In a typical year, they confidently
pull the levers that make the machinery of the travel industry work.
But this year, those who guide some
of the strongest brands in travel
are struggling to understand what
awaits them in 2009. Travel Weekly
Editor in Chief Arnie Weissmann interviewed the leaders in 11 distinct industry
segments and explored how they plan to
approach a year when the only certainty
CEO, Wyndham Worldwide
The economy is moving so quickly that we have been
going back and forth and back and forth on our 2009
budget. We’re going to be highly profitable, but it’s a
question of how profitable. We’ve given guidance to the
street that EBIDTA [earnings before interest, depreciation, taxes and amortization] will be essentially flat to
Our focus for hotels in 2009 will be to help our
franchisees get more than their fair share of the
market and help them find more efficient ways to
manage their businesses, help them with their yield
You’ll see some very active branding efforts; the need
for branding becomes more acute when times are bad.
We will try to bring them additional hotel room-nights
to make them more profitable.
As a company, we’ve got two structural advantages.
One is that we’re franchisors. We may not have the upside of ownership when hard asset values are going up,
but, for instance, utility costs don’t hit us when they go
The second is that we’re largely leisure dominant.
Conferences will be limited in 2009, especially internal corporate meetings. You will, however, see conventions for associations. It’s really a matter of survival for
‘Will ther e
be discou nt-
be discou nt-
But on the
leisure side, we
will endeavor to
or visit family and friends. We have seen some “trading
down” going on, and that will be good for many of our
Will there be discounting? Sure there will be discounting. There’s no way you can completely avoid discounting. But we hope that it will be thoughtful and
moderate. We’re encouraging franchisors to do three
nights for the price of two or five-for-fours. After 9/11,
the online travel agencies were relatively new, and with
the merchant model people were saying give me 50
rooms for 10 bucks each and I’ll dump them for you.
And hotels were dumping too many rooms into the
market. I don’t think that will happen again.
We may make some acquisitions in 2009. We’ve always been acquisitive, but it depends on a lot of things:
the capital market environment, what our stock value
is, what other people’s stock is.
In general, I don’t think this type of economic environment allows a lot of positive things to happen. But it
does really challenge hotels to be smarter and better.
CEO, Signature Travel Network
What’s happening today will forever alter the landscape of travel retailers.
The majority of Signature owners have been boldly
cutting expenses. They’re reducing head count and adjusting compensation models by cutting salaries, reduc-
ing staff to three or four work days and urging employees to take time off without pay. Owners of multiple
agencies are closing locations and consolidating.
Others have renegotiated their leases with landlords.
Several storefront owners are [becoming] home based.
Some are merging with larger agencies to maximize
yields and eliminate the headaches associated with running a business.
Bottom line: For today’s travel retailer, it’s about cash
flow, cash management. Too many don’t have the lines
of credit or cash reserves to hold their heads above water for an extended period of time.
For some agencies, advanced bookings have completely stalled or are at double-digit, year-over-year declines. Cash is king in this market. The better capitalized
agencies will prevail.
Owners in the business of travel will do better than
owners in the travel business. It’s easy to get distracted
thinking about the next marketing scheme and not
move into in-depth financial analysis. But that’s precisely what’s required in this market.
Supplier default is a concern that keeps us up at
night and has us consulting our CPAs and legal counsel. Our members are encouraged to sell third-party
insurance and take all steps necessary to mitigate risk.
Which products are on the shelves right now is very
In 2009, there will be downward pressure on pricing across all segments, even the luxury sector. And the
booking curve has changed drastically. Consumers are
more reluctant to commit far in advance, making it very
challenging for retailers to manage cash flow and pre-