Some travel predictions for the coming year

I’ve received several emails recently regarding the price of travel at the moment. While all signs point towards cheap airfare (a weak economy, lower load factors, etc.), the airlines haven’t quite given in yet. I figured I’d share some thoughts about where the travel industry is and also where I think it’s headed from the consumer’s point of view. The weak economy can be great for those of us looking for travel bargains and maximizing our miles/points, so here are just a few predictions of what I think we’ll see.

Let’s start with the hotel industry. Obviously they’re suffering with low occupancy rates, especially luxury hotels. Many business people that used to stay at Ritz Carlton hotels are now staying at InterContinental hotels, and it continues down the chain. Hotels are trying not to directly lower the nightly rates, but at the same time are making some special offers. I bet we’ll see promotions from the likes of Ritz Carlton, Four Seasons, etc., be it a “buy two nights and get one free” promo (as Four Seasons is offering right now), or them throwing in some freebies (free internet, breakfast, etc.). For those of us that love points, we’ll probably see some great promotions in the various loyalty programs, be it in the form of bonus points or more easily attainable status. They all want to keep a relatively consistent client base, and with less and less elites (as I’m sure we’ll see this coming year), they’ll have to do something to encourage loyalty. Along with that I would expect moderate price drops in nightly rates, but nothing too extreme. Lower occupancy will likely also lead to more availability for point redemptions, and along those lines maybe even some specials for redeeming points at discounted rates, like Priority Club does with PointBreaks. If the rooms are going to be empty anyway, they might as well encourage people to burn their points.

As far as the airlines go, if you’re a bit flexible, definitely hold off on booking a trip, especially if going internationally. The airlines are suffering even more than the hotels, and unlike the past year, the struggle for the airlines will be keeping the load factors up as opposed to increasing yields. Of course they’d like to increase fares, but they have no basis on which to do that, considering the lower demand and lower price of oil. I would also expect plenty of great airline promotions next year, be it in the form of bonus redeemable miles or bonus elite qualifying miles. For those planning a trip to Europe in the off season, I would expect massive price drops after Thanksgiving and beyond. The fact is that we see fares in the $400-500 range every year to Europe, so it’s just a matter of being patient.

Furthermore, as an American, traveling internationally is becoming more affordable again. The USD is starting to regain some strength against both the Euro and the Pound, so I might start looking east again for travel.

Long story short, if you’re interested in traveling next year, I’m betting it’ll be a great year for bargains, both in terms of prices and loyalty programs. Of course these are just my thoughts and I might be totally off, but it just seems to make sense.

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