Will 2016 End Up Or Down?

Like sifting through tea leaves, the travel industry is dissecting 2016 bookings and travel trends, trying to understand whether a healthy August surge means agents might be able to cash in on strong demand through the end of the year, or if the month was an anomaly.

According to the U.S. Travel Association’s Travel Trends Index, travel volume in the United States rose 4.4% in August, an unexpected surge over August 2015, and a higher growth rate than any other month since May of this year.

But despite the growth, USTA president and CEO Roger Dow was cautious in his commentary on August results. “Although travel has outperformed the economic recovery overall, our grip on prolonged growth has felt tenuous at times because of the dollar’s impressive run and a rogue’s gallery of other concerning factors.”

Dow cited TSA-security line delays, Zika and “a tumultuous U.S. election cycle” as causing “a year of news stories that don’t particularly create the yearning to travel” and may have inhibited international inbound as well as domestic U.S. bookings.

In fact, a month earlier, USTA issued a warning that July results pointed to a slow growth trend for the rest of 2017. But some observers believe August’s higher demand can be sustained.

Elizabeth Moriarty, vice president of product development at Delta Vacations, said the company had a strong August, up 7% versus August 2015, “driven by strong demand for travel in Europe and the Caribbean.”

Looking ahead, Moriarty said Delta Vacations is “continuing to see strong demand through year-end with growth for travel to Hawaii, Latin America and Caribbean. We’re also seeing growth in our all-inclusive and luxury segments through year-end.”

“I am usually not as busy in August,” said Karen Sheldon, ACC, MCC, and co-owner of Between Trips Travel, LLC, Littleton, MA.  “I was away for a week and came home to five new requests in one day.  Several local clients are planning larger family trips and contacted me to organize the cruises.”

Reason to hope?
Even at the USTA, some acknowledge that August could be a harbinger of sustained higher growth.

“Many of the indicators performed much better between August 2016 and August 2015 than between July 2016 and July 2015,” said David Huether, the USTA’s senior vice president for research. “For example, room demand, air travel, and demand for both business and leisure travel increased at a faster pace in August than they did in July. Generally, August (and June) appears to be a bit of a rebound from a lower point at this time last year.

“There has been academic research that indicates uncertainty can cause business to delay investments as well as cause households to restrain spending. Additionally, forward-looking searches, while increasing over the prior year, are doing so at a slower pace. Business investment remains quite uncertain, too.”

Will America vote, then travel?
Some observers expressed an opinion that the U.S. presidential election is slowing travel decisions for businesses and consumers, and that choosing a president will give a boost to travel after ballots are counted Nov. 8.

Trafalgar CEO Gavin Tollman, for example, told TMR that it’s “a bit early” to be predicting 2017, and noted that “clearly in the United states there’s a deep obsession around the election. But the beauty is that [no matter who wins], on Nov. 9 America will still be here, and want to travel.”

But historical data doesn’t indicate any clear path.

USTA’s Huether said “historically, it is difficult to break out the possible effects of uncertainty regarding an election from other factors.  For instance, in 2008, travel was slowing in the months leading up to the election, but this was likely influenced significantly by the great recession, which started in the fourth quarter of 2007.

“Also, in the months prior to the 2012 election, travel was slowing a bit, but this too was likely impacted significantly by the fact that the recovery was slowing throughout 2012.  The recovery then picked up some steam in 2013, as did travel as well.”