This is shaping up to be a difficult year for the travel industry. By almost any measure—money spent on vacations, international arrivals, business bookings—travel numbers are declining. According to Geoffrey Lipman, assistant secretary general of the UN World Tourism Organization, the math is simple: “Macroeconomics determines the curve of the travel industry,” he explains. And these days all macroeconomic indicators are decidedly down.
But that doesn’t mean everyone is staying put. Suzanne Cook, senior vice president of research for the U.S. Travel Association, doesn’t expect financial worries to keep Americans housebound, though she predicts they will be making shorter trips and spending fewer nights away. Peter Yesawich, chairman of Ypartnership, an Orlando-based marketing firm specializing in travel, agrees: people are traveling, especially affluent travelers. And they’re looking for value. The good news is that, as in all financial crises, this one spells opportunity, especially as hotels and destinations work to attract travelers. “The industry has recognized that the consumer is receptive to getting a good deal,” Cook says.
Seek and ye shall find a hotel bargain, advises Bjorn Hanson, associate professor at New York University’s Tisch Center for Hospitality, Tourism, and Sports Management. “By calling around to different hotels, guests are getting very different rates—sometimes 30 percent lower than what is advertised,” he says. Other properties are throwing in enticements such as: an extra night or two, half-price menus, complimentary spa treatments, and beefed-up loyalty programs.
It’s not just hotels, but entire destinations that are appealing to value-minded travelers. Close to home, Florida, the Caribbean, Hawaii—destinations that rely heavily on tourism income—are ramping up their offerings. Airfare to the Hawaiian Islands soared when two local carriers were grounded last year, causing some travelers to rethink a long (and potentially costly) trip. But more recently, the Hawaii Visitors and Convention Bureau has been working to shift the state’s image. “We were never a low-priced vacation, but now hotels and island activities are promoting value,” says Jay Talwar, senior vice president of marketing for the bureau.
The same thing is happening elsewhere. “Las Vegas is a steal compared with last year, from the hotels and restaurants to the rental cars and casinos,” says Adam Weissenberg, vice chairman and U.S. leader of the tourism, hospitality, and leisure sector at the business consultancy Deloitte & Touche. Similarly, this winter ski resorts throughout North America have been marketing themselves as affordable vacation spots. Ski Utah, the group that trademarked the phrase “The Greatest Snow on Earth,” has turned its talking points from powder toward discounted lift tickets and lodging packages.
In the meantime, destinations abroad are busy repositioning themselves as affordable. With the British pound dropping more than 20 percent against the dollar, VisitBritain has taken to trumpeting exchange rates as a promotional tool. Tourism Fiji, which just received a $12.7 million injection of funds from the government, has set a goal of marketing itself as a value destination to compete with resorts in Southeast Asia. Even Dubai is steering its message away from outrageous luxury (those gold-plated faucets) to a broader audience: United Airlines is advertising an economy-class fare from Dulles to Dubai for less than $1,000, and new three-star hotels are now offering rooms in the $200 range.
The dollar’s power is certainly helping to lure people overseas: hotels, shopping, food, and drink are already more affordable in dozens of international destinations. Like the pound, the euro has declined more than 20 percent against the dollar; the cost of a day in Cape Town has been slashed by a third; and Australia is almost 40 percent cheaper for an American visitor than it was a year ago. However, this may not remain true for long, warns Robert Sinche, global head of currency strategy at Bank of America, who forecasts the savings against the euro will level off in the coming months. His advice to travelers: “Lock in current dollar prices and take advantage of the packages that tour operators are offering for the summer.” For spending money, he suggests buying pounds or euros now—before they climb again.
Ultimately, travelers are looking for deals, but they want more. “People want vacations where they are enriched, and even those where they can give something back,” notes Jena Gardner, president and CEO of JG Black Book Travel. And the most farsighted brand experts are tapping into this. Tourism Australia is touting adventure and personal transformation. Similarly, Dubai is emphasizing enrichment. “Dubai appeals to the culturally curious, those who are interested in discovering Arabic culture in a modern context,” says Kathleen Leuba, marketing manager for the Dubai Department of Tourism and Commerce Marketing. Travel in 2009, it seems, will be a quest for values—of every kind.
The strength of your dollar depends on the relative cost of your destination. We compared the price of a gin martini in cities across the globe to see how they stack up.*
United States and Canada
New York City $19.25
Los Angeles $13.33
New Orleans $9.17
Mexico and Central and South America
Buenos Aires $13.00
San Juan, Puerto Rico $11.00
Rio de Janeiro $7.08
Asia and the Pacific Rim
Hong Kong $14.62
Africa and the Middle East
Cape Town $3.30
*Based on the December 2008 average price of a standard gin martini from a minimum of three luxury hotels in each city.
By Jane Levere