By Lisa A. Higgins

Travel professionals from around the world convened in Portland, Oregon, last month for the Travel Industry Association’s 2008 Marketing Outlook Forum. The 600 attendees, representing hotels, airlines, attractions, and tourism offices were keenly interested in the economy’s impact on travel, and what they can expect the next few years to bring.

Lyons

NBTA’s outlook for 2009 is nearly evenly split, Lyons reported, with 50 percent of corporate travel buyer members expecting business travel to grow, and 49 percent pessimistic about the prospects. [A later NBTA report found that 61 percent are optimistic about the growth of business travel, while 39 percent were more pessimistic.] Members report that the economic downturn has forced corporate travel departments to take cost cutting measures. They are increasing emphasis on advance ticket purchases (61% of reporting members); encouraging or requiring less air travel (55%); and sending fewer employees to conferences (51%). Some companies are renewing their emphasis on the mandates of their travel policies, as well as the enforcement of them (50%). Nearly half of NBTA members said they are increasingly requiring employees to drive to meetings, and using web-based technologies in lieu of face-to-face meetings.

Although telepresence is on the rise, it is still used by only 14 percent of NBTA members, Lyons reported. Eighty-one percent of members believe that conferencing technology is replacing trips, but Lyons doesn’t believe that business travel will be eliminated. “You can have the most incredible technology available, but it won’t replace a handshake,” he said.

Ducate

One way to do this is to copy the overseas model, Ducate says. In Europe and in Asia, convention activities include families. When children reach adulthood, convention attendance is more likely. “We can overcome other concerns,” Ducate said, “but we must address young people and the way they prefer to do business. The travel industry depends on it.”

Ducate said that conventions in several industries are benefiting from the current economy. One example is professional business services, because when the economy suffers, companies tend to outsource, creating market opportunities. Sports/travel/entertainment is seeing an upswing, due in part to travel opportunities designed specifically for baby boomers. For instance, Ducate says there is a retiree-focused ski resort coming on line in the near future, and business is expected to be vigorous. The healthcare industry tends to be immune to downturns in the economy, and stability is expected in the industrial/equipment and raw materials sectors.

Among the industries that are or will be challenged with the weak economy is consumer goods. Ducate says the food industry suffers from a split personality; shoppers may purchase groceries at a discount chain, then spend $75 for a bottle of fine wine with dinner. The same is often true for the hotel and travel industry. Consumers may spend more on their hotel and less on food, or vice versa. Consistently down are the building/construction industry, communications/information sector, and transportation. The exception is trucking, said Ducate, because online purchases are shipped to buyers.

In a discussion of The Economic Outlook and its Implications, economist Lakshman Achuthan expressed confidence that an upswing is inevitable. “Cycles always turn,” he said, but admitted that this won’t occur in the near term. What we are experiencing is not, and will not become, a depression, he emphasized. While there is no doubt that we are in the throes of a global recession, Achuthan says, “depressions are for the history books.”

Travel professionals should keep a close eye on the Weekly Leading Index WLI) to determine how and when to market their services, Achuthan recommended. For example, should you spend money marketing high-end or value-based foods? “The index can help you better time the execution of this kind of decision,” he said, helping you to avoid over- or under-purchasing. “If you can use these indicators to execute decisions, you will outperform your peers.”

Overseas markets are struggling as much or more than the U.S. markets. He believes vendors should continue to spend money to advertise in Europe, but in limited amounts. “Focus on the value proposition,” he said, “especially in Europe. Make it more attractive by lowering prices. You won’t make a lot of money, but you can keep engagement in the market there.” Opportunities are presenting themselves in Japan because of a strong yen. Achuthan says the combination of that strength and a value proposition should make for a better travel market there than it has been for some time.

Summarizing the conference’s sentiments, Lyons had this to say: “All in all, it will be a rough ride into 2009, but the bottom line is we’re still going to travel.”