It’s Over, Now What?
Today a panel of leading economists agreed that the awful recession of 2008-2009 probably ended some time this summer. (article) As some of you will recall, back in August I took exception to the gloom and doom outlook of the keynote speaker at Virtuoso Travel Mart. Larry Hochman spoke at length on “cutting costs without cutting your throat” and other cheerful concepts. My response to that tone was that the elephant had left the room. Most economists have a great rear view mirror, but that usually is not a good way to drive. As I suggested at the time it would be wiser for travel businesses to focus ahead on how to cope with the imminent recovery. If you were cutting in August you were late to the game.
I am not an economist and have no formal education in the field. I like to say I went to the Levy school of economics. For 18 years I worked managing a bond portfolio and trading stocks with a former floor trader in commodities. In order to maximize our investments we spent much time reading economic tea leaves focusing on getting ahead of the market when things change. I was taught to focus on leading indicators and often mundane things like how many shopping bags one can see at the local mall. In travel 2009 brought fire sale prices on hotels, cruises and tours. By May I noticed a sharp drop in what was being offered at a steep discount. There were still good deals on select travel products this summer, but I felt the everything must go sale had ended.
There are still some relative bargains to be had in travel this fall, but even those places like Arizona and Las Vegas which were hardest hit are starting to tick up in price. My many conversations with the “boots on the ground” people from the luxury travel suppliers reinforced my belief that the worst of the economic pain was behind us some time this summer. As business slowly picks up (it may be a very gradual recovery) hiring will as well and the lagging indicator of employment will begin to improve as well. The most important thing Mr. Hochman pointed out at Travel Mart was the only point of agreement for me: are you ready to deal with recovery? What goes down will eventually go back up. The only market strategy I ever used was to try to buy as close to the bottom as possible. I would have been buying travel this summer.
The bigger challenge facing our industry is how to cut through the clutter and get our message heard in the brave new world of information technology. The Internet has indeed changed the rules of the game. Just as we have begun to rise out of the economic mess, we can also find a way to rise above the noise on the web. New media represent not a problem, but an opportunity. The winners in the internet game have been those that connect people to what they are looking for, not those who are selling to people. The emerging stars are those sites and services that are finding the best ways to connect people to one another such as Facebook and Twitter. This sea change in the internet game works in the favor of a business model that works on person to person contact. The challenge facing the travel consumer using the internet is not finding information, it is finding information they can trust.