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2008 Adventure Industry Research Roundup

Executive Summary

Editors’ Note:
Since this report was finished in August, 2008, there have been many important developments in global financial markets and politics that are having a significant impact on tourism.

From a global economy in which developing countries were thought to be “decoupled” financially from the developed economies of the United States and Europe to one where problems are spilling over and affecting all corners of the world, people in all economic sectors are examining how the rapidly evolving and volatile financial situation and economic uncertainty will play out in various regions.

It has been generally accepted that, amongst the various niches of travel and tourism, adventure travel is more recession-proof than other segments: adventure travelers are passionate about what they do, view travel as a fundamental part of their lifestyle and identity and will cut back on other items of expenditures before they cut back on their adventure trips.

Baby Boomers, many of whom have experienced significant financial losses in recent weeks, may be expected to delay their adventure planning until they have a better sense of their future finances. Mid-range adventure companies may look to offset a loss in Baby Boomer bookings by focusing on younger travelers, however, who are still building, rather than maintaining their careers and finances.

Although Xola believes the core adventure traveler characteristics will hold in the current environment, it is undoubtedly a more complex and competitive adventure market than it was even five years ago. The economic downturn as well as the credit-crunch/liquidity crisis will require specific regions and companies around the world to take a serious look at their competitive position and evaluate all aspects of business from products to marketing to staff management.

Leading U.S. based adventure tourism operators contacted for their views on the current situation report a slowdown in new bookings for some regions of the world, however they continue believe that adventure travelers will continue to spend on high value experiences, and that maintaining excellent customer relationships will sustain their business during the downturn. Many operators are looking for ways to reduce costs and say they expect to put more energy to developing targeted marketing programs.

The full report provides in-depth discussion, analysis and predictions for the industry as well detailed data on specific segments of the market from gay and lesbian travel to expedition cruising and emerging uses of technology. Global and regional trends sections provide information and analysis on destination arrivals statistics. Highlights from key sections are provided below.

GLOBAL TOURISM TRENDS
So far in 2008, global tourism has shown itself to be very resilient, with all sub-regions recording positive results. This is considered to be particularly true for the adventure tourism segment.

REGIONAL TOURISM TRENDS

• As of June 2008, all regions of the world are recording positive tourism results. During the period from January-April, 2008, growth was fastest in the Middle East, North East and South Asia, and Central and South America.
• An interesting trend continuing in 2008 from 2007, which provides some explanation for thesurging growth in Asia, is the prevalence of intra-regional and domestic tourism, and a rise in South-South travel, in contrast to traditional traffic patterns, which emphasized North- South travel.

ADVENTURE TOURISM TRENDS

• Significant industry growth segments include: biking, diving, sailing, surfing, cruising
• Service offering trends include the proliferation of specialized offerings around very focused consumer interests; unexpected luxury in remote, exotic locations; marketing messaging emphasizing personal growth benefits of adventure tourism; and "front-country" recreation — areas relatively close to home where busy people can enjoy outdoor activities after work.
• Standards ensuring adventure tour operators follow safety and operational best practices are becoming more formal and organized: for example, the Aventura Segura program in Brazil was created as a partnership of the Ministry of Tourism with the Brazilian Association of Business Travel Adventure and Ecotourism(ABETA) and Sebrae. It provides for the creation of certification program and technical material and is piloting in 16 regions throughout Brazil.

Traveler Trends

• Adventure travelers are maturing and are much more experienced — they know what they want and what they can get at specific prices. They continue to look for more flexibility and are more demanding about the product they are purchasing and, thus, are becoming more fickle and less loyal.
• A study conducted by Dr. Paige Schneider’s research, in cooperation with National Geographic Adventure magazine, found that adventure travelers continue to be fairly evenly split between men and women. Most adventure travelers in the U.S. are married, and a large majority (more than 80%) does not have children living at home. Approximately 50% of adventure travelers have household incomes between $75,000 and $149,000.
• North America was the top continent/region visited for the adventure travelers surveyed by Dr. Schneider. After North America, the next most visited destinations were Mexico, Western Europe, and the Caribbean. In terms of destinations they hope to visit in the future, adventure travelers indicated Australia and Western Europe were top choices. “Hard Adventure Travelers” have great intentions to travel internationally in the future, with almost half planning travel to New Zealand, Central America and South America.
• A new crop of adventure travelers is growing in importance — “GenY” travelers and even younger, the so-called “Millennials” are traveler segments to watch for destination developers and adventure travel tour operators. In 2008 Xola’s Natasha Martin conducted primary survey research to better understand the preferences and attitudes of youth who consider themselves adventure travelers. Key findings from Xola’s research indicate that GenY adventure travelers:
• Are driven by a destination priority over a budget concern: 82% determine destination first, then worry about budget;
• Travel with a specific purpose to explore and engage with other cultures: they indicate motivations which are consistent with those of Baby Boomer adventure travelers;
• The adventure travel community should expect to see accelerated growth of social networks dedicated to adventure tourism in the coming months. Already some tour operators are embracing these concepts on their websites, and online adventure travel information sites are emphasizing networking in their operations.

Top Adventure Travel Company News
The competitive nature of the adventure company business has continued to increase and will continue to do so as many larger, better-capitalized travel companies seek to establish themselves in what is perceived as the fastest growing segment of the industry.

Most adventure companies, many of which have been around for decades and have established reputations for quality and innovation, are still small largely under-capitalized. We believe that, because of the highly fragmented nature of the adventure travel business on a global scale, coupled with its rapid rate of growth, there will be increasing pressures to consolidate to provide better operating and financial efficiencies and to improve cost-competitiveness.

In terms of specific adventure companies, web sites vary in quality, depth, and interactive capabilities, and quite a few do not yet use them as effectively as they could do so. In addition, in a few cases, sites were surprisingly flat for companies that are marketing exciting trips to beautiful areas of the world.

Almost all tout family travel and small-group personalized tours, and responsible tourism is a theme running through most of the sites, though, frequently, it is unclear what precisely that means.

Key Adventure Company Trends

• Increasing focus on land-based immersion in Africa and East Asia;
• More sea-faring expedition tours to the Arctic, Galapagos and Alaska;
• Taking increased measures to reduce carbon imprint and impact on environment;
• Customizable trips becoming mainstays in catalogs to reach high-end travelers;
• Increase in women-oriented trips, family adventures and theme travel (e.g., culinary tours, wine vacations, gastronomic tours);
• Emergence of “frequent traveler programs” offering discounts and special offers to drive loyalty;
• Expansion in volunteer tourism opportunities; and
• Special advertising and direct marketing to customer databases; special packages to attract middle market travelers most squeezed by current fuel prices.

TRAVELER USE OF TECHNOLOGY
The use of technology in general is growing relative to tourism, not only the Internet but also wireless communications while traveling is becoming important to travelers.

The Internet continues to shift power from service providers to travelers, pushing the travel industry to become much more market-sensitive, responding to consumer price expectations and other factors. In fact, Forrester Research predicts that travel will remain the number one on-line retail category and grow to $119 billion by 2010.

ADVENTURE TRAVEL MEDIA TRENDS
Half of all travel media users (50%) say that they read, watch or listen to travel media at least once a month or once a week. About one-third (31%) of travelers have decided to visit a travel destination because of information that they saw or read in the travel media.

• In spite of the generally pessimistic outlook for travel and tourism this year, we have had reports from several adventure travel media sources that they are not seeing any slowdown in travel ad spending to date. Bryan Kinkade, Director, Travel & Tourism, National Geographic Adventure, stated in a July, 2008: “As it looks now, 2008 will be another record year for the ad travel category at National Geographic Adventure as more and more destinations and travel providers are identifying adventure travel as a vibrant growth and recession-resistant sector. Our readers view their adventure travel vacations as an absolute right — and while there might be some tightening in other areas of their life, they are not changing their travel plans.”
• The major adventure-travel magazine publications all have web sites but of varying capabilities (e.g., more interactivity available to users) and quality (of content, visual elements, navigability, etc.). Potential advertisers should be aware of the evolving nature of the media strategies of these companies themselves and to make sure that they not only pick the publishers that target the audiences appropriate for their particular destination but also that they have the right mix of offline and online options to meet their specific requirements.

TOURISM SUPPLY CHAIN TRENDS
The tourism supply chain is becoming more complex, and relationships between suppliers are increasingly dynamic and subject to frequent change.

Some industry observers believe that, while air travel will not disappear, it will become much more costly and result in increased use of other forms of transportation such as rail and sea, particularly those close to home. Countries and regions investing in improved highspeed rail systems are expected to see significant benefits from these improvements.

With the increased focus on the environment and climate change during the last few years, real estate and hotel developers, as well as guests, are focusing on environmentally friendly or “green” hotels. While a few years ago it was estimated that the cost premium for building such a hotel would be upwards of 20%, it is now estimated that it would add only 2% to 7% of initial costs according to the U.S. Green Building Council (“USGBC”).

DESTINATION RANKINGS
Recent years have seen many ranking systems emerge to assist industry and consumer groups make sense of the widening array of tourism alternatives.

It should be kept in mind, however, that the value assumptions underlying the criteria used in various ranking systems, including their relative weightings, as well as the specific audience(s) being targeted to use a particular index, have a substantial impact on the results.

We have summarized the results of three indices:

1. Specific to the adventure tourism industry, in 2008 ATTA, Xola Consulting, Inc. (“Xola”) and George Washington University (“GWU”) launched the Adventure Tourism Development Index (“ATDI”). The ATDI is a benchmarking tool, which can guide entrepreneurs and governments in developing and marketing sustainable adventure tourism products and services. It ranks 28 Developed Countries and 163 Developing Countries.

   Top 5 Adventure Destinations for 2008 among Developed Countries: Switzerland, Sweden, New Zealand, United Kingdom, Spain.
   Top 5 among Developing Countries: Estonia, Chile, Slovak Republic, Czech Republic, Hungary.

2. The World Economic Forum (“WEF”), in collaboration with consulting firm Booz Allen Hamilton, releases an annual Travel and Tourism Competitiveness Report. It rates 130 countries using 14 criteria to judge which ones have the most conducive environments for developing and supporting the travel and tourism industry. The top three countries in both 2007 and 2008 were the following: Switzerland (#1), Austria (#2) and Germany (#3).

3. Now in its third year, the Country Brand Index (“CBI”) is a comprehensive study of the attitudes of more than 2,600 international travelers conducted by FutureBrand, in conjunction with the public relations firm Weber Shandwick’s Global Travel & Lifestyles Practice. The CBI’s top three choices in 2008 are: Australia (#1); the U.S. (#2); and the U.K. (#3).

National Geographic Adventure magazine continues to be the leader in shaping consumer perceptions and destination development initiatives by promoting understanding and appreciation of adventure tourism and its many benefits. Whereas the other ranking systems mentioned in this report discuss countries, Adventure is focusing on individual tour operators.

In 2008 Adventure surveyed over 200 adventure tour operators and scored them on the following criteria:

• Education provided to clients
• Sustainability
• Quality of service
• Spirit of adventure
• References.

ENDORSEMENTS

“As a specialized adventure tour operator, Boundless Journeys is always looking for reliable information on global markets, new destinations, and trends. We use the Adventure Industry Research Roundup to support our staff in keeping up with this fast-growing industry, stay informed about issues, and recognize new business opportunities. The 2008 report’s review of travel media and technology has especially useful information for adventure travel tour operators looking to make the most of marketing budgets in 2009.”
Matt Holmes, Boundless Journeys

“The Adventure Industry Research Roundup that Xola produces every year is a valuable resource. It offers a great overview and understanding of the dynamic adventure travel market with a mix of proprietary research and industry data and analysis. This report helps us identify trends, challenges and opportunities to support our sales efforts. Now more than ever, it's crucial for operators, DMO's and anyone working in the industry to know and understand the marketplace, and this report taps into the pulse of adventure travel today.”
Bryan Kinkade, Director, Travel and Tourism, National Geographic Adventure magazine

"Brunner Digital uses technology to connect people with brands - with clients spanning a range of industries we rely on specialized industry research such as Xola's adventure travel report to keep us informed on the latest trends in adventure tourism. The 2008 report offers in-depth analysis and predictions that will undoubtedly spark ideas we can use to connect our clients' brands with adventurous consumers."
Tim Weinheimer, Vice President Account Management; Brunner Digital Media

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