2009 Summary ReportT

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Keizersgracht 174 - 1016 DW Amsterdam - The Netherlandstel: +31 20 421 2800 - fax: +31 20 421 2810

info@wysetc.org - www.wysetc.org

Youth Travel Industry Monitor

WYSE Travel Confederation Youth Travel Industry Monitor 2009 Summary Report

May 2010

Introduction This issue of the Youth Travel Industry Monitor series summarizes the business trends and outcomes of the youth travel industry for the 2009 year. Published by WYSE Travel Confederation, The Youth Travel Industry Monitor aims to provide:

1. A quick global overview of recent changes in market demand, product supply, and factors affecting business within the youth and student travel industry.

2. Insight on how WYSE Travel Confederation members are responding to market conditions. 3. A summary of relevant data, predictions and analysis from the wider travel industry.

The Youth Travel Industry Monitor is intended to provide greater understanding of how the sectors of the youth and student travel industry are affected by ongoing market conditions and to help WYSE Travel Confederation members make informed business decisions and develop forward-thinking strategies to deal with business challenges. We would like to acknowledge the work of Greg Richards in analyzing the data and findings of the Youth Travel Industry Monitor series.

Methodology This summary report of the Youth Travel Industry Monitor is based on a survey of 48 experts within the WYSE Travel Confederation community, representing a cross-section of sectors and geographic regions. Respondents were surveyed in January 2010; each answered questions regarding current market conditions for their core business area during January – December 2009. The current report therefore differs slightly from previous editions because it surveys an entire year of business operations. Respondents by Sector and Geographic Region As in most previous editions of the Youth Travel Industry Monitor, Work Experience/Volunteer Travel and Youth Travel Accommodation provided the highest number of responses for this report. The geographical representation of respondents was also reasonably similar to previous editions, with over half the organisations being based in Europe. Respondents by Sector Respondents by Region

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Changes in Demand

The decline in the volume of business reported for 2009 in comparison with 2008 was only -0.3%. This seems to confirm that the decline in demand that many respondents reported in the first part of 2009 was reversed later in the year and that many sectors of the industry are now beginning to see some growth again. The trend towards renewed growth in some sectors is also clear from the distribution of growth reported by youth travel organisations. In 2009, almost a quarter of respondents reported growth of 15% or more compared with 2008.

These results indicate that the youth travel industry preformed much more strongly than the global travel industry as a whole in 2009. The UNWTO reported a decline in international tourism of -4% over the whole of 2009, which means that the youth travel industry’s performance was 3.7% ahead of the rest of the market in 2009. The Au Pair, Insurance and Language Study sectors reported that they experienced growth during 2009 in comparison with 2008. The Retail Travel sector experienced the biggest decline in demand during 2009, down by around 5%. Work Experience

providers also reported a small decline for the year, largely thanks to the effect of stronger visa controls and the lack of placements in some countries. The Youth Travel Accommodation sector was more or less static over the year as a whole, a performance which is very strong when compared to significant declines for the greater hotel industry. For example, hotel occupancies in the United States fell by almost 9% in 2009. In Europe, double digit declines in demand during the first half of 2009 saw gross operating profit per available room decline by more than 30% in many cities, according to TRI Hospitality Consulting.

There were wide variations in demand for the different world regions, with North and South America in particular reporting declines for 2009 over 2008, whereas Asia, Africa and Oceania both saw strong growth. These regional patterns largely reflect the trends in international tourism reported by the UNWTO, which identified Asia-Pacific and Africa as the biggest growth regions.

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Availability of Products & Services

The availability of products and services grew by over 5% in 2009. Although the largest single group of respondents reported no change in the availability of products and services for 2009, there were a significant number of organizations reporting an increase. Almost 60% of organisations reported an increase in the availability of products and services in 2009.

Most youth travel sectors reported a growth in availability. Au pair and Youth Travel Accommodation organisations reported double digit increases. Only the Insurance and Work Experience sectors reported little change.

All world regions reported increases in availability for 2009 over 2008, particularly Australasia and Africa.

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Costs of Products & Services

One negative consequence of the recovery in demand was a sharper growth in the costs of products and services. For 2009, there was an increase of more than 3% in the cost of products and services However, the largest category of respondents reported no change in costs during 2009 as a whole.

All sectors of the youth travel industry reported rising costs, except Insurance. Oceania reported the greatest cost increases in 2009. Asia and Europe reported the lowest cost rises.

Looking at longer-term trends, it seems that demand, product availability and costs are closely related. These three indicators all fell as demand softened in early 2009. However, as economic recovery set in with the northern hemisphere’s summer months of 2009, demand, availability and costs all rose. Demand increases stimulated a significant growth in product availability, with a slightly slower increase in prices.

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Factors Influencing Business

Although increased marketing efforts continued to be important in influencing business throughout 2009, there was a marked increase in the importance of new partnerships, which were mentioned by almost 60% of respondents as an important factor influencing their business in 2009. This demonstrates the importance of efforts made to develop these links as the business climate began to deteriorate. In many cases, the full benefit of such partnerships may not have been felt until market conditions began to recover in the later part of 2009.

Consumer uncertainty was the greatest problem faced by youth travel organisations throughout 2009. The fact that more than 80% of respondents mentioned consumer uncertainty in the current survey, as well as in the two previous editions, underscores the importance of this factor for youth travel businesses throughout 2009. However, significantly increased concerns were also seen around the issues of placement opportunities, visas and costs. The hardening of demand in the final months of 2009 seems to have led to a decrease in the proportion of organisations offering discounts. Instead, the most common action taken in response to a decrease in demand was to improve quality.

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Expectations & Forecast Throughout 2009, respondents of the Youth Travel Industry Monitor survey generally expected that a recovery in business would begin by mid-2010. However, as the downturn has dragged on, the bulk of respondents now expect a business recovery to come later in 2010 or thereafter. However, for roughly 10% of organisations, the recovery has already begun, demonstrating that some businesses are recovering faster than others.

Respondents were also asked to look forward and indicate what they thought their business prospects were for the coming year (2010) as compared with last year (2009). There is a clear indication that the youth travel industry expects a return to growth, with about a third of organisations expecting growth of between 5% and 9%. Only 6% of organisations expect a decline.

All of the various sectors of the youth travel industry expect growth for 2010 compared with 2009. Although this may reflect the recovery of business lost in 2009, it is clear that all sectors expect a turn-around in their business prospects this year compared to last year.

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Positive expectations for 2010 were seen throughout all world regions. Europe was the region reporting the lowest expected growth, but the expectations in all sectors is youth travel demand will recover faster than international tourism demand as a whole, which the UNWTO expects to grow by 3-4% in 2010.

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Conclusion Demand in the youth travel industry as a whole held up well in the face of the global economic crisis in 2009. A slight fall in year-on-year demand of -0.3% indicates a far stronger performance than for the global travel industry as a whole (-4% in 2009). This underlines the importance of the youth travel market as a resilient market which can help to balance the travel portfolio of destinations worldwide. Demand growth was relatively strong for the Insurance, Au Pair and Language Study sectors in 2009. Retail Travel was hardest hit by the downturn, and Work Experience fell slightly as a result of visa restrictions and lack of placements. Youth Travel Accommodation recovered strongly in the second half of 2009, making up for nearly all of the declines they reported in the first half of the year. The availability of youth travel products grew by 5% in 2009 as suppliers reacted to the economic downturn by diversifying and strengthening their product range. There was particularly strong growth in the Au Pair and Youth Travel Accommodation sectors. The cost of products and services rose by 3% over the course of 2009, responding to the strengthening of demand in the second half of the year. Consumer uncertainty continued to be the biggest negative influence on business in 2009, mentioned by over 80% of youth travel organisations. The biggest positive influence on business in 2009 was the development of new partnerships, closely followed by increased or improved marketing. The main actions taken by Youth Travel Organisations to counter difficult market conditions were improving quality and looking for new opportunities. Only about a third of respondents used discounting as one of their main actions. These figures indicate that the reaction of the youth travel industry to the economic crisis was in most cases proactive, and this probably helped many businesses to achieve a relatively positive result for 2009. The majority of youth travel organisations now expect a recovery to begin in mid to late 2010, although some organisations indicated that a business recovery has already arrived. The average expected growth for the youth travel industry in 2010 is around 9%, which is well ahead of the growth forecast for global tourism as a whole at 3-4%.