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United
States Travel Advertising
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The fortunes of
individual tourism destinations and travel suppliers may rise and fall,
but the media that carry travel advertising can always count on a steady
stream of healthy revenues from the business of travel. In fact, the misfortunes
of suppliers and destinations often benefit the media, because when advertisers
are losing market share, they usually try to rebuild it by increasing their
ad spending.
This year, the Yearbook is expanding its coverage of travel advertising
by including industry segments that were not part of our reporting in years
past. New categories in our coverage include hotels (the largest single
category of advertiser, based on total spending), car rental companies,
theme parks and travel services (travel agencies and tour operators).
We are now obtaining the spending figures for travel advertising in the
US directly from Competitive Media Reporting (CMR), a Taylor Nelson Sofres
Company. CMR uses measured media figures, which the Yearbook regards as
the most consistent and accurate barometer of travel advertising spending
in the US. As always, we remind readers that the numbers do not include
the cost of salaries, production, talent, sales promotion, so-called "trade
paper" advertising, most cooperative advertising or public relations.
With our broader numbers, we are looking at total travel ad spending of
$3.2 billion in the US market during 1998, and a 10.5-percent increase
in 1999, to more than $3.5 billion. From January through July of 2000,
US ad spending totaled $2.3 billion. Although we cannot project an annual
figure from this, the bulk of travel advertising traditionally happens
during the first half of the year, in preparation for the peak summer travel
season.
As mentioned above, the hotel industry ranks as the biggest spender on
travel advertising, perhaps because our figures combine the US spending
of both domestic and foreign hotels in a single category. The hotel industry's
1999 spending of more than $1.1 billion represented a 7.2-percent increase
over the previous year. The biggest jump in ad spending came from the theme
park business, which tallied an increase of nearly 35 percent on its ad
bill from 1998 to 1999, to a total of more than $283 million. Also posting
big gains in ad spending for 1999 were the cruise industry (up 22.6 percent)
and travel agencies/tour operators (up 19.2 percent). Destination ad spending,
both foreign and domestic, registered healthy increases as well, but spending
by airlines and car rental firms was flat from 1998 to 1999.
In the airline industry, low-fare leader Southwest Airlines continues to
dramatically outspend its larger rivals. Although its 1999 ad spending
showed a slight decline from the previous year, Southwest nonetheless poured
more than $106 million into ads, spending well over half of that amount
on broadcast TV commercials, both on the networks and in spot markets.
And keep in mind that Southwest flies only within the US. By contrast,
United Airlines, the world's largest carrier with huge domestic and global
route networks, had total 1999 ad spending of about $65 million in the
US market. American Airlines laid out some $42.5 million on domestic and
international advertising in the US, while Northwest Airlines spent $35.2
million.
Among non-US carriers, British Airways had the deepest ad pockets in the
US market, with a 1999 budget of more than $30.9 million. In 1998, BA spent
57 percent of its US budget on TV commercials, but in 1999 it spent only
30 percent on television, and dropped network TV ads altogether. Spain's
Iberia Airlines doubled its US ad budget, from $6.8 million in 1998 to
$14 million in 1999. During the year 2000, Air France significantly increased
its US ad spending, laying out $6.7 million in the first seven months of
the year, vs. $4.7 million during all of 1999.
Holiday Inn
Spends the Most $
In the hotel industry, Holiday Inns remains the perennial biggest spender
on advertising; its 1999 expenditures of $36.1 million represented a modest
7-percent increase over 1998. Harrah's held second place both years, with
a 1999 spending decline of about $3 million, to $26.8 million. Hilton Hotels
vaulted into third place for 1999 by boosting its ad budget 60 percent
over 1998, to $20.8 million, while Marriott fell out of the top 10 thanks
to a 32-percent spending reduction, to $15 million in 1999.
Overall, the hotel industry spent about 46 percent of its advertising money
on local and national newspapers and Sunday supplements, and about 23 percent
on magazines. Outdoor advertising accounted for almost 12 percent of industry
spending. (Note: Advertising spending figures do not yet include online
spending, which remains a very small portion of all advertising, and an
insignificant portion compared to traditional media - but one that is certainly
the fastest-growing.)
Travel Services (i.e., travel agents and tour operators) represent the
largest spending category after airlines and hotels, with a total industry
figure of more than $533 million in 1999 - and another $404 million just
in the first seven months of 2000. In this category we can clearly see
the rise of Web-based travel planning. The noticeable jump in 2000 spending
reflects the huge ad budgets of the largest dot-com travel agencies, three
of which have suddenly vaulted into the ranks of the five biggest spenders
- Expedia.com (which spent $16.9 million from January through July 2000),
Travelocity.com ($15.7 million) and Lowestfare.com ($12.4 million).
Still, no travel agency or tour operator can approach the spending level
of Liberty Travel, which laid out more than $40 million in both 1998 and
1999, almost entirely on newspaper ads. The travel conglomerate known as
Travelco jumped from 20th place in ad spending in 1998, with $2.2 million,
to second place in 1999 at $23.6 million. Apple Vacations and American
Express also rank among the top ad spenders in the Travel Services category.
It should come as no surprise that the nation's most popular theme park,
Florida's Disney World, also spends more on advertising than any of its
competitors - $34.2 million in 1998 and $60.6 million in 1999, a 77-percent
increase. Disney World spent just under $50 million in the first seven
months of 2000, $33 million of it on television commercials. Second-place
Six Flags Theme Parks had 1998 ad expenses of $23.3 million, which grew
by 60 percent in 1999 to $37.4 million, just beating out Universal Studios
Florida's 1999 budget of $37.2 million.
If you thought Carnival Cruise Lines was the biggest advertiser in the
cruise category, you'd be wrong. RCI's Royal Caribbean Cruises ranked number
one in both 1998 (with total ad spending of $31.5 million) and 1999 ($32.3
million), followed by Carnival at $26.5 million in 1998 and $27.8 million
in 1999. RCI's Celebrity Cruises division also outspent Carnival in 1999,
with ad expenditures of $29.6 million. However, Carnival outspent Royal
Caribbean on network TV ads by a three-to-one margin in 1998 and a 20-to-one
margin in 1999. Royal Caribbean spent about 40 percent of its 1999 ad budget
on cable TV, and more than 30 percent on newspapers, while Carnival devoted
some three-fourths of its 1999 spending to network TV.
In the world of car rental advertising, nobody comes close to number one
Hertz, which spent $75.2 million in 1998 and $70.4 million in 1999, compared
with less than half that amount by second-place National Car Rental in
1998 and about half as much by second-place Alamo in 1999. Although Avis
holds itself out as the number two rental company, it ranked fourth in
ad spending in 1998, with $27.3 million, and fifth in 1999, at $25.2 million.
The biggest domestic destination advertiser in 1998 was fast-growing Las
Vegas, which is sprouting giant new themed casino hotels like crazy; its
1998 budget of $13.9 million out paced second-place Florida's $12.4 million.
But in 1999, the state of Texas jumped into the top spot in ad spending,
with an outlay of $20.9 million, or more than twice what it spent a year
earlier. Texas is betting on the power of cable TV advertising: It spent
$2.9 million on cable ads in 1998, but it boosted that number to $13.6
million in 1999 and spent another $11 million on cable in the first seven
months of 2000. (See table, p. 43, for Projected State Domestic Advertising
Budgets by Rank, 1999-2000.)
Among foreign tourism advertisers, the biggest spender keeps changing.
In 1998, it was Puerto Rico (not really foreign, but it happens to fall
into that category for these purposes), which laid out $8 million to attract
mainland visitors, half of it on spot TV ads. In 1999, it was Jamaica,
with total spending of $9.1 million, just over half of it on cable TV commercials.
And in the first seven months of 2000, it was the distant destination of
South Africa, which didn't even rank in the top 20 foreign spenders during
the previous two years. From January through July 2000, South Africa spent
almost $6.9 million promoting itself to the US travel market, with some
87 percent of the total going to magazine advertising.
Tables included
in printed version:
(a) Advertising
Expenditures in the US for Major Travel Categories, 1998-2000
(b) International
Tourism Advertising Expenditures in US (Top 20), 1998-2000
(c) Domestic
Tourism Advertising Expenditures in US (Top 20), 1998-2000
(d) Travel Services
Advertising Expenditures in US (Top 20), 1998-2000
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