11 June 2010

Travel Recovery Stalled?

Last month I wrote that the recovery might be faltering. In the USA we are seeing mixed signs that the US economy might not be recovering as well as we had hoped. Jobless are stuck at near 10% and we are seeing consumers more cautious in their behavior but not necessarily what they tell survey takers.

For Travel we are seeing that the number of bookings is not growing that fast. They are back to almost regular levels from the terrible time of 2009. However yields are still on a healthy growth rate. Great for investors... not so sure about everyone else. This is not going to make US based legacy GDSs such as Sabre and Travelport's numbers look that much better because they need the volume.

So the airlines are very pleased with themselves because it seems we have a sellers' market. The hoteliers at this month's Hitec might not be quite so happy because hotel rates are still very low as are occupancy levels.

Markets like Las Vegas and Hawai'i are going to continue to suffer, IF all other things stay the same. But we are about to see some interesting dynamics in summer travel.

Let me list some of them:

1. Rates are high for Air Fares
2. Gulf Coast will become a dead zone for tourism another blow after Katrina but this time the recovery will take years if not decades.
3. Florida is on tenderhooks because those oil plumes are going to come ashore somewhere and Florida will take a hit - make no mistake about that.
4. It's predicted to be a bumper year for ... hurricanes so Caribbean and Mexico (eastern side) will be badly affected.
5. Transatlantic will suffer - the Euro is high so less east bound traffic and also while the US is very attractive the economies of Europe are not so healthy and people cannot afford to travel long distances. A lot of people who would normally have gone UK to Florida are now on their way to watch "The Beautiful Game" (Take your earplugs with you).
6. Brazil will continue to grow substantially and bring traffic northbound.

So a lot of confusing data which points in different directions.

Over the coming months I will try and handicap some of the players for you.


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