2009 – Travel Predictions // What Financial Crisis?
November 25, 2008 in George's Observations by George
I drink a cup of coffee every morning with the same group of guys at a downtown Peet’s Coffee shop. One of the guys asked me if the travel business was coming back. He had just flown to Dallas to see the 49er vs. Cowboys football game. He went on to say that the airports are full, the planes were all full and that many of the local hotels were sold-out. The travel business must be good right? What crisis?
Indeed the financial crisis is impacting travel for the upcoming year. One result is that airlines, hotels and rental car companies trying to increase the revenue per customer with increased fares and back-end fees. The game now is to provide a low base rate or fare then tack on four or five additional fees like checking even a first bag or adding a resort fee. However, at what point does this reduce travel demand?
To truly determine if travel is a necessity or a discretionary luxury we must ask if we need it or not. Indeed living in the 21 century is fast paced and full of stress. Viewed from this angle vacations may be a necessity for peace of mind. Sales are made by sales people and the best sales people sell face-to-face. Web conferencing is not as efficient because it is much easier to say no to a machine that it is a live person. If this is the case, then you can expect crowded airports and stable prices.
However, if people find other activities equally stress relieving and ways to create effective one-on-one sales pitches, then you can expect travel demand and prices as well to drop.
We are all interested to find out the answer because the travel industry is a leading indicator of the williness or ability of the American people to spend. Let’s hope it is a good year for travel.
George
