14-05-2025
Can travel advisors defy economic gravity?
Arnie Weissmann
I cannot remember a time when we've been presented, on an almost daily basis, with credible data that contradicts data from 24 hours earlier.
The contradictions can even come in simultaneously from the same source. In the May 13 Bloomberg Morning Briefing, for example, a Goldman Sachs analyst was predicting an 11% gain in the S&P 500 over the next 12 months, while an item just a few inches down cited an assertion that an economic slowdown is likely.
The two aren't an apples-to-apples comparison, but it's also impossible that they can both be correct.
Reading item after item that yo-yo between optimistic and pessimistic makes planning more than a little difficult; either you revise the trajectory of your business on a daily (hourly?) basis or resign yourself to living with uncertainty and relying on your gut to distinguish signals from static.
Most of the incoming information could be categorized as either "sentiment" or "behavior." As examples of sentiment, last month the Conference Board's Consumer Confidence Index fell to its lowest level in five years. And its consumer-based Expectations Index, which looks at short-term sentiment about income, business and labor market conditions, fell to its lowest level since October 2011.
Those who survey sentiment assume that sentiment drives future behavior and may in fact be more predictive of the future than data that reflects recent past behavior. Global Rescue's recent Traveler Sentiment and Safety Survey found that 72% of its client base believes that Americans will be perceived more negatively abroad due to recent U.S. international policy proposals.
The company's CEO, Dan Richards, concluded that "travelers aren't just weighing destinations based on beauty, cost or convenience. Perceived hostility or cultural friction is becoming a deciding factor -- and that creates a challenge for travel professionals, policymakers and tourism boards alike."
On the other hand, quarterly earnings reports, though backward-looking, reflect recent behavioral reality and can reveal patterns and expose underlying trends.
In travel, however, public companies' earnings reports suggest that there is no one travel trend. (Or, perhaps, even a single travel reality.) Recently, Sabre reported that air bookings declined 3% year over year. For the quarter, Disney parks and experiences went up 13%, and American Express Global Business Travel reported decreased demand. Royal Caribbean Group revenue rose more than 7%, while Norwegian Cruise Line Holdings revenue dropped about 3%.
Let me know if you spot a trend there.
Of course, neither sentiment nor past behavior can ever be fully predictive; life simply holds too many unknowns. Milan Kundera wrote in a 1995 essay that when looking backward, everything is crystal clear, and progress seems to have taken an obvious path. But the present -- never mind the future -- is shrouded in fog. No one knows what even the next moment might bring.
As it turns out, travel companies do have a few more predictive tools than owners in most other business sectors because they have a lens into the future courtesy of their business already on the books. And any shift in booking behavior is easily ascertained by comparing current booking velocity with previous years.
Recent stats from Travelsavers, as reported by Travel Weekly's Jamie Biesiada, suggest that new bookings are trending positive: premium ocean cruising is up 21%, river cruising is up 15%, contemporary ocean cruising is up 13%, luxury cruising is up 5%, guided vacations are up 11%, fun-and-sun vacations are up 5% and FIT travel is up 4%.
It's likely that there are advisors who are doing better or worse than those affiliated with Travelsavers, but all travel advisors have another advantage over even other players in travel: They have greater insight into their upcoming cash flow.
Ironically, one of the most frustrating aspects of the advisor commission payment system -- that advisors mostly get paid after the travel occurs -- also gives them more visibility into their cash flow than companies that operate on a shorter payment cycle. Because travel boomed last year, payments coming in through the rest of this year from those bookings can provide a bridge that may help advisors get past the current climate of uncertainty.
The incredible post-pandemic travel boom also seemed to demonstrate that for most people, travel has become a right, not a privilege, and uncertainty has not at this point kept most people from booking vacations. It's very possible that even if other areas of the economy suffer, travel advisors will be able to defy economic gravity.
And more than other businesses, travel retailers can tune out a lot of the static that comes in daily. The data they mine from their own businesses is likely more relevant and accurate than any professional forecasters' or pollsters'.
All that said, for benchmarking purposes, Travel Weekly is asking readers to share what they're seeing in their businesses.
Until those results are in: Onward through the fog!
