See the complete list of trends that we analyze.

1) Introduction to the Travel Industry

The 2009-2010 period finds the travel industry continuing to face challenging times. Consumers’ budgets are tight, and they are cutting down on unnecessary expenses. When the middle class does take a vacation, it is on a reduced budget. Meanwhile, corporate and business travel budgets are tight as well. The travel industry is acutely aware of this problem. Most airlines have cut routes and reduced the total number of seats available, partly by removing older, fuel-guzzling aircraft from service. Travel providers of nearly all types are competing fiercely on price or are offering their customers special inducements and packages.

The U.S. Travel Association (USTA) estimated total U.S. travel expenditures at $772.9 billion for 2008, $739.4 billion in 2007 and $699.8 in 2006. According to the World Travel & Tourism Council (WTTC), the global travel and tourism industry supported 77.2 million jobs on a direct basis in 2009 (a 1.9% decline from 2008), generating $1.87 trillion in direct global revenues (a 3.5% decline from 2008, and an amount representing about 3.2% of total global GDP). The WTTC forecasts real annual revenue growth averaging 3.6% between 2009 and 2019, boosting the 2019 total to $3.39 trillion.

The WTTC also prepares an estimate of the total effect of travel and tourism on GDP (gross domestic product), including both direct and indirect revenues. On that basis, the group estimates the total impact of the industry on global GDP at $5.47 trillion or 9.4% of global GDP for 2009.

In the WTTC’s figures, the U.S. accounted for $1.64 trillion in direct plus indirect travel expenditures in 2009, followed by Japan at $551 billion and China at $526 billion. China is the market to watch, with 100 million Chinese expected to travel to foreign lands in 2018.

IATA, the international association that represents most of the world’s major airlines, projected a global airline industry net loss at $9 billion for 2009, after a net loss of $10.4 billion in 2008 and a net profit of $12.9 billion in 2007.

The 2008-2009 period was an ugly time for airlines. Many airlines took bankruptcy protection in 2008, including Frontier, and some, such as Aloha Airlines and ATA, once major airlines in Hawaii and elsewhere, were forced to discontinue operations altogether. Several specialty and business-class-only airlines ceased operations, including MAXjet, Eos and Skybus. Government-controlled Alitalia, in Italy, took bankruptcy in August 2008.

Hotels throughout the world enjoyed a major boom through mid 2007, with high occupancy levels, rising room rates and strong levels of both business and leisure travelers. However, the global financial crisis put a damper on hotel occupancy that continued into 2008 and 2009. Many major hotel construction projects have been cancelled or put on hold.

E-commerce continues to play an extremely important role in the travel sector, making booking convenient for consumers and more cost-effective for travel providers. However, online travel booking sites like Orbitz and Expedia face tough competition. Today, airlines and hotel chains are offering their own powerful online reservation systems, with rich features, multiple levels of photos and descriptions, and the ability to earn and manage frequent flyer awards. Consumers often find the lowest prices on sites operated directly by airlines and hotels.

The cruise line business has held up relatively well in the onset of the financial crisis, particularly at the largest cruse lines. However, these companies often offer deep discounts today in order to fill cabins. Consumers see cruises as high-value package deals, and cruise ships are nearly full.