Excerpt from Travel Weekly
While a number of aspects of the U.S. economy could affect people's propensity to travel, economists largely believe the outlook will remain strong for the foreseeable future. And at the moment, travel agencies are benefiting from a period of strong bookings for the next several years, signaling continued strength.
Yet some indicators, including a drop in consumers' intent to travel for leisure, have led travel marketing firm MMGY Global to predict a travel recession.
MMGY CEO Clayton Reid predicted the market will change in the next 12 to 18 months. In part, that's because MMGY is seeing some rate sensitivity in the market, typically a sign of challenges to come.
The company periodically polls travelers about how important price is in their travel decisions. Travelers who indicated they are sensitive to price have increased from 18% of those polled to 34% in the past 2.5 years.
"When consumers start telling us they're more sensitive to price, we know that creates rate challenges for suppliers, and we know that it's also a sign that demand is softening," Reid said.
MMGY's travel sentiment index has declined for eight straight quarters. Before that, it had been rising since mid-2009, hitting its peak in mid-2017.
Reid said he doesn't expect a "catastrophic" travel recession, saying that certain segments, such as affluent consumers, tend to be resilient and continue to travel even when there is an overall downturn.
Phocuswright is predicting a slowdown in growth of travel spending, albeit a small one.
"We are projecting 6% growth for travel in 2019 and 2020, down to 5% in 2021," said Phocuswright senior director of research Maggie Rauch.
Adam Sacks, president of Oxford's Tourism Economics group, said he believes it's "premature" to predict a travel recession.
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