Arnie Weissmann:
As the media aired AIG’s woes,
John Noel scrambled to
defend Travel Guard. 12
DESTINATIONS:
46
Richard Turen:
Is your business slumping?
Try my four-step
sales-slump cure. 57
www.travelweekly.com
M ag ellan
Awards
2008
THE NATIONAL NEWSPAPER OF THE TRAVEL INDUSTRY
SEPTEMBER 29, 2008
[ SOBER LODGING CONFERENCE ]
Forecasts bleaker
for hotel industry
in the next 2 years
By Jeri Clausing
PHOENIX — One year ago, the prediction
from the hotel industry’s annual Lodging
Conference was, “2008 is going to be great,
2009 is going to be fine.”
That forecast was uttered just a month after the credit crisis emerged as a threat.
Last week, the only cause for optimism
among the 1,400 hotel owners, investors and
operators gathered here for the 2008 conference seemed to be the hope, perhaps desperate, that the downturn had hit bottom.
Maybe, the reasoning went, the meltdown
on Wall Street signaled a possible end to the
financial market turmoil that now threatens
not only demand and profits but also financing for sales and new construction of hotels.
“Maybe this is the cataclysmic event that
will cause us to be in an environment to begin recovery,” said Arthur Adler, managing
director and CEO of the Americas for Jones
Lang LaSalle Hotels. “This has been a slow,
painful death.”
Recognizing excellence in marketing of Cruise Ships, Hotels & Resorts ,
Travel Agents & Agencies, Destinations,
Online Travel Services and Airlines & Airports
PAGE 29
See HOTELS on Page 58
Current downturn will
test whether cruise is
really recession-proof
[ CAPACITY CUTS, EXTRA FEES ARE PROBABLY HERE TO STAY ]
As oil drops, profit outlook for airlines brightens
By Michael Fabey
By Johanna Jainchill
The cruise industry has survived the economic downturns brought on by the 9/11
terrorist attacks, two wars in Iraq, the stock
market crash of 1987 and the ensuing recession in the early 1990s.
Throughout those gloomy periods, the industry continued to grow, prosper and, in the
case of the largest cruise lines, always sail full.
Today, however, many economic analysts are predicting that the current decline
will affect discretionary consumer spending
more than in earlier downward cycles. And
since the cruise industry is among the most
See CRUISE on Page 8
As oil prices yo-yoed throughout
mid-September, airlines assured
financial analysts of better balance
sheets for the third quarter because
of either lower fuel prices or the
carriers’ more aggressive hedging
against higher prices.
nually for some carriers and, according to
US Airways, as much as $3.5 billion for the
industry as a whole.
The ancillary charges were mostly instituted midyear as fuel prices reached historic
Further, airline executives said, capacity
cuts and a la carte pricing for such things as
checked bags, snacks and drinks would remain
intact, no matter which way fuel prices head.
The airlines are starting to bank on the
extra fee revenue — up to $700 million an-
‘In a lot of ways, ancillary
charges create a better
product for customers.’
— Scott Kirby, US Airways
highs. Since then, oil prices have retreated,
with substantial peaks playing havoc with
airline financial forecasters.
But even as the price of fuel dropped be-
low $100 a barrel, the airlines refused to ax
the additional fees.
Indeed, some executives posed the coun-terintuitive argument that the passengers are
the ones reaping rewards from such charges.
US Airways President Scott Kirby told
analysts during a Sept. 18 presentation at the
Calyon Securities Airline Conference that
he and other executives were aware of complaints that the airlines were “
nickel-and-diming” passengers with the added fees.
“What we’re finding,” he said, is that “in a
lot of ways, this creates a better product for
customers.”
Passengers, he said, care more about the
core airline service than they care about
amenities.
See AIRLINES on Page 59
