Posted by Diane Clarkson on February 17, 2009
[Posted by Diane Clarkson]
I was speaking with a friend today about the state of the economy and its impact on travel. This friend is a survivor of the travel industry’s catalog of crisis over recent years: 9/11, SARS, airline bankruptcies, soaring fuel costs. His view was that the travel industry has become complacent in its approach to crisis.
It’s true that one of the oft-repeated refrains I hear is “people still want to travel”. Several statistics announced last week render this hope like clinging to an untethered life ring.
According to the Association of Corporate Travel Executives, 71% of its member companies now plan to spend less on travel this year than in 2008. This is twice as many U.S. companies as they previously expected.
Convention travel is suffering from a rash of cancellation caused by diminishing budgets and the so-called “AIG effect”.
Demand for international flights – the most profitable product for airlines – is falling. ITA reports U.S. international air travel was down 5% in November 2008 compared to November 2007. According to USA Today, there will be 5.3% fewer international flights in March 2009 compared to last year.
Inbound tourism is facing challenges. According to the ITA, total international visitation in November 2008 was down 9% compared to November 2007.
All of this is happening despite the belief that “people still want to travel”. The issue is not desire. The issue is that an alarming number of people cannot afford to travel.
So I will offer a couple of short thoughts on an immense topic.
Travel companies must be developing scenarios for the next couple of years based on bad, worse and disastrous possibilities.
As we wrote about at the end of last year in a report called “Travel Advertising in a Slowing Economy”, travel advertisers are becoming less brand-driven and more direct-response focused. These marketers must address how this strategy will affect brand equity and the cost of recapturing it against the above scenarios.
I don’t believe the travel industry is complacent. Most travel professionals that I know are strategic, realistic and very concerned. Those who were optimistic may be a bit less so this week.