This is the first of a two-part series examining changes that have taken place in the travel landscape as a result of 2008’s tumultuous economy.
Whoever said “a change is as good as a rest” likely didn’t have the past few tumultuous months in mind. In the travel industry, as with so much else, change is occurring at an exponential pace, driven by a global financial meltdown and a relentless stream of dismal economic news. As someone who monitors news on a daily basis for this website and sister travel-industry site OpenJaw.com, it felt like a switch was flipped in late summer and suddenly the news was all bad, all the time.
For the industry, the economic crisis is almost exclusively bad news: An already low-margin business just got tougher. For Canadian travellers, however, there’s a silver lining, at least in the short term. Many industry commentators are already calling for 2009 to be “the year of the deal,” as cruise lines, resorts, casinos, luxury hotels and other travel operators with high fixed costs are doing whatever it takes to attract travellers. Senior industry insiders are already reporting 20% diminished capacity.]
As a result, the deals are out there. Luxury cruise lines are offering 50% or more off the regular price. Major Caribbean resorts have dropped rates by 30%. Canada’s leading tour operators, stuck with buckets of capacity and a smaller pool of travellers, are offering unbelievable bargains: Packages that would normally be $1,500 to $2,000 pp over the Christmas and New Year’s holidays were being offered at under $1,000 pp.
Savvy travellers with money to spend are waiting until the last minute to book, sensing that prices might drop even further. They’re also willing to exchange a preferred destination for a better price. Personally, I find it difficult to imagine the current prices in our hyper-competitive marketplace being sustainable for much longer.
For the global travel and tourism industry, which is coming off an extended period of rapid growth, this economic crisis has ground their progress to a halt. One saving grace is that the price of oil has dropped by two-thirds since its summer peak. This has saved some airlines and other travel companies from complete disaster and kept quite a few people travelling thanks to lower prices and the gradual disappearance of fuel surcharges. What we don’t know is where the price of oil will be a year from now.
The new travel reality also means that no corner of the globe is off-limits to tourism. As more people seek authentic experiences and endeavour to travel in ways that will benefit the destination, operators are offering yet more remote locations with limited infrastructure. Most of the companies offering this type of travel are small, and therefore vulnerable to economic downturns. But as consumers shift from conspicuous to more conscientious consumption there is hope that when the recession finally ends, pent-up demand will drive the growth of ‘sustainable’ travel.
While many things will change in 2009 and beyond, our desire to explore our surroundings is not likely to be one of them.
Next week we will look at how new travel realities will impact Canadian travellers.