New winners and losers in travel trade

Internet bookings will surge, demand for online virtual meetings will gather pace, domestic travel will stay stable or grow, as will demand for low-cost flights. Destinations adjacent to big travel markets will not do so badly. Long-haul travel will fall sharply. And the most pain will be felt in the business travel and MICE sectors.

Those were the predictions for 2009 unveiled by IPK International’s CEO Rolf Freitag, in an ITB World Travel Trends Update at the ITB Convention in Berlin last week.

Based on 500,000 travel interviews in 58 countries around the world, IPK delivered a wide-ranging forecast. In the predictions, IPK suggested that 2009 will see travel declines in most markets, with 2010 neutral and small growth likely in 2011 and 2012.

greed and fear

“We’re in a full global economic crisis, not a small recession. Consumer greed of the last few years has turned into consumer fear,” Freitag said.

IPK’s travel interviews suggest that 40 per cent of Europeans will change their travel plans due to the economic crisis. Some 66 per cent of Europeans and 60 per cent of Asians plan to change.

Freitag said this change would mean they are likely to switch to domestic travel, travel for shorter periods of time, choose cheaper destinations, or spend less while on holiday.

European and North American markets will be adversely affected compared to other regions of the world. IPK predicts that China, India and all of Latin America will record GDP and travel demand growth, even in 2009.

smaller

However, those growth figures will be smaller than the precedents set over the last 10 years. Freitag pointed out that over 50 per cent of global travel demand emanates from Europe. Within Europe, in 2008, the Russians, Dutch and Poles recorded much higher than average travel rates.

However, the strong devaluation of the Russian rouble and Polish zloty suggests that such strong performances are unlikely to be repeated in 2009.

While Turkey, US, Austria and the UK all received strong growth in arrivals numbers from European travellers in 2008, IPK predicts they are unlikely to do so again this year.

In households that earn more than €20,000 a year, travel will remain a high priority, according to IPK. However, households earning less than €20,000 are much more likely to adjust travel plans towards cheaper and/or domestic trips.

travel tool

Freitag pointed out that travellers are increasingly using the Internet, not just to find information, but to book and pay for holidays. The Internet as a travel tool will continue to grow in 2009.

To help them face the economic downturn, which is likely to go on longer than previously predicted, Freitag said companies should reduce costs, go on a price-cutting offensive, enter into partnerships with the public sector, communicate new attractions more aggressively and intensify e-marketing and e-sales initiatives.

Companies with good asset security can take advantage of low interest rates to borrow money and invest for the upturn which will eventually come, he said.

Source: HospitalityJamaica

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