The ALTO Deloitte Language
Travel Industry Survey 2014
Talking numbers
Deloitte Malta, December 2014
About ALTO
Bringing together the Leaders of the Language
Travel Industry
ALTO is the only independent forum that successfully
brings together leading educational agencies, top
quality international and domestic language schools,
national associations and accreditation bodies as well
as organisations that provide auxiliary services to the
industry as one global community. The association’s
Board Members are strongly committed to the on-going
development of an industry-specific association that
offers real value to its members.
ALTO is not only unique in that it welcomes decision
makers from all areas of international language
travel, but also because it’s the only truly international
association, with a membership from over 30 different
countries. This gives members an unparalleled global
insight into the industry as a whole.
ALTO Mission
To provide a global platform for leaders and decision
makers within the language travel industry to further
develop and grow the industry through networking,
professional development, idea and information
exchange.
Industry Survey
The language and educational travel industry is in many
ways an immature industry, with a frustrating lack
of data available about the industry. Very few of the
destination markets and an even smaller number of the
source markets have, as yet, recognised and embraced
the need for pertinent, useful and comprehensive
data. This type of data can be effectively used for
benchmarking purposes and helps to create a healthier
and more transparent market environment, whilst
pointing out weaknesses and areas for improvement.
Equally importantly it can be used as a tool when
lobbying for a more optimal regulatory structures and
stable visa policies between source and destination
countries.
ALTO has commissioned a world-wide industry data
collection exercise, which was project managed by
Deloitte through their Maltese office. This assures the
complete confidentiality, impartiality and professionalism
that a top four Professional Service company can bring.
2
The ALTO- Deloitte Language Travel Industry Survey
report is the first one in the industry of this scale and
ALTO’s plan is to make this an annual benchmarking
report that includes concise and meaningful data.
During the next few years we hope to develop this to
the one and only report that all key stakeholders of the
industry, including language schools, educational agents,
associations, lenders, investors and service providers
will refer to when trying to find comprehensive
benchmarking data about the industry.
The ALTO- Deloitte Language Travel Industry Survey
report will be a very important tool for ALTO in its aim
to improve the international profile of the language
travel industry within the global economy. It will also
help organisations of all sizes to find ways of aligning
themselves to the national and international industry
benchmarks outlined in the report and thus creating
more professional and more profitable businesses that
benefit the industry as a whole.
We would like to emphasise that this is the first one
in the series of benchmarking reports and although
the data is representative of the industry, we expect
to publish even more accurate data in the future
with higher response rate as awareness of the survey
grows. This is especially true for the separate country
analysis. This survey provides a brief an overview of the
industry and should not be relied upon as an in depth
representation of the industry as a whole.
We are delighted with the response to the first of what
will be a regular survey, and look forward to even more
wide- ranging and representative data in future versions,
as participation continues to grow, and appreciation for
the need of accurate and focussed information grows.
The ALTO Board would like to take this opportunity
to thank organisations who participated in the data
collection and supported the project by providing
information about their business performance. We
would like to encourage them to spread the idea and
talk to their peers about the importance of participation
in order to make this a truly global survey.
For more information about ALTO, please visit our
webpage www.altonet.org, contact us by e-mail
[email protected] or by phone on +44 203 239 6551.
Contents
4
Sponsors
Section 1 - Schools’ Survey
6
Participant profile
Total participation; Combined revenue; Number of participants by country as
a percentage of total; Number of schools by country; Percentage of total
student weeks by country; Percentage of total net revenue by country
7
Business mix
Percentage of total participants by language taught; Student weeks; Gross
and net revenue; Gross and net revenue; Booking source mix
10
Student mix
Top 10 student nationalities; Age mix
11
Key statistics
Average length of stay; Accommodation take-up; Average turnover per
week
12
14
Trends 2014 vs. 2013
Student weeks; Revenue; EBITDA; Country percentage change
Section 2 - Agents’ Survey
Perceived impact on participants’ business
Perceived impact on participant’s business; Respondent comment quotes
16
Participant profile
Total participation; Combined revenue; Number of participants by country as
a percentage of total; Number of agents by country; Percentage of total
student weeks by country; Percentage of total commission reported by
country
The ALTO Deloitte Language Travel Industry Survey 2014
© ALTO/Deloitte. All rights reserved.
Source of data: Deloitte
Images courtesy of Deloitte
Deloitte Financial Advisory Principal: David Bonett
Tel:+356 2343 2000 Fax:+356 2134 4443
E-mail: [email protected]
17
Business mix
Student weeks; Commission revenue; Booking source mix
18
Student mix
Top 10 junior student nationalities; Top 10 adult student nationalities
19
Key statistics
Average commission per student week; Age mix
20
22
Trends 2014 vs. 2013
Student weeks; Revenue; EBITDA; Country percentage change
Perceived impact on participants’ business
Perceived impact on participant’s business; Respondent comment quotes
The ALTO Deloitte Language Travel Industry Survey 2014
3
Sponsors
guard.me is among the world’s largest insurance
providers in international education — protecting
individuals studying and working abroad, including
full- and part-time students, faculty members, and
participants in exchange, co-op and internship
programs. As the insurer of choice for language schools,
school boards, and private and public colleges and
universities, guard.me is trusted by over 400 partner
agents, organizations, schools and institutions globally.
StudyPay is the Education Payments division of
Baydonhill Ltd, one of the largest non-banking Foreign
Exchange payments companies in the world. StudyPay
was created five years ago and has evolved to provide
a specialist and an industry tailored payments solution
for the international student travelling and studying
overseas. StudyPay is positioned to be an international
payments solution for agencies, educators, associations,
industry providers and parents.
As a full-service insurance provider, each policy is
managed by our own staff and processed by our
in-house team. guard.me offers on-line services such
as enrolment and fulfillment; fast, efficient Claims
Management; and 24/7 Telephone Assistance service
world-wide in multiple languages.
The StudyPay offering addresses the specific needs
of the education industry by offering a transparent
alternative to excessive bank charges; uncompetitive
exchange rates, exorbitant intermediary bank
deductions; incoming payment reconciliation
nightmares; currency fluctuation exposures and the
security issues of students carrying cash.
A five-time winner of Study/Language Travel Magazine’s
STAR AWARD for International Insurer, guard.me
became the first SuperStar award winner in 2011.
guard.me collaborates with educators to create
customizable and affordable solutions. We’ve built our
reputation on the belief that insurance is something our
clients should never have to worry about. That insurance
should eliminate stress, not cause it. That even the
smallest detail deserves our fullest attention. Most
importantly, guard.me works with you to protect your
students and your reputation. Our client relationships
are a matter of trust. For more information please visit
us: www.guard.me.
At Deloitte, we know you need more than a functional
solution to your business problems, you need real
industry insight. Making informed decisions is key to the
effective management of all business organisations. With
close to 20 years of experience in analysing performance,
costs, trends, and general market information of
the tourism industry, the Deloitte Malta firm is well
established to provide advisory services and business
solutions to operators in this sector. To learn more please
contact David Bonett at [email protected].
4
StudyPay is proud to be a sponsor of the first ALTO and
Deloitte, Language Travel Industry Report as this original
and insightful data will highlight potential trends and
regions that may need more support from industry
providers like us.
For more information please visit https://www.
baydonhill.com/education.
Other sponsors
Section 1:
Schools’ Survey
The ALTO Deloitte Language Travel Industry Survey 2014
5
Participant profile
Total participation:
Combined net revenue of:
108 Participants
304 Schools
USD$507.8 million
Number of participants by country as a percentage of total
Number of schools by country
9%
17%
6%
8%
8%
13%
6%
22%
13%
3%
6%
11%
8%
22%
11%
36%
Percentage of total student weeks by country
Percentage of total net revenue by country
8%
15%
8%
16%
20%
22%
17%
19%
10%
8%
14%
7%
9%
Australia
6
12%
Canada
9%
Ireland
South Africa
Spain
United Kingdom
8%
United States
Other
Business mix
The first ALTO Language Travel Industry survey attracted 108 respondents from the
language school segment, representing a total of 304 individual schools.
Percentage of total participants by language taught
2%
2%
6%
Respondent organisations were asked to complete one survey per country. Only
countries with five or more respondents were analysed separately. The rest were
grouped under the “Other” category. This category includes respondents from:
Argentina; China, Dominican Republic; Ecuador, Egypt, France, Greece, Japan, Malta,
Mexico, New Zealand, Poland, Portugal, Thailand.
5%
6%
8%
59%
13%
English
Japanese
Spanish
French
Portugese
Chinese
German
Other
Of the 108 respondents, 77% (83 respondents) provided complete data in respect of
student weeks and revenue figures. Accordingly the student weeks and revenue charts
opposite and below are based on 83 respondents representing 228 schools.
Whilst UK-based schools accounted for 22% of the respondent base and 36% of the
number of schools, only 8% of the reported weeks and 7% of the reported revenue
related to UK schools. This is mainly due to the profile of UK respondents primarily
comprising smaller schools. The opposite appears to be the case with Canada, Ireland
and schools in the “Other” category, which represented 8%, 6% and 8% respectively
of the total number of schools but accounted for 20%, 14% and 16% of the total
reported net revenue.
Student weeks:
Junior/Adult split and analysis by course type
16%
5%
6%
11%
26%
84%
Junior student weeks
69%
Adult student weeks
4% 1%
78%
Junior general language courses
Adult general language courses
Junior specialised language courses
Adult exam preparation courses
Junior academic year courses
University pathway courses
Adult specialised language courses
Executive language courses
The ALTO Deloitte Language Travel Industry Survey 2014
7
Business mix cont.
Gross and net revenue: Junior/Adult split
Gross revenue
Net revenue
25%
27%
75%
73%
Junior students
Adult students
Gross and net revenue: By revenue type
Gross total revenue
Net revenue breakdown
5%
6%
25%
29%
70%
Tuition revenue
8
Accommodation revenue
65%
Other revenue
Tuition services accounted for 70% of total gross
revenue and 65% of net revenue indicating
that commissions are higher on tuition than on
accommodation and other services.
Booking source mix
6%
9%
Junior business accounted for 16% of weeks but 25% of
gross revenue and 27% of net revenue. This is explained
by the fact that junior revenue per week tends to be
higher and also that junior business tends to include
a more significant element of non-tuition items which
tend to carry a lower commission.
85%
Agents
Internet
The survey respondents reported that 85% of their
bookings, on a weighted average basis, were generated
through agents.
Walk-in
The survey respondents reported that
85% of their bookings, on a weighted
average basis, were generated
through agents
The ALTO Deloitte Language Travel Industry Survey 2014
9
Student mix
Top 10 student nationalities
Weighted average top 10 ranking based on percentage of student weeks.
8
7
6
French
Swiss
Spanish
3
Italian
2
9
Turkish
5
10
South
Korean
Chinese
Saudi
1
Brazilian
52% of the respondents’ students were aged between
19 and 25.
Age mix
6%
1%
13%
The respondents reported that approximately 29% of
students are below the age of 18.
14%
15%
22%
30%
10
Younger than 10
10-15
16-18
19-21
26-35
35+
22-25
Elsewhere, the schools reported that only 16% of weeks
related to junior students. This statistic is consistent
with the reported average length of stay for juniors (2.3
weeks) being significantly below the average length of
stay for adults (6.1weeks).
4
Japanese
Key statistics
Average length of stay (weeks):
Accommodation take-up (%)
Percentage of students who take up accommodation with the
schools - Weighted average on the basis of student weeks
8
100
7
94
80
6
79
6.1
5
60
5.1
64
4
40
3
2
2.3
20
1
0
Juniors
Adults
0
Total
Juniors
Adults
Total
Average turnover per week (USD$):
1,000
923
800
816
600
616
629
613
622
400
200
316
363
322 333
374
403
496
459
492
395
280
281
233 240
332
368
373 390
358
386
286
0
Overall
Australia
Canada
Ireland
South Africa
Junior
Adult
Spain
United Kingdom
United States
Other
Total
As mentiond previously, the profile of UK respondents
comprised a significant number of smaller schools. It
would appear that the UK sample profile also included
a number of premium junior programs resulting in a
reported average junior turnover per week of USD$923
for the UK. Canada also reported a significant average
turnover per week in the junior segment. Junior weeks
represented 12.8% and %17.5% of total student weeks
for UK and Canada respectively.
The ALTO Deloitte Language Travel Industry Survey 2014
11
Trends 2014 vs. 2013
Student weeks:
+9% Junior
+16% Adult
Junior student weeks trend by percentage of respondents (%)
Adult students weeks trend by percentage of respondents (%)
50
60
60
47
50
40
40
30
30
20
23
20
19
10
Decrease
+10% Junior
+16% Adult
21
10
0
Revenue:
30
No change
Increase
0
Decrease
No change
Increase
Junior revenue trend by percentage of respondents (%)
Adult revenue trend by percentage of respondents (%)
50
60
60
48
50
40
40
30
30
20
22
20
10
0
10
Decrease
No change
EBITDA: Overall (%)
EBITDA trend by percentage of respondents
+15% Overall
60
Increase
50
50
40
30
29
20
21
10
0
12
30
Decrease
No change
Increase
0
24
16
Decrease
No change
Increase
Country percentage change:
Weeks
Canada
+16%
US
+16%
UK
+11%
Ireland
+8%
Spain
+14%
Other
+10%
S. Africa
+16%
Australia
+24%
Revenue
Canada
+19%
US
+12%
UK
+9%
Ireland
+10%
Spain
+14%
Other
+10%
S. Africa
+20%
Australia
+21%
The ALTO Deloitte Language Travel Industry Survey 2014
13
Perceived impact on
participants’ business
Perceived impact on participants’ business (%)
School’s initiative*
63
Competitor school activity
26
64
Competitor country activity
26
50
10
38
My country’s government
policies
72
Economic issues in source
countries
12
15
80
0
17
20
40
60
Negative impact
Neutral impact
Positive impact
*It appears that most respondents may have misinterpreted the nature of the initial question. The statistic
above would imply that respondents felt that their own initiatives had a negative impact on their business.
Respondent comment quotes
“Russian EU relations”
“Ebola could
threaten our
business”
“Media reports
of violence in
our country”
“Lack of barriers to
entry is attracting
increased competition,
driving down prices”
13
10
60
Currency exchange rates
14
11
“Currency
appreciation
is making us
uncompetitive”
“Visa regulations
being tightened
on non national
students”
10
23
80
100
Section 2:
Agents’ Survey
The ALTO Deloitte Language Travel Industry Survey 2014
15
Participant profile
Total participation:
Combined revenue of:
64 Participants
127 Agencies
USD$168.4 million
Number of participants by country as a percentage of total
Number of agencies by country
14%
37%
8%
31%
45%
11%
4%
10%
22%
Brazil
18%
Germany
Percentage of total student weeks by country
Russia
Spain
Other
Percentage of total commission reported by country
16%
26%
36%
46%
22%
22%
8%
6%
8%
10%
Brazil
16
Germany
Russia
Spain
Other
Business mix
Student weeks
Commission revenue
29%
35%
71%
65%
Junior students
Adult students
The survey attracted 64 participants, representing a total
of 127 agencies from 28 countries.
Booking source mix
8%
24%
50%
17%
1%
Direct to agents’ sales team
Bookings through schools
Other
Sub-agents
Internet
As with the language schools surveys respondent
organisations were asked to complete one survey
per country and only countries with five or more
respondents were analysed separately. The rest were
grouped under the “Other” category. The “Other”
category includes: Australia, Belgium, Bulgaria, Canada,
Colombia, Ethiopia, France, Indonesia, Iran, Ireland,
Italy, Japan, Jordan, South Korea, Mexico, New Zealand,
Poland, Portugal, Slovak Republic, Switzerland, Ukraine,
United Arab Emirates, United States, and Vietnam.
Of the 64 respondents, 72% (47 respondents) provided
us with complete data in respect of student weeks and
revenue figures. Accordingly the student weeks and
commission charts opposite and below are based on 47
respondents representing 94 agencies.
The ALTO Deloitte Language Travel Industry Survey 2014
17
Student mix
Top 10 junior student destinations
Weighted average top 10 ranking based on percentage of student weeks.
3
Canada
1
UK
4
Ireland
5
2
6
10
Germany
Belgium
France
8
Malta
USA
7
Australia
9
New Zealand
Top 10 adult student destinations
Weighted average top 10 ranking based on percentage of student weeks.
1
4
7
Canada
Ireland
3
USA
UK
France
6
Spain
2
Germany
9
8
Malta
18
10
5
South
Africa
Australia
Key statistics
Respondents from Russia
and “Other” source
markets reported higher
average commission
income per student week
than Brazil, Germany and
Spain.
Average commission per student week (USD$):
150
139
120
112
90
82
60
69
65
30
0
Brazil
Germany
Russia
Spain
Other
Age mix
6%
3% 1%
17%
20%
16%
34% of the respondents’ students were aged 18 or
under which is consistent with the 35% junior student
share of overall student weeks.
19%
17%
Younger than 10
10-15
16-18
22-25
36-45
46+
26-35
19-21
The ALTO Deloitte Language Travel Industry Survey 2014
19
Trends 2014 vs. 2013
Student weeks:
-2.5 Junior
+4.8% Adult
Junior student weeks trend by percentage of respondents (%)
Adult students weeks trend by percentage of respondents (%)
40
40
40
35
35
30
25
30
31
29
25
20
20
15
15
10
10
5
5
0
38
35
Decrease
No change
Increase
0
27
Decrease
No change
Increase
Revenue:
Junior revenue trend by percentage of respondents (%)
Adult revenue trend by percentage of respondents (%)
0.0% Junior
+1.7% Adult
50
50
40
30
30
29
20
10
10
Decrease
No change
EBITDA: Overall (%)
EBITDA trend by percentage of respondents
-3.0% Overall
40
30
25
Increase
39
35
33
28
20
15
10
5
0
20
31
29
20
0
44
40
42
Decrease
No change
Increase
0
25
Decrease
No change
Increase
Whilst more agents reported improvements in revenue
and profitability than those reporting declines, the
overall trend for Junior weeks was negative and the
overall EBITDA trend was -3%.
Country percentage change:
Weeks
Russia
-21%
Germany
0%
Spain
0%
Brazil
+8%
Other
-5%
Revenue
Russia
-13%
Germany
+4%
Spain
-2%
Brazil
+6%
Other
0%
The ALTO Deloitte Language Travel Industry Survey 2014
21
Perceived impact on
participants’ business
Perceived impact on participants’ business (%)
14
My agency’s initiative
10
76
71
Competitor agency activity
Destination country’s
government policies
(non-visa realted)
20
30
61
Destination country’s visa
policies
63
Economic issues in my
country
32
20
60
Neutral impact
Positive impact
Respondent comment quotes
“Lack of regulation is
attracting competitors
into industry which
increases pricing pressure”
22
“Soccer World Cup
impacted on the
July junior programs
resulting in less
student weeks”
“Late payment
of fees results in
cash flow issues”
14
8
40
Negative impact
5
8
81
Currency exchange rates
“Increasing
demand for
academic
programs”
9
78
0
9
“Regional turmoil“
“Media reports
of violence in
our country”
80
10
100
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The ALTO Language Travel Industry report by Deloitte
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Agencies performance and market trends.
Why participate?
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Country supplements
(available to ALTO members
and survey participants)
Schools
For more information please contact:
David Bonett
Principal - Financial Advisory
Tel: +356 2343 2348
Email: [email protected]
•Australia
•Canada
•Ireland
•South Africa
•Spain
•United Kingdom
•United States
Agencies
Louisa Bartolo
Senior Analyst - Financial Advisory
Tel: +356 2343 2346
Email: [email protected]
Justin Feeney
Senior Analyst - Financial Advisory
Tel: +356 2343 2345
Email: [email protected]
•Brazil
•Germany
•Russia
•Spain
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