Recession will be good for travel! What???
A question on everybody’s mind in travel is the impact the slowing economy will have on the industry. At the TIA Marketing Outlook Forum in Portland this week it will be on of the central questions to be discussed.
Not everybody thinks a slowing economy will be bad for business. Travel Weekly last week had an article about Crystal Cruises which thinks it will benefit from a slowing economy as it might lead to people being “less focused on the material world”. It gets even better:
“People will come to realize that the most important things in life are experiences, not possessions. In other words, the shift in societal values plays to travel’s strengths: We are in the business of providing experiences and are thus perfectly positioned to take advantage of the postcorrection environment. [….] I’m sure one could make a convincing parallel argument that, rather than portraying travel as catharsis, it’s time to play to another of travel’s strengths: escapism. This winter could be the perfect time to flee one’s problems by taking a cruise or hitting the beaches of Cancun or the Caribbean (or, if one can afford it, indulge at the Oberoi Udaivilas in India or the Four Seasons Tented Camp Golden Triangle in Thailand) …”
This perspective is not shared by some of the shrewdest business people around - the Venture Capital folks in Silicon Valley. They are predicting thought times ahead of us. Sequoia, on of the leading VC companies, put together a really great presentation outlining the current economic challenges and the drivers behind it.
As a background: Sequoia has funded companies like Apple, Cisco, Oracle, invested in Yahoo and a company you might have heard of called Google. Take a look at the presentation; see their arguments and what they think about the future. Not a lot of talk about cruises, beaches and massages there.
It would be nice if all of us could escape more, travel more and focus less on the material world – alas it will not happen. I see a bigger focus on deals and value as well as an increased push for marketing that can be clearly measured in our future. Or am I wrong? What are your thoughts? Travel impacted? If so, how? What does it mean for travel and tourism marketing?
(Thanks to respres for the Foreclosure photo!)
October 28th, 2008 at 8:38 am
Such an interesting question. One thing I am wondering from here at the TIA Marketing Outlook Forum - how will business travel impact travel orgs versus leisure travel? What sectors can take advantage of a consumer “escapist” attitude and which sectors are in trouble? Great post - very thought provoking.
October 28th, 2008 at 10:03 am
Is the glass half empty or half full? That is the question. Or: “The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.” (William Arthur Ward)
October 28th, 2008 at 5:32 pm
There are tons of examples of people who have decided to sell their house and just travel across the country or across the world. So if that trend continues, travel will pick up. I think it’s true that people are interested in experiences and especially being able to provide those types of travel experiences with their kids as a family.
In that case, maybe people will finally get rid of their Playstation game consoles and oversized TVs and use that money to experience life outside.
October 31st, 2008 at 7:12 am
i think as you get older you value experiences more than the material - with an aging population, maybe this will benefit tourism.
October 31st, 2008 at 10:35 am
Definitely think it is an ostrich move to assume travel is good to go because people value experiences more than possessions, etc. While I do agree with the premise, I disagree with its application as a way around the current economic environment. A good chunk of travel spend is driven by people saving up for (or hitting their credit cards for) their big trip. Large portions of those consumers are in a wait and see mode right now – and if (when) the pink slips start flying, they will hunker down and take a more modest vacation. They will still seek experiences and probably need a vacation more than usual, but it will be one that involves fewer/no flights (and certainly cruises!), go down market on hotels, dining — or skips in entirely by visting relatives, etc. As with most recessions, the value end and the extreme high end (the part not driven by aspirational consumers) will fare best. Everyone else likely to be facing some meaningful bumps in the road.