The travel industry is influenced by the crisis in the economy worldwide. The soaring price of crude oil led to increased cost for airlines, trains, cruise lines, and bus lines. The travel industry had no option but to pass on their increased costs to consumers in the form of higher ticket prices. This was at the same time that consumers had less discretionary income for travel. Even though the price of oil has dropped tremendously, the airlines still predict multi-million dollar losses in 2009 due to the expected three percent drop in passengers ByDzyne travel .
Because of the banking crisis, carriers who were having financial difficulties have been unable to get the credit necessary to weather the economic storm. The British travel industry began to feel the impact when tour operator Travelscope and carrier MAXjet Airways collapsed at the end of the year in 2007. This illustrates one consideration that travelers have when making reservations: is the carrier going to be in business still when it's time to travel? Many travelers are postponing making arrangements until the last minute, hoping that they will get a deal on last-minute fares, and ensuring that the carrier will be in business.
It is expected that the winter ski resort reservations will be down 9% for this year's season. Economists point out that the traditional deterrent to taking vacations "can't get away from work" has turned into "economic conditions". Previously many Americans used the equity in their homes to finance vacations, among other things. Now in the reality of tighter credit availability, people will be taking fewer, shorter vacations close to home. Tourists also expect to spend less on souvenirs and shopping, meals and entertainment, and on hotels.
These trends mean that travel destinations will need to market their properties to potential customers in their own backyard. People are looking for a vacation that includes the activities close. The changing demographics of the United States will also dictate that tourism changes the target population and adjust the services provided accordingly.
Another factor is the rise of tourism from emerging countries. Although it is not expected that this sector will lead the way in increased travel, it will help. International tourism expands on the same path that other economic indicators such as the GDP. One international arena that has had a boom in tourism over the last 15 years is India, due in part to the loosening of restrictions on the airlines. It is expected that there will be losses for high-end-tourism for the first time, but that the downturn and eventual recovery will be slow.
The value of the U.S. dollar abroad has an impact on travel. It is argued that this is the main issue to determine the future of the travel industry. For Americans, a rising dollar will allow them to travel abroad more, and spend more money while they are gone. The sagging U.S. dollar will boost inbound tourism to the United States from overseas. Tourism officials are hopeful that when the new Obama administration takes office in January 2009, it will take action to bolster the value of the dollar and initiate policies favorable to the industry.
It is expected that Amtrak will have continued support from the Obama Administration. The Passenger Rail and Innovation Act of 2007 was co-sponsored by Obama and provides for long term funding for Amtrak. The new Vice President, Joe Biden, has been using Amtrak to commute to from Washington D.C. to his home in Delaware for over 35 years now. All of this should bode well for the passenger train industry.
So what steps can the travel industry take to make the impact of the recent world crisis less? New marketing plans should be designed to help travelers, whether individuals or businesses save money. Resorts and hotels can offer all-inclusive plans to entice business meetings and corporate retreats. Another option is to give the meeting room free with a block of rooms rented for the meeting.
In Argentina the government has gotten involved to boost tourism in the South American country. They have announced a plan of offering interest free loans for individuals and families who will be traveling in the upcoming months and year. Payment plans allow the loans to be paid back in either three or six months. Small businesses in the travel industry find that they can avail themselves of interest-free loans with the same payment terms.
Cruise lines can offer deep discounts or ship credits to fill cabins. Due to their fixed costs of operating (fuel, staff, fees), they are in a position to entice tourists to book cruises at bargain prices.
The current world crisis will definitely leave its imprint on the travel industry. Successful businesses will adjust their plans to be the most efficient models possible, and be able to lure stressed out and skeptical consumers into traveling.