I know it's hard for many people to think of a vacation when the economy is in such a mess, but if you can refocus for a moment I've got some good news for you.
That vacation you're not thinking about has just gotten less expensive. And it doesn't have anything to do with declining prices because of the Wall Street mess either.
What has happened is that the dollar has been slowly and quietly been gaining strength against some other currencies during the past few months. That gives you a lot more buying power in some overseas vacation spots.
For example, look at the approximate increase in value of the dollar versus some other currencies since June 1. The dollar now buys you 23.4% more Euros, almost 35% more British Pounds, 47% more Aussie dollars, and 33% more South African Rands, It goes 36% further in Norway, about 15% In Switzerland and a whopping 89% in Iceland.
Not all destinations are offering fire-sale prices on their exchange rate, however. Argentina's peso has only changed about 7% in our favor and China has become more expensive, for example.
The dollar hasn't returned to its glory days, of course, but there's more to the picture. Despite air fares staying relatively high -- although you can snag a few good bargains if you look around -- hotel prices are edging downward due to that better exchange rate. Remember that great exchange rate in Iceland? According to Forbes, you can now stay in a four-star hotel in Iceland for $70.00 per night. Basically, the entire country is on sale.
But the really good news is that you can now find hotels that are waving about some good deals to lure you in. Just log onto places such as TravelZoo, Shermans, Orbitz, etc. or Google some of the better-know chains and see what deals you can unearth. You may be surprised.
Jim Ferri
No Comments »
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
No Comments »
Air travelers are a fairly resilient bunch.
Over the past few years they've endured just about everything that's been thrown at them. Additional fees for checked baggage, fuel surcharges, cuts in service, increases in delayed and cancelled flights, crowded planes, you name it. Now, they're about to be faced with another change, and it's one that many people either love or hate -- à la carte pricing.
"Unbundling," as it's called, is just the reverse of what your phone and cable company do when they tease you with the discounted cost of selling you a number of different services in one package. The only difference with the airlines is that it's doubtful if anyone will really discount anything.
American Airlines recently announced that it will start à la carte pricing next year, emulating Air Canada which went through bankruptcy after losing customers to WestJet Airlines, a low-cost rival. After emerging from bankruptcy in 2004 Air Canada then unbundled its fare structure, and created a bare-bones service so it would be more competitive with WestJet. It did work, in that it helped the company stabilize its domestic business
Today, the unbundled Air Canada has four tier or fare levels, with the completely refundable and most expensive Latitude- and Executive- Class tickets providing priority check-in, food, etc.
Tango, the lowest fare, is completely bare-bones and requires you to pay extra for everything - flight changes, advance seat selection, food, lounge access, bag checks, etc. On the other hand, it also allows you to save an additional $3 by not checking a bag or taking frequent-flyer miles. Half of Air Canada's passengers currently choose the basic Tango plan.
American will likely follow a similar scenario and provide a few basic fare plans, allowing customers to buy extra amenities for an additional fee.
American and other carriers have gotten very good at the imposition of fees, which has angered many travelers who hate the idea of being nickel-and-dimed for everything from food and drinks to blankets and headphones. But it is lucrative. Continental, for example, brings in about $100 million from passengers that are billed $15 for checking a single bag, and that doesn't include those who have multiple bags to check. United raises about $700 from fees every year.
But let's face facts -- the airlines do need to increase revenue if they are to continue flying. This is the reason they have all gotten so good at "yield management" -- raising and lowering fares depending on supply and demand -- which results in people in the same section of a plane paying very different prices for a ticket. Ever gone online to research the cost of a ticket and gone back the next day and seen a different price? You've been yield-managed.
Overall, all these fees really swell the corporate coffers, which is the reason why no carriers are decreasing the fuel surcharge despite the cost of fuel diminishing. In all likelihood we may not be going back to all-inclusive fares no matter how much fuel prices decrease.
Some people do like the idea of a bare-bones price point, but many frequent travelers don't want to have to wade through a menu of optional services for a fee, for things such as booking a flight online, choosing a seat, etc. And that doesn't even scratch the surface when you think about the potential for in-flight Internet, email and cell-phone service. Experts say that travelers can expect all these fees to become permanent.
If you remember that it was American Airlines that initiated baggage charges, I think you'll get a pretty good idea -- or perhaps not-so-good -- as to where the industry is going.
Jim Ferri
1 Comment »
