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AH&LA Resort Conference

AH&LA Resort Conference. Michael R. Grillo, Vice President American Express Business Insights September 19 th , 2011. Agenda. American Express Business Insights The US Consumer Post Recession The New Normal Lodging Industry Trends, Domestic and International Visitors

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AH&LA Resort Conference

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  1. AH&LA Resort Conference Michael R. Grillo, Vice President American Express Business InsightsSeptember 19th, 2011

  2. Agenda • American Express Business Insights • The US Consumer Post Recession • The New Normal • Lodging Industry Trends, Domestic and International Visitors • Key Traveler Segments to Focus on for 2011 and Beyond • Final Thoughts and Q&A

  3. American Express Cardmembers Approximately 90M Cards 5B+ Annual Transactions 127 Markets $713B Overall Spend

  4. Recession & Recovery US SPEND TRENDS

  5. OVERALL SPEND GROWTH Spend Growth by Card Type Pre Recession Recession Recovery

  6. THE GREAT RECESSION YOY Spend Growth by Quarter Q1 -09 Q2-09 Q3-09 Q4-09 Travel -21% Retail -12% Entertainment -13% Dining -15%

  7. THE UNEVEN RECOVERY YOY Spend Growth by Quarter Travel Q1 -10 Q2-10 Q3-10 Q4-10 9% Retail 2% Entertainment -1% Dining -3%

  8. THE UNEVEN RECOVERY? YOY Spend Growth by Quarter Travel Q1 - 2011 Q2-2011 2% Retail -1% Entertainment -2% Dining -6%

  9. The New Normal US consumer behavior

  10. THOUGHTS ABOUT THE NEW NORMAL Luxury Is Back Value Is Sticking • Spending shifted from dining to supermarkets while affluent consumers shopped more with discount retail • Luxury fashion spending returned first but consumers are deal seeking; newcomers are younger and less affluent Dining Out is Changing Necessities Are Being Redefined • QSR increased its share of restaurant spending by more than 15% and bars have seen greater than 40% increase since the start of the recession • Smart and wireless phone and service have increased through the recession Generations Matter Health Matters • Boomers and Seniors cut back first and haven’t come back as strong while Gen X and Y have returned to spending • Affluent consumers and Gen Y have prioritized a healthy lifestyle of fitness, high-quality foods, and caring for oneself since the pre-recession period

  11. LODGING INDUSTRY TRENDS

  12. Lodging Spend has Picked Up and Maintains its Trajectory for the Luxury and Upscale Segments Domestic Visitor Spend Index in Lodging Recovery Recession Spend index Base Period: 2008=100 International Visitor Spend Index in Lodging Recovery Recession

  13. Gen Y Travelers are Leading the Road to Recovery Consumer Spend on Lodging Spend index Base Period: 2008=100 Recovery Recession

  14. Gen Y, are Growing ALL tiers of the Lodging industry, especially on the high and low ends H1 2011 YOY Visitor Growth by Lodging Tiers Retail Travel Dining LUXURY UPSCALE MIDSCALE ECONOMY 9% 6% 6% 7% Gen Y 2% 0% -1% 10% Gen X 0% -4% -4% 2% Boomers -4% -10% -9% -8% Seniors

  15. …..and Spending! Retail Travel Dining H1 2011 YOY Visitor Growth by Lodging Tiers LUXURY UPSCALE MIDSCALE ECONOMY 22% 3% 8% 40% Gen Y 6% 14% 2% 43% Gen X 3% 2% -3% 30% Boomers -2% -5% -7% 9% Seniors

  16. Who are the key Traveler Segments to Focus on for 2011? Business Travellers International Visitors Key Leisure Segments

  17. Business and Visitor Spending observes strong rebound in 2011 Spend Index H1 2007=100 Visitor Business Domestic Leisure

  18. Domestic Business Travellers Remain Valuable % Business vs. Leisure (H1 2011) +4% -5% Leisure Business Spend

  19. International Travelers For Business Are Also Rebounding % Business vs. Leisure (H1 2011) +2% -2% Leisure Business Spend

  20. Top International Feeder Markets Year Over Year Change in Spend, H1 2011 Canada United Kingdom Mexico Australia France 18% 11% 19% 30% 11% 17% 17% 17% Business 3% 3% Leisure MAPS to be UPDATED

  21. Top International Feeder Markets Year Over Year H1 2011 Percentage Point Change Canada United Kingdom Mexico Australia France Business Amex Overall 1.3% 3% 0.9% 0.7% 1% 0.0% 0.0% 0.1% 0.9% 0.9% Leisure Amex Overall MAPS to be UPDATED

  22. Top International Growth Markets Year Over Year H1 2011 Australia Brazil Canada Japan France 11% 18% 17% 14% 13% 22% 30% 19% 17% 17% Business Amex Overall Leisure Amex Overall MAPS to be UPDATED

  23. Newcomers in the Recovery Period Have Gained Share Spend Share for All Lodging

  24. Younger Consumers (Gen X and Gen Y) Are Becoming More Important Spend Share for All Lodging

  25. The “Recession Proof” Traveler is Showing Resilience

  26. Final Thoughts and Q&A

  27. Extra Slides

  28. SPEND BEHAVIORS BY GENERATION 2010 YOY Spend Growth by Industry Retail Travel Dining Entertainment 4% 15% 0% 0% Gen Y 4% 8% -2% -3% Gen X 1% 4% -5% -3% Boomers -2% 2% -6% -6% Seniors

  29. SPEND BEHAVIORS BY GENERATION H1 2011 Spend Growth by Industry Retail Travel Dining Entertainment 1% 6% -6% 6% Gen Y 1% 2% -5% -7% Gen X -2% -1% -7% -1% Boomers -5% -7% -10% -9% Seniors

  30. RETAIL BEHAVIOR

  31. THE PRE-RECESSION LUXURY FASHION CONSUMER Spend Growth

  32. NEWCOMERS ARE DRIVING GROWTH IN THE RECOVERY Spend Growth by Consumer Segment 25% stopped spending in 2010 but are starting to capture some share of luxury spend in 2011 Lost share in 2010 and have not recaptured it back Continue to hold on to the gain in share Fewer in number but higher spend per visit than pre-recession Aspirationals

  33. GENERATIONAL TRENDS - LODGING

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