The recession officially began in December 2007 and many financial analysts insist that we are still in a deep economic hole. Last week, Goldman Sachs economists said renewed recession is "not our forecast, but clearly a possibility given the recent numbers.” These days, both consumers and politicians do extremely well at creating ambiguity, which is crippling businesses.
The travel business has been negatively influenced by the besieged economy because it often relies on people taking vacations and using discretionary leisure funds that may not be available during stressful economic times. In addition, companies are also cutting back on their corporate travel budget which also negatively impacts the travel industry.
Additional Signs of The Impact of the Recession on the Travel Industry Include:
- Many travelers, most notably families, are slashing their hotel room budgets in favor of the less expensive motels so that there is more money in the travel budget for the rising cost of gas and food. According to Bjorn Hanson, associate professor at the Tisch Center for Hospitality, Tourism and Sports Management at NYU, ”cancellations of reservations made at full-service hotels have increased as much as 50% in recent months.” Corporations calling off conventions and large company meeting cancellations have had a significant impact on the financial bottom line. Many hotel and motel chains are marketing to travel discount programs to get customers.
- Airlines prices have actually decreased! Even as fuel prices continue to rise, the airlines have not significantly increased their prices to the levels that they would be at if we had a more secure economy. The general consensus in the airline industry is that they have raised airline prices to the highest that a depressed economy can withstand. Instead the airlines have added and/or increased fees for items such as baggage, in order to try to make up for some of their lost revenue. Most people are traveling much less than they used to and airlines understand that raising fare prices will likely make passengers travel even less. According to the New York Times, “there was an average drop of 9.47 percent in the number of miles traveled by domestic passengers on major airlines from September 2007 to September 2008 and airline traffic hasn’t improved much since then.”
- Many Families are Taking More Staycations! Staycations are family vacations that are typically closer to home and allows the family to eliminate the costs of airline tickets and save on gasoline. Common activities of a staycation include use of the backyard pool, visits to local parks & museums and attendance at local festivals. The monies that you spend during Staycations also allow you to support your local economy which is essential during a recession.
- International Travel is Much Less Popular: Declines in the US Dollar have forced many travelers to stay close to home. Saving money is important to almost ALL travelers and negotiating favorable rates are much easier in a vacationer’s home country.
- A Boost in Coupon Usage: According to a recent marketing study by Inmar, Americans cashed in about 27 percent more coupons in 2009 than the previous year. Ever since the economy began its sharp decline, everyone seems to be looking for a deal. Travelers use coupons for discounts on admission to theme parks, museums, attractions, restaurants buy-one-get-one-free deals, free meals for children or seniors and even for souvenirs sales.