Travel Industry Proceeds with Caution, Cruise Lines Regroup

Is leisure travel rebounding?

January was a roller coaster month for the travel business. On the upside, the industry scored a coup when President Obama proposed a plan to boost travel to the U.S. during his January 19 visit to Orlando. As Terry Dale, president of U.S. Tour Operators Association observed, “It’s nice to see the industry recognized at the Presidential level.”

On the downside, the cruise segment of the industry was rocked by the January 13 grounding of the Costa Concordia ship off the Italian coast and the related stream of bad news.

These were among the issues discussed at the Association of Travel Marketing Executives annual forecast forum in New York on Wednesday. The panel, moderated by Henry Harteveldt, co-founder of Atmosphere Research Group, included Dale and one representative each from an airline, a hotel chain, a destination, and a transaction provider. Cruise lines were notable for their absence. Below are four key takeaways.

The mood for the travel industry overall is cautiously optimistic for 2012. As Harteveldt noted, “Consumers are looking forward, but the recession has taken its toll. The average income of leisure travelers increased as we’ve lost lower income travelers. Those who travel this year will be more demanding and seek value.”

Dale added, “We don’t know since it depends if there is more civil unrest or if Mother Nature flexes her muscles again,” referring to 2011’s Arab Spring and the Japanese earthquake/tsunami.

The state of the travel business itself will also be a factor. Since yesterday, we’ve gotten news of dramatic changes at American Airlines, related to its bankruptcy filing in November.

The cruise business will take a short-term hit but eventually bounce back. The cruise segment prompted more emotional, empathetic comments, with words like “tragedy” and “shock” along with “resilience” and “survival.” Scott Hyden, VP at Travelport, predicted that over time people will forget, but not as long as the grounded ship remains in view.

Joe Byrne, EVP of Tourism Ireland foresees discounted prices this year. He also noted the irony of the Costa Concordia’s comparison to the Titanic given the timing. The Titanic’s hundredth anniversary will be commemorated this spring in Belfast, Ireland, where the ship was built.

Panelists reported increased budgets and a growing role for digital and social media platforms. Greg Brown, VP loyalty at Choice Hotels, said, “Now travelers, including seniors, are digitally enabled, and travel marketing is more personalized, targeted and direct.”

JetBlue Airways is “heavily into Facebook and Twitter, which it monitors 24/7,” according to Dennis Corrigan, VP sales. He added that the airline is planning to introduce a big mobile initiative soon.

Deal sites are cause for concern. The argument was made that sites like Jetsetter and Groupon are doing more harm than good. Byrne observed that “the prices are out of kilter and the real danger is that we’ll end up selling at lower prices than the market demands.”