Last night I had dinner with another Professor. He is on assignment with a large travel supplier trying to solve a complex internal set of problems relating to IT.
We discussed how the recession will impact the functions he interacts with - both corporate and the subsidiary he works for. There are going to be a lot of people who will be toast. Our original aggressive estimate of up to 100K people who are laid off or cut totally in the US market for Aviation and Travel for 2008 now seems light.
Despite the need to cut costs even further will mean that there will be some tough decisions. We have seen certain facilities cut and now we are hearing that hotels have cut services as well as shutting whole floors to reduce costs. The products are being quietly cut, certain cruise lines (probably all of them) have cut headcount at head office and indeed on some of the ships. Work rules have been altered.
One area I didn't expect to take the hit so soon is the outsourcing market in South Asia, Eastern Europe and other similar locations. Already I have seen significant cuts in companies we know operate in ATT (Aviation Travel and Tourism). I have received many different requests for assistance and work projects. I cannot even hazard a guess other than to say India is going to experience a severe cold from the cancellation, delay and reduction of outsourcing work. As these workers are themselves part of the class who are now starting to enter the middle class consumerism - particularly travel inside India - it will reverberate outwards.
China is also holding on to its pocket books tightly. A combination of Chinese policy (for example restricting visits to Macao for local Chinese would be gamblers) a significant fall in confidence and an overly zealous restrictive policy during the Olympics has resulted in very large drops in occupancy and yields. The markets that have started to become dependent on China for tourists is also seeing significant drops.
So for how long will they (and us) have to suffer? 2009 is a write off - 2010 is not looking too good.
Best of luck to all of us.
Uhm uhm uhm ... how do you think the current travel situation (fuel price going down while most airlines pretend not to see, previously free services receiving a new fee, airlines trying to peel every further skin of the onion-customer) bodes for China's new opening towards Taiwan? Chinese tourists (business travellers, actually) can now reach Taiwan much more easily than in the past. Do you see this as something that will persist for the foreseeable future?
ReplyDeleteDr. Sabena, please bear in mind that your answer will be drawn, quartered, translated and quoted in my own mini-travel blog ("mini" since there are four people in my family and only three read it...).
Best regards from Singapore