Somehow, we have been desensitized to statistics. I don’t know how it happened.
The title of this blog comes from a quote attributed to Benjamin Disraeli and popularized in the US by Mark Twin.
The statement refers to the persuasive power of numbers, the use of statistics to bolster weak arguments, and the tendency of people to disparage statistics that do not support their positions. So perhaps this abuse is the culprit.
I have been on the campaign trail over the last two years to help people understand the power of the drive market. And I can tell you, this is anything but a weak argument.
In my role as a leading member of the Leisure & Lodging council with investment consulting firm Gerson Lehman Group, I speak to half a dozen analysts a week about their investment in the travel industry. These individuals are generally following publically traded companies in our industry, or are looking at acquiring or merging a company with a company in our industry or they are considering funding the debt amassed by the private equity companies taking public companies private.
Whenever given the opportunity to comment on the future of the industry to these companies, I revisit the same statistics and talk of my optimism about the growth potential for this industry if we can break out of the stagnant status quo.
- Out of 2 billion trips taken in the US, 1.7b of those were taken by a mode of transportation other than an airplane.
- Of those 2 billion trips, 969m of them were overnight trips.
- Of those trips, 73% were by car and 12% were by rental car, RV, motorcycle, light truck and other and just 15% were by air
- Of the $740b spent on travel last year, just $137b was sold online and just $129b was sold through travel agencies, leaving $474b that is not sold electronically
Hmm…. anyone want a piece of that $474b? Do you know why there is this much spent in the US on travel that isn’t sold electronically?
Could it be that eCommerce isn’t the only business model that matters in this industry? Is there another frontier that we have only dreamed of? I believe there is. It is called location based content and providing information on those products and services that still aren’t available electronically. And it is tapping into the myriad of hotel bookings that are still made by phone or walk up, by guess who – the drive market.
But if percentages and statistic make your eyes glaze over, and more importantly don’t change your behavior or your strategy relating to the drive market, how about revenue numbers???
Instinctively, you believe the air traveler is a more lucrative traveler. Sounds good.
But here are the facts. Although the spending on the average trip by car is admittedly lower ($295 with an average of 1.3 nights), and the spending on the average air trip, not including the air ticket itself) is $878, with 4.6 average nights, here is the total spending by category:
- Drive market spending in 2007 $ 495b
- Air traveler non-air spending in 2007 $ 140b
- Other modes of transportation $105b
Can you afford to ignore a $495b market?
I am amazed that after reviewing such stark statistics, that the response I often get from industry leaders and investors alike is “Ya, ya, but what do you think the impact will be of the GDS negotiations with the airlines in the next cycle?”.
The GDS companies collectively rely on the airline traveler for 90% of their revenues. So 90% is from 15% of the pie.
I would ask the leaders of these companies, and their investors “How’s that working for you?”
As long as I will live, I won’t understand this obsession.
Well, I take that back. Obsessions are emotional, not factual. I know that. So I guess I do understand the obsession, as air travel is MUCH sexier than car travel.
But where I come from, profits are much sexier than flat growth projections. And building a business is much more fun than cutting back and laying off.
If I’m going to build a business moving forward, I’m going for the big piece of the pie as my market. How about you?
Drive Market Evangelist and Entrepreneur
(check out www.roadescapes.com, launching the RoadTrip Wizard officially next week with our new branding)