Rate growth has been proceeding at a more consistent pace than bookings, albeit not achieving the same size margins as bookings. July global corporate and leisure ADR increased by +6.0% and +5.0% over prior year. August has seen some of the widest and most frequent swings of stock market performance in recent history. While travel will likely not respond with the same rash reactions, on-going volatility can take its toll on the pace of travel recovery. Therefore it is important to re-examine and re-invigorate all your booking source relationships, especially those with demand-driving travel management companies (TMCs). The comforting aspect of travel activity is that, historically, it is not nearly as hyper-sensitive to fiscal trends as the financial markets. In August, the United States government narrowly avoided debt default while rumblings began that the U.S.’s credit rating from agencies may be at risk. During that time, the Hotel Data Conference occurred and despite what was being discussed by media pundits, the topic of conversation on everyone’s lips was not the impact of the U.S. financial situation on the travel industry. In fact, while Pegasus CEO Mike Kistner addressed questions from the audience in an open forum at the event regarding the topic of recovery and external forces, not a single question was raised about this potential impact. Later in August, Julie Parodi, senior director for Strategic Planning at Pegasus, reported at the Global Business Travel Association conference that there were no significant changes in corporate travel activity attributable to turbulence in the financial markets through August 14th. Leisure bookings, however, did show growth slowing the week of August 8th for North America and Europe. That was the week following the August 5th announcement of Standard & Poor’s credit rating downgrade for the United States which compounded by reports of European debt issues, led to serious volatility in the stock markets. While travel may hold a degree of resistance to economic activity, it is obviously not immune to its influence. Uneasiness from extended financial market swings can impact travel growth, even for the resilient corporate sector. There is still more progress to make before we’re at pre-recessionary levels, and capturing return, high-yield business can prove challenging. Now is the time to look towards TMCs and their ability to provide high-volume, corporate bookings beyond what your sales force can reach. They not only provide increased visibility and access to markets through relationships and preferred programs, they also provide companies with effective and efficient methods for controlling and managing their travel spend; being of valuable service to the companies that deploy your future business guests. Get the full story at the PegasusView Report July 2011 (PDF 140KB)