likely will replace some long-haul travel, and, despite
the economic difficulties, many customers still will
be looking for nicer lodgings and more pampering
Adventure travel as a whole will continue to grow as
it speaks to the increasing consumer desire and, in fact,
requirement for authenticity of experience in travel.
R ose Hache
t ravel industry lawyer
My expectation is that the
news media, excluding PBS,
BBC (and Travel Weekly, of
course), will continue to skim
the issues, spotlighting negative edges to news stories.
I experience the recession as
truly regional with scarce impact in some states. An opportunity is presented by studying markets, particularly
in the South, excepting Florida.
My clients tell me the mistake that was made after
9/11 was crawling into a shell and not keeping up their
marketing. Wholesalers report more and more travelers
are booking through travel agencies.
I am working on sales of travel agencies. … I continue to see healthy down payments and secured payouts.
Below the radar, automation vendors are hotly pursuing market share. I am truly concerned about [GDS
contract renewals] in summer 2011 and working hard
on automation contracts today to blunt the potential of
another hit to incentives.
B ob Sweeney,
I nnovative Travel
Travel agency owners
s hould expect the hangover
f rom the third and fourth
q uarters of 2008 to accelerate
i nto the first half of 2009. Service industry multiples of EBITDA (earnings before interest, tax, depreciation and amortization) have always
ranged between three to five-and-a-half times earnings
regardless of the type of service the company provides.
Midsize shops are commanding three times EBITDA,
while larger travel businesses are still receiving four
times EBITDA. The smallest agencies are commanding
33% of annual gross profit.
For 2009, transactions will require more seller financing, as many banks do not want to lend to a business
with no hard assets.
Also, my firm expects to see lower down payments
and more of the purchase prices determined by an earn-out formula pegged to the performance of the agency in
the 12 months following the closing.
Buyers are not going to overpay for a travel business
in this environment. The structure of the transaction
should contain a clause allowing the buyer to look back
at the first year’s actual performance. Indeed, a final
purchase price is usually not determined until the first
anniversary of the transaction. The terms of any transaction are as important as the purchase price.
Buying and selling of agencies will continue, but the
seller’s market shifted in mid-2008 to a buyer’s market.
This should be the case until late 2009 or into 2010.
Look for leisure and corporate shops to pick up steam
in the third quarter of next year as we begin the recovery. … This is a very resilient industry that will not die.
S usan Gurley
g lobal executive
It is unlikely that solutions
implemented in this or next
year will fix all the issues that
produced the current crisis. …
C ertain economic constraints
will last well into 2010.
For 2009, I predict business travel spending will drop
more than 9%, but I believe a majority of companies
will take a judicious approach to travel cutbacks, as opposed to across-the-board cutbacks, enabling firms to
take advantage of spot market developments.
And more firms will implement electronic meetings
technology in 2009 as part of a trend that will become a
fundamental aspect of business travel management.
There will be upheavals in the airline industry. Cuts
in oil production will be inevitable, and the price of fuel
will rise again. The airline industry may consider seeking a bailout, but Congress and the American people
will be beyond considering it at that point.
The shock to the traveling public then will be “total
reality pricing.” The upside to this will be new programs
to minimize the airlines’ financial losses through long-overdue airways enhancements.
The Obama administration will take a different, more
transparent approach to decisions related to travel security. Therefore, I believe bills such as REAL ID will
be scrutinized and are unlikely to be passed as riders
to other pieces of legislation. Also, legislation such as
biometric exit measures are unlikely to be developed,
implemented and funded as part of airline functions.
Traveler rights will gain a much higher priority, and
significant changes to guarantee these rights, especially
in procedures such as laptop examinations at U.S. borders, will be reintroduced in the next Congress. I also
look for an advanced priority for a modernized air traffic control system, eliminating the No. 1 cause of congestion and excess jet fuel consumption.
Given that the current respite from high-cost fuel is
almost certainly temporary, the development of biofuels
for commercial aircraft will continue to be important.
Corporate social responsibility (CSR) will quietly take
a back burner to economic survival. CSR may temporarily stall, but companies understand that consumers
expect corporate America to be socially conscientious.
Companies will not walk away from CSR; they may just
not be able to finance expanded efforts until the economic hurdle is cleared.
Bill Roebuck, president
Commission revenue, to
those who produce, is alive
Being in the air commission
quality-control business since
1992, we have seen commissions come, go and return once again.
Currently, and surprisingly, we are on a plateau after
a nice upturn. Offerings have leveled off somewhat for
our larger clients and consortia that sell international
segments effectively. We do not see much in the way of
I suspect that the more things change, the more they
will remain the same with regard to commissions in
About the time the carriers tell us they are going to
eliminate incentives, someone sweetens the pot with a
new round of them.
Everything remains negotiable, even with regard to
air segment sales. The vast majority of airlines are paying for production and, in some cases, quite well.
Next year will present many challenges to our industry due to consumer unease about the environment.
This also goes for corporate travel, which may convert
to online meetings and conference calls instead of that
business-class seat to New York.
Those who survive this economic downturn will be
rewarded with higher revenue, better margins and more
customers willing to spend their money.
You never know. Maybe ASTA will negotiate a direct
stimulus package. I mean, everyone else is getting one;
why not travel agencies?
S cott Koepf, president
My crystal ball is as fuzzy as
everyone else’s and offers the
same predictions. The good
news is that prices will be the
lowest imaginable, and the
bad news is that prices will be
the lowest imaginable. More
people can afford to go and at great value, but for agents
it will be more work for less money.
What may come of this is a tightening of relationships