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Travel Industry’s Status Upgraded from Critical Condition

August 31, 2009 By: Michael Grisafe Travel Agent

Stocks are down, housing prices are down, consumer spending is down, and travel is at one of its all time lows.  Is there any end in sight?

A recent analysis by Piper Jaffray and Citibank seems to think so.  Although the U.S. hotel industry posted a sharp dip in revenue per available room, the industry’s occupancy and average daily rate (ADR) and revenue per available room (RevPAR) seems to have stabilized over the summer.    

So has the travel industry has finally “flatlined”?  And is it ready for “resuscitation”?

It appears that there might be signs of life yet.  Supporting this are steady weekend rates and RevPAR for U.S. hotels, and slow, but steady upward gains in the European hotel industry and RevPAR.

Meanwhile, online travel is still in critical condition, with Citibank and comScore data showing a 7 percent year-over-year decline in online travel spending in June followed by a more unsettling 9 percent year-over-year freefall in July.

A major contributor to the July freefalls seems to be a 15 percent year-over-year dip in hotel reservations, which represent 24 percent of all online travel spend.  In addition, a 16 percent year-over-year decline in travel Ppckages (6 percent of spend) added to online travel’s symptomatic malaise.

However, a healthy dose of car rental spending (4 percent year-over-year and 11 percent of spend) helped offset the 16 percent drop, and the 8 percent year-over-year decline in air travel spending was a bit rosier than its 10 percent year-over-year decline reported in June by comScore.

So is the travel industry ready to make a full recovery?  It’s still early for a complete diagnosis, but the symptoms described by Piper Jaffray and Citibank seem to indicate that the worst may be over as the travel industry slowly gains its strength in the coming months.

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