The Latest Travel Trade Insights from Nick Hentschel

Intro: This is Brand USA Talks Travel, elevating the conversation about international travel to the United States. Here's your host, Mark Lapidus.

Mark Lapidus [0:09]: You're one of the few people I've ever met who can truly say that you grew up in travel. As you started to think about your career, did you ever consider working in other industries?

Nick Hentschel [0:18]: Yes I did, Mark, thank you for the question. I was born into the industry with my mother, Noël, founding ATI in 1977, and I was born after that. I'm not going to say which date. But I did really look at international politics and government between college, and before coming back, I'd say, to the travel industry, because I did work many summers in various departments at ATI. And that was a valuable experience for me to bring to ATI and to the tourism industry, because international politics, of course, plays a role, as we've seen, especially cross-border international travel, which is what we're all focused on.

Mark Lapidus [0:54]: I'm very excited to welcome back Nick Hentschel to the podcast. It's been too long, Nick; welcome back to Brand USA Talks Travel.

Nick Hentschel [1:01]: Thank you so much, Mark, for having me.

Mark Lapidus [1:03]: Nick is the Chief Operating Officer at AmericanTours International. He also serves on the International Inbound Travel Association Board, and previously, Nick was on the United States Travel and Tourism Advisory Board during the Obama administration. Nick, last time we chatted, we discussed how ETI has brought over 20 million global tours to America over four decades. And because of that volume, you have a huge advantage when it comes to understanding patterns and seeing in the future, so I'm going to ask you to look a little bit in your global crystal ball. We're seeing that the outlook for international arrivals is extremely positive, with US reaching the goal set by NTTO for 90 million arrivals by 2027, perhaps even a year early in 2026. Does this trend with what you're seeing?

Nick Hentschel [1:47]: Yes. It's a little early for 2025, I would say. What we're seeing for next year, it's really in the product development stage. We're getting all of the tours and everything on sale and bookable. We'll have a clearer picture in the fall of how 2025 is trending. Stepping back to how what we're seeing is tracking in actual bookings that we're getting, versus what Brand USA and US Travel have predicted, I would say we've seen some markets come back faster, and other markets lag, the Chinese market, for instance. And that tracks with what Brand USA and, I think, US Travel had projected. But for ATI, from our perspective, we've actually recovered international back faster than I think the predictions had said, which was 2026, if I recall, from the pandemic, right? So that's a little bit different from what you're referring to with the NTTO goals. I imagine that those will be achieved in due order. But of course, what's the challenge is that some markets like China, which were such an important part of reaching those goals, is lagging for a variety of reasons.

Mark Lapidus [2:52]: Right. So we have to make up for it in other ways, right?

Nick Hentschel [2:54]: Exactly. And some of those international markets are, from our perspective, making up for it; you know, the German market is very strong. Some of the smaller European markets, like Switzerland and the Netherlands, very strong. Of course, the question is, is that some market share shift, or is it really indicative of the overall market production to the US? And the best to gauge that is to, I guess, look at who's actually coming in terms of air arrivals. I know that that's how NTTO bases their numbers.

Mark Lapidus [3:23]: I think most people know that ATI works with a massive cross-section of industry, from large to mid-size to smaller organizations and businesses. How do you keep track of this extensive international network?

Nick Hentschel [3:34]: Well, we have a really great team. Many of our team have been with us for a long time, both on the product side and the sales side. Product being the buyers that are going to the suppliers and contracting for our escorted series, for groups, for FIT, for individuals. And on the sales side, they are very much market-focused. So some are in market, some are based here in the U.S. but are traveling there constantly. That's how we do it. It's the professionalism and the knowledge of our team. And the hard work!

Mark Lapidus [4:07]: How many employees do you have?

Nick Hentschel [4:08]: Well, it's very much a seasonal business, right? So we ramp up significantly in the summer, up to about 300, including our tour directors and local reps. And then during the winter, when there's less tour business than in July, August, being the peak months, about 160, I think.

Mark Lapidus [4:25]: I'm sure we have a lot of destinations listening, so what opportunities are you seeing these days DMOs can take advantage of?

Nick Hentschel [4:31]: First of all, we partner very closely with many destinations across the USA. That partnership is often based on developing product, right? So accessing, whether it's a new attraction or a new boutique hotel that doesn't have the distribution that maybe a chain would, that's really important for the destinations to realize that operators like ATI that have the international distribution can be a solution for them, especially to lay in the base of business. And it's back to basics when it comes to this discussion, because a lot of people left the industry during the pandemic. And so what we really need in partnering with our destination partners is that touch point with the new people who are in sales at a property, at a hotel, or attraction, or transportation provider, to help our team explain the value of international leisure business that books really far out, that spends more, and stays longer in the cases of hotels. And that combined with developing the actual destination in coordination with other destinations, because what we're seeing is, with our international business, is multi-destination trips, right? So what we often do is partner with multiple destinations that make sense together and to inspire both the trade, right, and hopefully the end travel consumer, to pair these destinations together. Those are just two facets of how we like to work with our destination partners.

Mark Lapidus [5:59]: Nick, can you share an example of a U.S. tour itinerary that's been particularly successful in appealing to multi-generational families or mixed travel groups?

Nick Hentschel [6:07]: The California coast plus National Parks is one that comes to mind, where we've actually even done small group tours that cater to multi-generational, to grandparents with their kids and their grandkids. And a lot of our tour product is based around including National Park destinations, obviously, with a major gateway like Vegas, for instance. The other one that is always interesting is Route 66. We're entering the 100th year anniversary soon.

Mark Lapidus [6:35]: Yeah, we're gearing up.

Nick Hentschel [6:36]: So we've seen increased interest, and we're preparing the groundwork now to do some new exciting things for Route 66. Including with Brand USA.

Mark Lapidus [6:47]: And are you seeing any trending destinations for families?

Nick Hentschel [6:49]: For families, it depends on the market. So for the UK, the trending has and always will be Orlando with all of the parks - and not National Parks, the theme parks, Disney and Universal. In the case of the Australian market, it's actually Anaheim for proximity purposes. And what we're really wanting to develop as a family destination for international is Hawaii, because traditionally it has been more honeymooners and bucket list trips all the way from Europe, because it's so far. But as there's an increased value proposition - it's been an expensive destination coming out of the pandemic - but I just returned from there, and we met with Hawaii Tourism Authority and with some of our key clients we're visiting as well, post-IPW, we went on a special VIP FAM, if you will. It was more than a FAM, different from a FAM, but that was a key topic, right: how do we get families to come to a destination like this where there are extra costs. It's already expensive. So we're working on some unique offers that cater to making it more affordable for families to visit the Hawaiian Islands.

Mark Lapidus [7:54]: I know we'd all like to believe that the pandemic is behind us, but it's certainly still having its impact on the state of the industry. We saw FTI Touristik, Europe's third largest tour operator, file for bankruptcy recently. What are your thoughts, Nick, for the confidence of the German traveler as the industry navigates this difficult setback?

Nick Hentschel [8:12]: Look, the German travel trade is incredibly robust. FTI was one player in, really, an array of companies that sell North America. And keep in mind, FTI also, the primary destination for them was Mediterranean, was Turkey and Egypt. North America was, of course, an important destination, but it wasn't their top by any means. You have big players in the market that are going to, I think, take up some of the, let's just say, the rebookings, if you will, and the market share left by FTI, the TUIs and the DERs. And then you have the North America specialists that were already really strong, I would say, coming out of the pandemic. And I think that they'll continue to strengthen, because of the service and the know-how that they provide. ATI works with all of these companies to really bring the product from all over America that is unique, whether it's touring product or dynamic hotel product, which is an issue to get into the German market. It's a very important market for us. I expect, as sad as the failure or the insolvency of FTI is, I do not think it will have a long-term impact on the confidence of the German traveler in booking with tour operators and specialists. The companies that are in the business of selling the USA there are quite robust. I don't think that there's one company that we've spoken to that is shying away from developing their U.S. program. They're all very much interested in growing their U.S. program.

Mark Lapidus [9:44]: Thanks so much for that honest and detailed answer, Nick. I really appreciate it. While I was preparing for this interview, I took a look at ATI's website, and found in the What's New section, What's Next magazine. Looks like a fantastic way to inspire and engage travelers during their tours. What's the strategy behind the magazine, and how do you collaborate with DMOs to showcase different destinations across the U.S.?

Nick Hentschel [10:05]: First of all, we work with Brand USA on it, in the latest feature. We do it annually. We update the in-tour magazine, like you have in the back of the plane seat. We distribute them to all of our tour customers, and also our Drive America customers that are booking the package. The purpose of it is to inspire their next trip to the USA. Many of them are coming for the first or second time. If they're doing a classic Western discovery, two-week trip around the Western National Parks and California coast, they are already, by default, a qualified travel consumer that will come back to the USA. And so the question is, what are they going to book next? And that's the purpose of the magazine, which also is in digital form and can access on their phone. And so we work with the destinations for them to inspire those customers about their next trip, and not just to a single destination, but as I spoke about earlier, a multi-center trip, right? So we often work with multiple destinations in featuring recommended road trip itineraries, which I know is also what Brand USA has really focused on in terms of their trade outreach, right, are those iconic road trips. And ATI is really well positioned for that, because our focus is really that kind of product, and we've invested a lot in developing our own platform, Drive America, on americantours.com, which really allows for the trade travel agents/advisors to customize their own recommended Great American road trip and then sell it to their customers. It's all correlated and complementary, and destination partners play a pivotal role in the product development that we also, I like to think, are instrumental in.

Mark Lapidus [11:47]: Let's go from old school to new school and talk a little bit about artificial intelligence. What conversations are you having around artificial intelligence at ATI?

Nick Hentschel [11:56]: Well, initially, it was probably similar to what the destinations were looking at. It was, like you mentioned, ChatGPT, and how do you create new content quickly. But "How authentic and accurate is it?" was my first response. I did some tests around it, putting in ChatGPT, "Plan a family trip around New England with sailing and lobster," right?

Mark Lapidus [12:19]: Sure.

Nick Hentschel [12:20]: And it did put together a really interesting itinerary. There were problems with it. There's going to need to be a lot of advancement for it to take over the role of actual travel advisors. In my view, it will, I think, supplement the trade activities and the advice given by travel experts, shall we say - actual people. But where I think it might be really interesting for us in the shorter term is around content for hotels and attractions, which is a huge portfolio. We offer over 20,000 hotels across North America. Several thousand attractions and transportation providers are also featured and sold by ATI. So getting up updated content for all of that, it's still not automated to the degree that it should be. And I would think that there are going to be solutions with AI that really streamline that process. So that's where we're focused. But as you said, it's not as integrated into as many businesses or industries as I think the media reports it to be.

Mark Lapidus [13:19]: ATI was the first receptive in China, it's built a lot of relationships there. We're getting a lot of questions about China, and I'm sure you are, too. What are you hearing about the return of China specifically, and Asia in general?

Nick Hentschel [13:30]: First of all, travel has rebounded significantly in China, domestically and then regionally. And that's how really the travel business from China outbound grew initially, right? It was, first, to Southeast Asia, Japan, Korea, and then the U.S. was the next destination, if you will. Look, I think from our perspective, it's going to take years to recover, in some part because of the ongoing political landscape, if you will. I think it would take a change in the recommendation, shall we say, from the Chinese government that Chinese customers should go back and visit the U.S. That's something that's different from a lot of other markets. They don't really listen to what is recommended in the same way, that's one aspect. I think the other is, rebuilding the air networks, and that takes time as well. Other markets are also slower to recover, other Asian markets, in Japan, Korea being the next largest, than international markets in Europe. For some of the same reasons, maybe it's a cultural reluctance coming out of the pandemic. But what I really think it likely is, is just the cost. You look at exchange rates, and the weak Yen versus the Dollar, that has the most, I'd say, prevalent role in impacting demand.

Mark Lapidus [14:47]: Nick, before we go, if my math is correct, ATI's 50th birthday is coming up in 2027. Not that far away, really. Have you formed your celebration committee yet?

Nick Hentschel [14:56]: Good question, Mark. We usually plan our our events 6-9 months in advance, but that one we'll probably do a little bit further in advance. We do like a good client and supplier special event. We did a really great one in LA, because it's our hometown, over IPW. So the short answer is no, we haven't started any planning on that yet, but we are very much looking forward to it, and it'll be something fun and interesting. I just have to first pick the location, right? Or maybe it'll be multiple locations. It's going to be here before you know it, right? There's a lot of things that seem like that that are going to be here in no time: we mentioned Route 66 earlier, the LA Olympics, obviously, Paris is happening this summer, but it'll be here before you know it in 2028, and we'll be 51 by then.

Mark Lapidus [15:43]: You know, the truth is, I just I'm going to be the first on record to ask you the question. And that way, you're going to have to remember to invite me to the party.

Nick Hentschel [15:50]: For sure.

Mark Lapidus [15:51]: Thank you so much for joining me, Nick. It's always a pleasure.

Nick Hentschel [15:54]: Thank you, Mark.

Mark Lapidus [15:55]: And that's it for Brand USA Talks Travel. I'm Mark Lapidus, thanks for listening.

Outro [15:59]: Your feedback is welcome. Email us at [email protected] or call 202-793-6256. Brand USA Talks Travel is produced by Asher Meerovich, who also composes music and sound. Engineering by Brian Watkins. With extra help from Bernie Lucas, Nthanze Kariuki, and Casey D'Ambra. Please share this podcast with your friends in the travel industry. You may also enjoy many of our archived episodes, which you can find on your favorite podcast platform. Safe travels!

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