There may not be reason to be fearful just yet but as the prospect of recession looms safeguarding loyalty is becoming an imperative.
The ‘R’ word is back! Given that the UK, for one, saw international business air travel demand cut by 25% in the last recession and globally the squeeze forced restructuring by airlines, hotels groups and travel agents, it is hardly surprising that the travel business is twitchy. Thus economic and financial numbers are being read as runes.
Actually, while growth is undoubtedly slowing, recession has not arrived yet, but that has not stopped publication of a host of ‘what to-do’s’ and safeguarding customer loyalty tops them.
Earlier this year at IATA, the International Air Transport Association, Director General Alexandre de Juniac announced that “airlines will still turn a profit this year, but there is no easy money to be made”. Global growth has been slowing, with the numbers of total revenue passenger kilometres (RPKs) up only 3.6% on a year ago in July compared against a rise of 5.2% in June. International growth was slowing even faster, with a rise of 2.7% against 5.3% in June.
July’s performance, he said a few days ago, “marked a soft start to the peak passenger demand season.” He listed the reasons for the escalating concerns – tariffs, trade wars, rising oil prices and concern over Brexit.
In other news, UK package holiday and travel group Jet2 has said it is “very cautious” on its outlook for the coming months, a view backed by the demise of Thomas Cook.
Further warnings come from STR and Tourism Economics, which last month downgraded their forecast for US revenue per available room growth to 1.6% in 2019 and 1.1% in 2020 (its second downgrade, having already cut in June). STR and Tourism Economics forecast that occupancy will fall 0.3% next year to 66.1%, ADR will rise 1.4% to $133.70 and RevPAR will increase 1.1% to $88.40. The group noted that occupancy has not declined year-over-year since 2009.
