“I’m migrating a little bit from what I call the Kmart, Walmart, to maybe the Target customer,” said Bassoul, who took over the top job in November.
His voice was just one in a chorus of travel executives and tourism officials recently taking digs at the cheapskates among their customers. Sacrifice sheer consumer quantity in favor of quality spendthrifts? Don’t mind if they do.
Disneyland regulars were wounded earlier this month when a quarterly financial report described an “unfavorable attendance mix” at the California resort. And the tourism minister of New Zealand drew backlash for saying the country would “unashamedly” target “high-quality” visitors rather than those who post on Facebook that they “can travel around our country on $10 a day eating two-minute noodles,” according to local and international media.
“It’s one thing to say ‘We want to be a premium brand,’” said travel analyst Henry Harteveldt, president of Atmosphere Research Group. “It’s another thing to be elitist.”
In this season of rising costs, economic uncertainty and surging crowds, many travel-related businesses are looking to their most well-heeled customers to keep the money flowing. Experts point out that wealthier people tend to be less affected by recessions — and more attractive to travel companies as a result.
Delta Air Lines president Glen Hauenstein said in July that shifting to premium business was “key” to weathering inflation and economic booms and busts.
“Historically, more price-sensitive products like ‘Basic Economy,’ which is currently less than 10 percent of our sold fares, have struggled to keep up with inflation,” he told analysts. “While high-value premium offerings perform much better and have proven to be much more resilient through the pandemic.”
Ultra-low-cost carrier Spirit Airlines agreed to be gobbled up by low-cost airline JetBlue, though the deal must still be approved. Even European budget carrier Ryanair says its cheapest fares — like 10-euro cheap — are going away.
“There’s no doubt that at the lower end of the marketplace, our really cheap promotional fares … I think you will not see those fares for the next number of years,” CEO Michael O’Leary told the BBC earlier this month.
In an earnings call this month, Norwegian Cruise Line Holdings CEO Frank Del Rio said the company’s cruise lines — recovering after an extended pandemic shutdown — would not follow the example of other operators who dropped prices “to ridiculous levels” during the recession in 2008 and 2009.
“We could, like others, chase short-term occupancy and sell cruises for crazy prices, but we don’t want to do that,” he said.
The pricing-up strategy comes at a time when many travelers are looking to scale back amid record inflation.
“Right now consumers, I think, are very focused when it comes to travel and entertainment on getting the best possible value that they can,” Harteveldt said. He said travel companies that shun budget travelers run the risk of pushing those customers away for good.
“What will it take for them to win back what may now be former guests who feel alienated and possibly even insulted?” he said.
There are still budget options, of course: destinations where costs are lower; hostels boasting bunk beds and tight quarters with strangers; and budget airlines with business models that cater to cheap travelers. Tourists can take public transportation, travel offseason, stalk deal sites and, yes, eat an occasional meal of two-minute noodles to save money.
It’s the tone and language from executives and countries that has rankled some travelers and even industry experts.
Disney — not known for its budget-friendliness — said this month that average per-person ticket revenue had grown thanks to fewer promotions in Florida and the addition of line-skipping services, but no thanks to Disneyland’s “unfavorable attendance mix.” While the company didn’t point fingers, visitors who hold so-called “Magic Key” annual passes identified themselves as the targets.
“At first I was like, wait a second. Are they talking about me?” said Mindy Marzec, a Disney blogger and content creator who runs the site This Fairy Tale Life. She said the reaction “rippled across Twitter” for a day, ultimately becoming an inside joke with some Disneyland fans adding “unfavorable” to their profiles.
Marzec, who has been an annual pass holder at Disneyland for more than 20 years, said she’s not offended by the term. But she also points out that without her pass, she wouldn’t visit the parks as often as she does — and definitely wouldn’t drop the same amount of money on food, drinks and merchandise.
ITS ACTUALLY PRETTY EASY TO TRAVEL ON A BUDGET HOTELS AND HOSTELS ARE CHEAPER THAN AIRBNB AND YOU CAN GO TO THE GROCETY STORE INSTEAD OF EATING OUT AND THERE ARE SO MANY FREE/CHEAP ACTIVITIES IN EVERY CITY. SMALL LIFESTYLE CHANGES AT HOME GO A LONG WAY — pic.twitter.com/BXnvTeOjzh
— lexi (@acowbythesea) August 24, 2022
Matt Kepnes, author of “How to Travel the World on $50 a Day” and founder of NomadicMatt.com, said companies are supposed to maximize their profits, so he can’t begrudge the Norwegians and Deltas of the world for wanting premium customers. But he was less understanding of countries that prioritize wealthier tourists.
“That’s sort of shooting themselves in the foot,” he said.
New Zealand’s tourism minister, Stuart Nash, said at a travel association conference that the country would still welcome backpackers, but needed to draw the “world’s most discerning” visitors, according to the New Zealand news site Stuff.
Government officials in Thailand have also urged businesses to avoid discounting to tourists but rather promote it as a premium vacation spot.
“We cannot let people come to Thailand and say because it’s cheap,” Deputy Prime Minister Anutin Charnvirakul said in July, Reuters reported.
Kepnes said backpackers tend to stay longer than wealthy tourists, use public transportation to get around, and spend money with more local restaurant and business owners.
Chekitan Dev, a professor of marketing at Cornell University’s School of Hotel Administration, said in an email that brands are “shortsighted” if they reject their lowest-paying customers.
“Every brand must think of ways to engage their poorest customers in some fashion so they can build a relationship with them, keep them from the competition, and one day pay for their premium offerings,” he said.