As the recession builds in the US and Americans trim their budgets, discretionary spending will surely take the initial hit. That's not good news for the travel and leisure industries.
Numerous companies throughout the sector -- hotels, airlines, theme parks, cruise lines, casinos, you name it -- have warned that bad times are to come in the year ahead.
Hotels will certainly take a big hit and the pain is already being felt. Since March, Starwood's stock has fallen 68.5%, Marriott's by 53%. If you think those declines are bad, the situation at the Las Vegas Sands is nothing short of horrific -- it's stock has plummeted more than 94 percent since last December, the latest hit coming last week following an auditor's report concerning doubts about Sands' ability to stay in business.
PricewaterhouseCoopers is forecasting that demand for hotels will fall by 2 percent, which on the surface may not appear to be significant. But when you factor in the increase in supply in hotel rooms, real occupancy levels will fall to nearly 58%.
"This is an unprecedented period of decline in recent history," Reuters recently quoted hotel industry veteran Bjorn Hanson of New York University as saying. "This just is unlike any period we have to compare."
Things aren't much better in the cruise industry where Carnival's bookings for 2009 lag bookings for the same time in 2008. Along with Carnival, Royal Caribbean has also warned about a slowdown.
Even at Disney, which had been weathering the early days of the recession fairly well since it had begun repositioning itself as a value-oriented, family-vacation experience, things are taking a turn for the worse. The company has just reported a sharp downturn in hotel bookings, and said that attendance at its US parks was down about 1 percent this quarter. Worse, however, is the fact that bookings for the first two quarters of fiscal 2009 are currently off about 10 percent. That's a number that could grow depending on which way the economic winds blow with a new administration arriving in Washington.
And that's exactly where all of this is going to land: in Washington. Needless to say, as the economy continues to disintegrate around us there are very few people, John McCain and a few others notwithstanding, who'd want to be in Obama's shoes.
Many American industries need help at the moment. Although it's the financial and auto industries that are getting the most play in the media at the moment, let's hope that the new administration doesn't close its eyes to the plight of the travel industry -- and more importantly, wakes up to how this industry can help in some small way to turn around the economy.
Following Obama's historic victory, Roger Dow, president and CEO of the Travel Industry Association (TIA), pledged that the industry would support the anew administration in improving the economy and bolstering America's international image.
Since the industry is a major economic force in every state, and not only accounts for more than $700 billion in spending but also for employing one out of every eight US workers in one capacity or another, it is quite an economic force.
The US travel industry may not be the engine that will turn the economy around, but it certainly can be one of the locomotives that can help jumpstart it. Let's just hope all those folks in Washington stop arguing partisan politics and get this train moving down the right track.
Jim Ferri
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Like most people, I enjoy traveling. What I don't enjoy are people who try to rip me off just because I'm a traveler. And I'm not talking about traveling to Papua New Guinea or deep into Africa or other exotic locales
Take my visit to London's Heathrow airport a few days ago, to the much ballyhooed Terminal 5. The design of the new terminal is fantastic -- broad spaces, good and rapid access to far-flung gates via train and escalators, comfortable seating areas around the gates (although they could have thrown in a few more outlets to recharge laptops and cell phones).
They've got some good restaurants such as the Giraffe -- a great place to grab an American-style breakfast after arrival -- but some of the new restaurants, such as Gordon Ramseys "Plane Food", have prices at the same altitude as the 747s flying in here.
That's one of the problems with Heathrow -- everything is so expensive. Want a glass of OJ at Ramsey's after your early morning arrival? It will set you back about $5. If that's enough to send you to something a bit harder, go for the $15 Bloody Mary. I mean, come on, that's $3 more than the Eggs Benedict.
The problem with Heathrow is that it wasn't designed to be an airport. It was designed to be a shopping mall at which planes land and travelers are trapped.
Worse yet, many of the sales people seem to have been trained to extract every dollar and Euro from your wallet. The folks who ran the Spanish Inquisition could learn a few tricks from retailers here.
Although I wasn't buying anything last Saturday, I walked into various shops to get a sense of the cost of things. When I entered the Duty Free liquor area I asked a clerk (who immediately latched on to me as they had in other shops) if they had Johnny Walker Red. His immediate reply was "Wouldn't you much rather have Johnny Walker Black or Blue?" I felt like making him black and blue.
When I was back out on the concourse I stopped to take a photo of the shop and the surrounding area. Within seconds a sales clerk yelled over to me that I was not allowed to take photos of the Duty Free shop.
My mouth dropped when I said "What?" "No," she said coming over, "it's not allowed and they confiscate the cameras of people who take photos."
"Is that the law?" I asked. "Yes," she replied.
"That's incredible," I said, "I'd like you to call a policeman so we can ask him about this."
"I'm just doing my job," she said, as she quickly walked away. I went to talk with her again a few minutes later but when she saw me coming she quickly moved away.
Jim Ferri
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Como is one of those incredible towns you only find so often. I'd been coming here for many years, never quite getting my fill of the place. It's like some fantastic meal you have at a restaurant you only get to once in a while, but it's so good you order it every time you go there. And go out of your way to go there.
For those who don't know what I'm talking about -- or should I say where I'm talking about -- it's a small Italian city on Lake Como about an hour outside of Milan. Leave Milan, or anywhere, to come here and you feel that you've been dropped into another world.
I've always come here by train only because that's usually how I've always traveled in northern Italy. But no matter how you approach it, the beauty of the place is overwhelming . The expanse of the lake, the mountains running down to it, the houses and villas dotting the hillsides. It all makes for one incredible scene.
My wife -- here for the very first time -- was stunned by it. Really. For her, the beauty of the place was totally unexpected. For me it seems to get more beautiful every time I visit.
Como is a walking city, possibly more than any other, and we walked the quay along the lake, through the old center with its Duomo and markets and shops and cafes and patisseries. In these Italian towns -- usually the ones on a body of water -- I always find it incredible how many people go out strolling every evening.
But no matter where you stroll here you always come back to the lake. It's the focus of everything, the reason, I guess, for almost anyone being here in the first place. And when they're not strolling it seems that most people are either watching it from a multitude of cafes along its shore, or from one of the villages high in the hills above, or passing across it on the numerous ferries and boat.
It has a soothing, calming effect, totally opposite of the chaos you find in other Italian cities.
Jim Ferri
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