Bellwether Shows Strong Recovery – Time Will Tell if Some Changes Were Structural!

Serving as a “canary” of sorts, the performance of the “travel” economy was first to signal the recession from which we’re recovering as much as two years before it was clear to some experts or the news media.  In my opinion, the current strength of this sector’s recovery is also far better reason for optimism than trying to keep up with each morning’s OMG report of micro indicators and knee-jerk reactions by computer controlled market reactions.

Business travel, the smaller but far more seriously damaged segment during the recession, was up nationwide by nearly 14% in July based on airline seats while lodging rooms-sold in communities like Durham (which draw a larger proportion of air travelers than nearby or competitor cities) were up 9% that month and have increased over last year during each of the last nine months through September.

Steady recovery in “demand” or visitation is pushing up air fares nationwide and overall hotel room revenue in Durham is up now six straight months.  When overall travel volume is back to pre-recession levels, we’ll be able to say just how much of the change to the 10% convention and meetings sub-segment are “structural.”

Even before the recession, the “meetings” sub-segment of the travel economy was undergoing a gradual but structural transformation due to advances in technology substituting for many meetings.  It has been apparent for many years that the “arms-race” in meeting facilities between communities was ill-founded with some cities (not Durham) subsidizing conventions to the point they had zero or negative return on investment in terms of local tax revenue.

Recessions typically accelerate and entrench changes and it will be interesting to see how much of this has further decreased the convention and meetings sub- segment of travel.  It is much too early to tell right now.

More interesting will be whether communities and their respective destination marketing organizations (DMOs) have learned any lessons during the recession and begun to diversify away from over reliance on conventions and meetings and/or jonesing larger and larger meeting facilities.

My guess based on nearly four decades as a DMO executive over many recessions is that my peers as a group haven’t learned a thing and probably won’t until new generations of both DMO executives, local officials and enablers emerge, unencumbered by old school egos and rhetoric.