I started Leisure Group Travel during one of the greatest economic upswings in history. In the winter of 1999 the stock market was roaring, unemployment was at near record lows and our government was, get this, reducing the national debt!
It wasn’t long before the Twin Towers fell and travel came to a screeching halt. As our nation’s economic fortunes rebounded and wounds healed, people got back out on the road again, only to be undercut a few short years later by 2008’s financial crisis. It felt like we were starting over again.
From there it was a steady rise back, and in 2018 and 2019 the travel industry experienced another year of growth as major sectors. Then of course there was 2020 which shook the travel industry to its core. But now in 2023 —airlines, lodging, tour and cruise—are all reporting revenue gains. While this is certainly good news, it’s making some wonder when the other shoe is going to drop.
In a recent interview in Travel Weekly, Keith Baron, president of luxury tour operator Abercrombie & Kent, said, “It’s a little bit scary how good things are.” He reports that bookings are up “huge double digits over 2019, which was an exceptional year. But it makes us nervous when we look at the economy and how fragile it might be.”
When will the next travel recession hit?
I share some of his concern about our next travel recession. Looking to the future, there are potholes in the road that, if not patched, could turn into sinkholes. Exploding student loan and government debt, trade wars, tight labor markets and stagnant wages are but a few of the warning signs that this bull market might turn bearish. While we should be wary of all this, let’s not hide under our desks waiting for the boogie man. Enjoy good fortunes while they are here and ride the wave of prosperity. But at the same time, now’s the time to game plan for the future. The famous motivational speaker Les Brown said that in good times you pull it from your pocket, in bad times you pull it from your heart.
There are steps you can take to insulate your travel business for that inevitable downturn:
- Tighten your systems and procedures to eliminate profit bleed—those nickels and dimes add up!
- Look to innovate products and develop your niche tightly. If you’re continuing to do the same things year after year, you can expect to do less of them in a recession.
- Increase your raving fan base. If your travelers love you and your trips, they’ll help you weather storms.
Hit on all three of these and you’re in a better position to “make your own economy.” Most importantly, understand that travel’s an escape from the doldrums of everyday life. In good times and in bad we all need that. This is what you bring to the table.
by Jeffrey Gayduk