See the complete list of trends that we analyze.

1) Introduction to the Travel Industry

The 2008-2009 period finds the travel industry once again facing very challenging times. Consumers' budgets are tight, and they are cutting down on unnecessary expenses. When the middle class does take a vacation, it will be on a reduced budget. Meanwhile, corporate and business travel budgets are tighter as well. The travel industry is acutely aware of this problem, and leading travel providers are preparing themselves as best they can. Many leading airlines have cut routes and reduced the total number of seats available, partly by removing older, fuel-guzzling aircraft from service.

The Travel Industry Association of America (TIA) estimated total U.S. travel expenditures at $775.9 billion for 2008, $739.4 billion in 2007 and $699.8 in 2006. By the time that the actual 2008 numbers are in, 2008 revenues could easily turn out to be lower than projected, and any actual increase over 2007 will represent, in large part, increased fuel costs that were passed along to travelers.

The World Travel & Tourism Council (WTTC) estimates total world personal travel and tourism expenditures (that is, both direct and indirect spending) at $3.2 trillion for 2008 (growing to $5.4 trillion in 2018), with business travel an additional $843 billion on the same basis (growing to $1.4 trillion in 2019). According the WTTC's most recent study, the travel industry supports 80.7 million jobs on a direct basis, and 238.2 million including direct and indirect employment. These employment figures are forecast to grow to 97.9 million and 296.2 million respectively in 2018.

In the WTTC's figures, the U.S. accounts for $1.4 trillion in direct plus indirect travel expenditures in 2008, followed by China at $508 billion and Japan at $438 billion. By 2018, the organization forecasts the U.S. number to grow to $2.4 trillion, with China surging to $2.0 trillion and Japan climbing to $637.8 billion. Obviously, 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 global airline losses to range from $2.3 billion to $6.1 billion for 2008 (in its June 2008 study, the range is based on possible variations on fuel prices), after a net profit of $5.6 billion in 2007. Actual losses could turn out to be much higher than this forecast. Of course, dramatic increases in fuel prices are the cause of these losses. The group forecast 2008 airline industry revenues at $514 billion for 2008, up from $485 billion in 2007.

The year 2008 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 that exploded in the summer of 2007 put a damper on hotel occupancy that will continue into 2009. Many major hotel construction projects have been cancelled or put on hold.

The price of gasoline, fuel for cruise ships and jet fuel for aircraft will remain a major hindrance to the travel industry, even if the price of oil declines to less than $100 per barrel.

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, the soaring growth years for online travel booking sites like Orbitz and Expedia appear to be over. 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. For example, Carnival, the largest cruise company, managed to keep profits for the first half of 2008 equal to those of the same period in 2007, despite vastly higher fuel costs. Consumers see cruises as high-value package deals, and cruise ships are nearly full. Carnival is continuing its aggressive new ship construction schedule.

On a very positive note, economies in many parts of the world are much stronger today than they were in the 2001 through 2003 travel slowdown. Business travel to certain nations is absolutely booming, especially India, China and Dubai. Tourism has been extremely strong in New Zealand and parts of Eastern Europe, as well as in many new or alternative travel destinations around the world. Ecotourism and adventure tourism are booming. Spas are the hottest thing in fine hotels, bringing in much-needed additional hotel revenues. Tourists from Europe and Asia are flocking to U.S. cities to take advantage of bargain prices due to the relatively low value of the U.S. dollar.