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Travel industry continues upward climb despite US credit downgrade

Global business travel net revenue grew by +12.2% in July, while global leisure travel revenue increased +8.6%, according to data released from Pegasus Solutions in The Pegasus View. The report, which includes extra analysis of daily bookings through August 14, shows resiliency…

Global business travel net revenue grew by +12.2% in July, while global leisure travel revenue increased +8.6%, according to data released from Pegasus Solutions in The Pegasus View. The report, which includes extra analysis of daily bookings through August 14, shows resiliency in both the corporate and leisure markets despite the US credit downgrade by the S&P on August 5.

The corporate travel recovery continued in July in the face of uncertainty about the financial markets regarding the August 2 US debt default deadline. Bookings grew by +5.8% over 2010, while global average daily rates (ADR) gained momentum over June’s pace, rising by +6.0% over prior year. Mike Kistner, chief executive officer of Pegasus Solutions, said the fickleness of the financial markets failed to make a marked impact on the industry.

“Unlike events that may put the personal health and safety of travelers at risk, negative and uncertain financial news did not compel travelers to cancel planned trips, whether they had already booked or not,” said Kistner. “Long-term strain could ultimately lead to a slow-down in the recovery, but in the short-term, it is events like earthquakes and hurricanes that will have the most immediate effect on bookings, though on a more regionalized level. It is good news for the travel industry that travelers failed to ‘catch’ the nervousness of investors.”

Leisure travel bookings grew by +3.1% over 2010 globally, which did represent a slightly slower pace than June growth. However, leisure ADR grew by +5.0%, up from June’s +4.7% and two points higher than the year-to-date pace of +3.0%. The solid ADR counteracted slower booking growth to lead to an +8.6% gain in leisure revenue over 2010.

Looking forward, leisure booking growth slowed slightly during the week of August 8, although the pace seemed to improve toward the weekend. Through the end of 2011, the leisure channel is expected to improve over 2010 in terms of bookings and ADR. GDS channel activity shows that corporate travel demand will continue to drive more bookings with steady ADR growth.

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Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

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