting some rise in interest as a result of the Winter Olympics which will be held in British Columbia in 2010. And several states which rely on tax revenue generated from ski tourism are promoting the Learn a Snow Sport Month. To maintain market share and to generate tax revenues, both private operators and public sector agencies may be increasing their marketing programs in January to prompt consumers to enjoy the great outdoors.

[Source: Steinbaum, Glenn. How the ski industry fights this economy, The ski Channel, 11.18.09; Clarey, Alex. State Governors…, The Ski Channel, 11.20.09]