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A gloomy travel market for 2010 will follow an ugly 2009
Slow improvements to the economy, according to some industry analysts, should push demand for tickets and hotel rooms higher – not to mention services related to the convention and meetings business. But, the baseline is set pretty low, with 2009 having been so weak. American Express, the largest travel agency in the world, doesn't see a recovery coming anytime soon.
The bar has been reset, and it's low. It will stay low for a while.
The big beast to be tamed in the travel market, doubtless, is business travel. Until the corporations start to send people on the road more liberally, the airlines, hotels and other businesses involved in travel will continue to feel the squeeze.
What's going to happen by sector? See below.
Analysts believe that "even a modest rise in the USA's gross domestic product," says USA Today, will kick the airlines back into profitability. Gary Kelly, CEO of Southwest, isn't that optimistic, telling the newspaper, "Business travel still lags, and I don't know that I'm comfortable in reporting that we've seen any improvement in that market." He doesn't expect business travel to bounce back next year.
Hotels: What can I say that Melanie Nayer hasn't? Not much, really. The past year has been miserable, with PricewaterhouseCoopers reporting occupancy plunging to 55.2 percent this year, from a 2006 peak of 63.3 percent. Next year, it's expected to tick up only to 55.8 percent.
Room rates fell precipitously in 2009 relative to 2008, causing an average decline of 16.4 percent in the industry's average revenue per available room-night. PwC expects 2010 to be worse than 2009, conflicting with the Business Travel Monitor report from American Express. But, there's room for both views. Leisure travelers will have to spend a bit more, but hotels in business-heavy markets will still win some favorable pricing.
Conventions: Look for a slight increase next year – again, relative to a brutal 2009. For the good news about the conventions, you'll have to wait until 2011 and 2012, says Roger Dow, president of the U.S. Travel Association. Through the end of 2010, approximately 40 percent of corporate and association meeting planners, reports USA Today, are likely to postpone or sink off-site meetings for the next year.