Travel Still Working

March 15, 2009       Don McNamara      

The direction in which the U.S. economy is traveling is straight downward, but many Americans are still traveling the world, utilizing packages available through travel auctions that benefit nonprofits.

Travel charity auctions have felt the pressure also, but auction agencies, hotel chains and airplane and cruise lines are responding with a flexibility that has made the travel auction segment a bright spot in the darkness.

Between affluent people who have not felt the pinch and those less well-off who want to get away but are willing to settle for shorter stays closer to home, travel auctions continue to work as fundraising vehicles.

For example, cMarket, a Cambridge, Mass.-based online auction platform that provides fundraising through a wide range of vehicles, including travel packages, raised more than $20 million through online charity auctions in 2008, an increase of 25 percent compared to 2007, according to Helen Stefan, director of public relations.

Of that total, lower-priced travel items (less than $500), sold 95 percent of the time, generating $600,000. Mid-priced travel items ($500 Ð $2,500) sold 89 percent of the time, generating more than $1.9 million. High-end travel items (more than $2,500) sold 59 percent of the time, generating more than $1.5 million.

“Travel is by far our most popular and sought-after category,” Stefan said. This is especially true for low- and mid-range packages, she added.

Despite an early decline when the Dow Jones tanked, demand has rebounded, although with some limitations, said Stuart Paskow and Michelle Cohen of Mitch-Stuart Inc., a provider of incentive travel packages with offices in Florida, California and England.

“Of course, when the economy first crashed everyone decided to stay home and not go away,” Paskow said. “What became popular was ‘getaways,’ long weekends rather than bigger vacations.”

He said travel package auctions have “cut down on the number of days, but when the panic kind of subsided our more popular trips to Europe Ð for example, ‘culinary trips’ to places like Paris Ð started to pick up again.”

Versatility and adaptability have been the keys.

“We’ve pared down, so there’s an option in addition to our normal catalog,” Cohen said. “For example, there will be a package that doesn’t offer airplane tickets. That means that people are driving or using their air miles. Before, when they could get airfare for $199, that was so good that they didn’t use their air miles. Now, they’re using their air miles in combination with the travel package they buy.”

Interestingly, factors other than practicality have entered the equation. “I think some people have money but feel guilty,” Cohen said. “They can go to Europe but not feel guilty. Why? Because (through an online auction) they are helping a charity.”

Paskow and Cohen also said that people are finding other ways to keep traveling to faraway destinations by making adjustments, such as rejecting five-star accommodations in favor of something less extravagant.

In addition, bundling services together for travel packages is becoming more prevalent. Paskow said that all-inclusive packages or trips that include, for example, tours of a city, are in demand, as people want more for their dollar. That is one reason why cruises are still popular. Stefan echoed this sentiment, noting that cMarket statistics show that airlines have cut flights to the Caribbean by 20 percent but that cruise lines are reporting full occupancy. Traditionally, cruises offer travel, lodging, food and entertainment all for one price, although Paskow said some air packages are now going the same way.

In addition to donor satisfaction, however, there is exposure, and not just for the charity. Nonprofits find that they move into the consciousness of potential donors, but the same is true for organizations such as cMarket and Mitch-Stuart, as well as travel destinations and carriers as well.

In an email message, Stefan said, “cMarket is working with resorts, spas and hotels to place their excess ‘inventory’ in charity auctions and the nonprofit then sells it and keeps the cash. In exchange, the destination gets no-cost, national brand exposure to an affluent consumer audience, filled rooms with guests who spend money on other property offerings and additional nights, potential future customers and marketing data on pre-qualified non-winning bidders.”

As an example, Stefan cited Cancun Vacations, which donated several four-night resort stays in 2008. The company gained 104 customers, 234 qualified prospects, 19,000 click-throughs and association with dozens of high-equity charities. The nonprofit, which she declined to identify, received 39 percent of the retail market value of the package.

Even the auctioneers are benefiting. Paskow said that Mitch-Stuart has an increased demand for information.

He also said online auctions comprise a fundraising tool that does not require nonprofits to hire extra staff. “So there’s no risk,” he said. “The nonprofit wins, and the donor wins.” Cohen also pointed out that the economic mess that has forced the business world to scale back its support of the philanthropic sector has brought its own kind of innovation.

Corporations that have needed to pull back on their support of nonprofits are having internal auctions for their employees,” Cohen said. “Whatever proceeds there are go to the nonprofit. So corporations give their employees a benefit, cheaper travel, and they can give a nice donation.” In addition, businesses get positive publicity for being good to employees and to the sector.

Cohen said that AT&T did that with the United Way and, although only a few such arrangements are in place now, they will become more prevalent over time.

Paskow predicted that the online auction travel industry will continue as it is now for about 18 months but will return to pre-meltdown activity in about two years.

“The key is being able to adapt to circumstances,” he said. “We issue a new catalog each quarter. We are keeping a close watch on what sells.” NPT