PRICING executive summary
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YOUTH AND STUDENT TRAVEL MARKET Industry Review no. 2: Pricing EXECUTIVE SUMMARY This is the second in a new series of industry reports for WYSE Travel Confederation members.
Published by:
Prepared in cooperation with:
World Youth Student & Educational Travel Confederation Keizersgracht 174 1016 DW Amsterdam The Netherlands
StudentMarketing Ltd. Bakossova 8 97401 Banska Bystrica Slovak Republic
Tel: +31 (0) 20 421 2800 Fax +31 (0) 20 421 2810 Website: www.wysetc.org Email: laura.daly@wysetc.org
Tel.: +421 48 415 2404 Fax: +421 48 415 2404 Website: www.student-market.com Email: research@student-market.com
COPYRIGHT Š 2012 WYSE TRAVEL CONFEDERATION All rights reserved. The contents of this report may be quoted, provided the source is given accurately and clearly. Distribution or reproduction in full or in part is permitted for members’ own internal use only. Disclaimer: The presentation of material in this publication and the designations used do not express the opinions of authors, but represent extracts from secondary sources. Due care and attention have been taken in preparing, but this does not warrant that it is correct and complete.
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Research programme WYSE Travel Confederation and its Sector Associations are committed to understanding the ever-changing characteristics, motivations and needs of young travellers and the industry that supports them. The Confederation and Associations gather, analyse and share important research data and market intelligence with their members, academics, corporate and government decision-makers, and the general travelling public. Our investment in research and market intelligence informs the policies, services and products which make international travel and educational experiences exciting, safe, accessible and affordable for young people. Last year, we developed a partnership with industry research specialist StudentMarketing to build on the good work already done and help fill out the picture of our vibrant but still under-documented industry.
The Research Programme has three parts: 1. Industry Review Series A research based industry review from secondary sources, compiling recently available data on industry matters that affect members’ businesses (youth travel market dynamics, mobility, pricing, customer preferences and marketing).
2. Primary Survey Primary research to source up-to-date data from youth specialist businesses across all sectors, globally.
3. Research on Demand WYSE Travel Confederation members have the opportunity to commission research particular to their sector and business needs.
We hope our members will find these new additions to our Research Programme useful and thought provoking. The three stage programme outlined above, offered in collaboration with StudentMarketing, is only available to WYSE Travel Confederation members. Please visit www.wysetc.org for more information about WYSE Travel Confederation’s Research Programme.
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Introduction In 2011, WYSE Travel Confederation started its latest research initiative, a commitment to better document the youth and student travel industry. Within the Research Programme, the Confederation launched a series of Industry Reviews, starting with the first published in July 2011: “Youth and Student Travel Market – Data, Statistics and Trends, Industry Review no. 1”. It examined six sectors of the industry, namely Language Travel, Higher Education, Exchange/Work Experience, Volunteer Travel, Accommodation and Backpacking, and looked at them in the context of the Global Tourism industry. The Executive Summary as well as full report are available for download at www.wysetc.org. The “Youth and Student Travel Market – Pricing, Industry Review no. 2” focuses on Pricing in six sectors of the youth and student travel industry: Language Travel, Higher Education, Work Experience, Volunteer Travel, Adventure Travel and Youth Travel Accommodation. Each sector chapter gives deeper insight and information about measured programmes and products, compares prices, outlines associated costs, adds purchasing indexes, and comments on the market situation. Research initiatives included eight global regions of North America, Latin America, Western Europe, Eastern Europe, Africa, Middle East, Asia, and Australasia, where and when possible. The research used published material from over one thousand institutions, businesses and agencies. As such, Industry Review No. 2 brings data on price levels as of July 2011 when the data mining and collection was conducted. Its ambition was to capture the market situation and establish a base upon which to build future year-to-year measurement.
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The power of youth travel
policy and pracTice for Global Tourism This major new publication from UNWTO is a guide to the major themes in world tourism today. Through 11 chapters, it presents an overview of topics ranging from sustainable tourism to social networks or emerging markets to creating a successful destination brand. Examples of UNWTO’s work in key areas are highlighted throughout the publication, and these are complimented by case studies and opinions from business leaders, destinations management organizations, academics and NGOs.
To find out more about becoming an Affiliate Member of the World Tourism Organization visit www.platma.org
In this comprehensive publication, UNWTO is proud to include contributions from over 30 Affiliate Members from around the world, as well as input from experts from the UNWTO Secretariat.
The publication is available to consult in electronic format in the UNWTO at e-Library www.e-unwto.org to which Affiliate Members can benefit from free access.
Policy and Practice for Global Tourism is aimed at decision makers working in the public and private sectors alike, as well as those who are simply interested in learning more about this fast-moving and dynamic sector of the global economy.
Policy and Practice for Global Tourism is now on sale through the UNWTO Infoshop at www.unwto.org/infoshop at the price of 50 EUR. UNWTO Members can benefit from a 50% discount on all purchases through the Infoshop.
plaTma - unwTo affiliaTe members proGramme What
How
Why
• Connect • Create • Participate • Share
• Affiliate • Browse • Discover • Benefit
• Communication • Networking • Knowledge • Added value
UNWTO Affiliate Members Programme presents www.platma.org, the professional online network for the Organization’s Affiliate Members. The network was launched in January 2011 in collaboration with SEGITTUR and provides a space for the public and private sectors in global tourism to meet, share knowledge, experience and best practices using a range of multimedia tools. Platma is now open! If you work in an affiliated organization, please email platma@unwto. org to register yourself and your colleagues. Each Affiliate Member organization is eligible for up to five individual user accounts. Guests In cooperation with can also be invited to participate for a certain youth and student travelperiod market of time.
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If you would like more information about platma or you wish to discover the benefits of affiliation to UNWTO, we will be happy to help you. Please contact: UNWTO Affiliate Members tel: +34 915678167 / 243 email: platma@unwto.org
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Methodology Prices are measured from the customer prospective, i.e. as available to the end customer. In other words, the research team’s data mining efforts were focused on sending organisations and student agencies who represent the predominant channel of information and bookings in youth and student travel industry. Where impossible, e.g. the Higher Education sector where agencies do not publish the prices, or Youth Travel Accommodation where purchasing and bookings are done predominantly directly by the end customer at the provider without using the services of sending organisations, providers were subject to measurement (prices offered to the general public paying from abroad). Either way, the prices in this study are the prices as known and available for end customers, i.e. retail prices for which an end customer can purchase from a provider or sending organisation. As such, data on prices was collected as found on websites, in trade catalogues, brochures and research papers. In rare cases, where the data was not publicly available, particular companies were contacted to provide prices for potential customers (mystery shopping). The intention of the research was not disclosed in order not to influence the data provided by the approached companies. The methodology played a strong role in relation to final outcomes and figures, or in other words, the methodology was a strong determinant of final outputs and data. This study therefore does not tell the full story, but a story limited by several factors.
Selection of sectors was determined by the previous research: five of the six sectors monitored in the Industry Review no. 1 were retained (Language Travel, Higher Eduation, Exchange/Work Experience, Volunteer Travel, and Youth Travel Accommodation), Backpacking/Flashpacking (unable to choose one universal product that would in addition be different from that offered and measured within Youth Travel Accommodation) was replaced by Adventure Travel, which is thematically close to Backpacking/Flashpacking and a recently growing sector with growing importance in youth and student travel. Only a limited number of youth and student travel programmes were possible to be measured within this research initiative. Therefore, programmes with the biggest global coverage were selected (that are most widely promoted and available on a global retail basis). In some cases, it was necessary to add products to ensure global coverage. As a result, the selection of programmes to be subject of measurement within a particular sector, focused on having a programme that is the most common within a particular sector (a wholesale product represented worldwide, in most of the world respectively, e.g. US Summer Work/Travel). As there are no such programmes in all measured regions (US Summer Work/Travel is not offered in certain regions and countries), one or more additional programmes were added to the research to ensure the global coverage of worldwide regions (e.g. Work and Study Canada, Working Holiday programmes).
North America
Western Europe
Eastern Europe
Middle East
Latin America
Central Europe
Africa
East Asia
Australia & New Zealand
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Definitions For the purposes of this research paper, a specific delimitation of regions and countries was made, taking into consideration common practice in most of the youth and student travel industry sectors.
Each of the six sectors measures the following features of its programmes:
Description of sector and measured programmes Companies and organisations to be subject to measurement were carefully selected in order to keep a sizeable and representative sample group. On the other hand, the final set of companies was strictly determined by suitability (the organisation had to promote the product as precisely defined). Definitions of the programmes measured are described in the introduction to each chapter.
Each sector starts with a brief introduction with regard to the portfolio of programmes that are chosen to be subject of measurement. It describes what programme was the subject of measurement, and why the specific product was selected, plus a basic description of the product and what is included in the price. This section also explains any sector specific methodology that was needed.
In particular, of 40,000 providing and sending organisations (worldwide database of the research team), 2,500 were identified as representative for sectors and regions, applying various criteria and independent ranking systems (please see more below) to be the subject of data mining and documentation. More than 1,000 organisations were proven suitable for the purpose of this research - offering programmes and products that were subject to measurement, publish the prices in a transparent way, provide up-to-date information - making the sample group size on average 225 organisations per sector, 54 per programme, and 22 per programme and region combined.
Price
Not only did the research team approach the sufficient size of the sample group, but also targeted a representative sample group, using specific criteria, for instance, company size (to include companies of all sizes and importance, i.e. smaller and non-mainstream organisations as well as mid-range and big players), portfolio diversity (sector specialists as well as cross-sector organisations), country of origin (to ensure adequate representation of the region), and various ranking systems (Institute of International Education ranking, customer rankings in the case of hostels, etc.). Names of the companies examined are mentioned at the end of each sector. Data was collected in the period of July and August 2011. All prices are in United States dollar (US$). When necessary, currency converter OANDA (www.oanda.com) was used, exchange rates used as at July 1, 2011. Disclaimer: Methodology (such as the selection of programmes and companies) can considerably determine and limit the outcomes. Also, in comparison to other studies and research papers, differences may occur due to sample sizes and the methodology applied.
Each sector contains average prices of several programmes, in all or some of the eight worldwide regions (as available). Information about average prices is accompanied with information about value (what the price includes, as mentioned in this chapter or above in the description). This offers useful insights into price levels in various regions.
Allocation of costs How much customers pay for what, a graphic illustration of percentage allocation of total fees, compulsory and optional. For obvious reasons, only the country of origin of a selected business is disclosed. This offers a valuable insight into pricing trends and what customers pay for.
Associated costs That which is being charged within the sector in general, a comprehensive list of all fees that businesses charge; both compulsory and optional, i.e. an aggregate of all items that were identified in the process of research as a subject of charge, separately or as part of a package. This offers useful insight into the industry situation, and indicates what businesses charge in various regions of the world.
Purchasing index Inspired by the widely recognised Big Mac Index, the sector purchasing index was developed. It displays how many days a person has to work in a particular country to buy the product measured. It was calculated as an average product price divided by the average daily salary in a given country. A month was considered to have 22 business days, average wages were retrieved from OECD (Organisation for Economic Co-operation and Development) and UNECE (United Nation Economic Commission for Europe). The index offers a valuable insight into the purchasing power of particular nationalities, and offers comparative analyses that indicate the economic features of demand in each particular sector.
Commentary A summary of findings related to a particular sector.
Source information A comprehensive list of institutions, businesses, providers, sending organisations, and agencies to show sample size, which aimed at being as representative as possible.
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“BRAZILIAN TRAVELLERS SPENT OVER US$ 11 BILLION ABROAD”
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Executive summary This study “Youth and Student Travel Market – Pricing, Industry Review no. 2” constitutes the second report of a series introduced by WYSE Travel Confederation in 2011. After the release of “Youth and Student Travel Market – Data, Statistics, and Trends, Industry Review no. 1” that systematically examined the industry from a bird’s eye view, this paper maps and analyses the prices of the most representative youth and student travel programmes. The research compiles information on the prices of more than one thousand organisations worldwide in the six sectors of the industry - Language Travel, Higher Education, Exchange/Work Experience, Volunteer Travel, Adventure Travel and Youth Travel Accommodation. This initiative, unprecedented in nature, is hoped to set a benchmark for years to come, and to be a valuable and helpful source for WYSE Travel Confederation members.
Globally, it was found that: • The prices of youth travel programmes are mostly over US$1,000 up to US$43,000; • Educational programmes are the highest revenue earners; • The prices vary up to 46% in particular regions; • The tuition/programme fee represents from 22% to 90% of total pre-departure expenditures.
Exchange/work experience • Programmes with governmental regulation (Exchange) are generally more expensive; • US Summer Work/Travel at a low price and tight margins in Central Europe (US$1,100), most expensive in China; • Working Holiday programmes are much less costly, participants pay on average US$611; • Registration and programme fees are quite significant across the sector as a whole.
Volunteer travel • The average programme price fluctuates around US$1,500 (2 week programmes); • Price variancy of 36% across the source countries worldwide; • Humanitarian work in Central America is currently priced slightly more affordably than in Sub-Saharan Africa; • Programmes are sold as a compact package, a fact that precludes illustrating the break-down of costs.
Adventure travel • The average price of an adventure trip to Africa is US$3,412; • An adventure trip to Latin America costs on average US$3,970; • There are minimal additional fees, most individual fees are included in the package paid prior to departure; • The sector buoyant only where purchasing power is very strong.
Among the findings in the six featured sectors are:
Youth travel accommodation Language travel • English language courses are most expensive in Western Europe; • Average price for 4 week general course in London is US$1,697, 7.2% cheaper in Eastern Europe, 11.8% in Latin America; • ELT in Australia - retailed in South East Asia – on average US$1,198; • Spanish courses in Madrid most costly in North America (US$1,230); • Associated costs represent up to 70% of total pre-departure expenditures.
• The most prominent high season vs. low season difference was identified in Western Europe (17%); • New York was found to be the most expensive place to stay in a hostel; • Eastern Europe maintains attractive price levels and currently offers a 39% cheaper price than cities in Western Europe; • Non-bed income fluctuates between 13% to 47%.
Higher education • The USA is not only the most popular destination, but also the most expensive place to study; • Eastern Europe, Latin America and Asia - all destinations under US$10,000; • Tuition represents over 60% of total pre-departure expenditures; • Room and board represent up to 30% of total price, most expensive being Australia.
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WYSE TRAVEL CONFEDERATION RESEARCH PROGRAMME
WYSE Travel Confederation is committed to understanding the ever changing characteristics, motivations and needs of young travellers and the industry that supports them. The Confederation and its sector associations gather, analyse and share important research data and market intelligence with their members, academics, corporate and government decision makers and the general travelling public. Our investment in research and market intelligence informs the policies, services and products which make international travel and educational experiences exciting, safe, accessible and affordable for young people.
research programme and other contact info@wysetc.org
To compliment our existing research initiatives and provide members with the latest industry intelligence, we have established a partnership with industry research specialist StudentMarketing. 1) Industry Review Series A quarterly research-based industry review from secondary sources, compiling recently available data on industry matters that affect member’s business (youth travel market dynamics, pricing, customer preferences and marketing).
2) Survey Primary research to source up to date data from youth specialist businesses across all sectors, globally. 3) Research on Demand WYSE Travel Confederation members can commission their own research project, particular to their business needs at a discounted rate.
WYSE Travel Confederation Keizersgracht 174 | 1016DW Amsterdam | The Netherlands T. +31 (0)20 421 2800 | E. info@wysetc.org youth and student travel market
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Resources Archer, W. (2010). The i-graduate ICEF Agent Barometer. Berlin: ICEF Berlin Workshop Bhandari, R., Belyavina, R., Gutierrez, R. (2011). Student Mobility and the Internationalization of Higher Education: National Policies and Strategies from Six World Regions. New York: Institute of International Education. ISBN 978-0-87206-341-9 Buckley, R. (2006). Adventure Tourism. King’s Lynn: Biddles, Ltd. ISBN 978-1-84593-122-3 Chow, P., Bhandari, R. (2010). Open Doors 2010 Report on International Educational Exchange. New York: Institute of International Education. ISBN 978-0-87206-336-5 Hothouse Media (2006-2011). Language Travel Magazine (now Study Travel Magazine). London: Hothouse Media Richards, G. (2008). Volunteer Tourism: A Global Analysis. Atlas, Arnhem 2008. ISBN 978-90-75775-34-1 Richards, G. (2011). The STAY WYSE Youth Travel Accommodation Industry Survey 2010. Amsterdam: WYSE Travel Confederation Richards, G. (2007). The STAY WYSE Profile of the Global Youth Accommodation Industry. Amsterdam: WYSE Travel Confederation Richards, G., Welk, P. (2009). The STAY WYSE Youth Travel Accommodation Industry: Crucial business metrics and trends. Amsterdam: WYSE Travel Confederation The George Washington University, Adventure Travel Trade Association, Xola Consulting (2010). Adventure Travel Market Report WYSE Travel Confederation (2011). Youth and Student Travel Market – Data, Statistics and Trends, Industry Review No. 1. Amsterdam: WYSE Travel Confederation Over one thousand organisations, websites, brochures and catalogues were used as a source of information.
Online resources www.go2eu.com www.hostelbookers.com www.hostels.com www.hostels247.com www.hostelsclub.com www.hostelworld.com www.oanda.com http://stats.oecd.org www.staywyse.org www.unece.org
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PRICING executive summary