Monday, January 19, 2009
Industry Faces Restructuring This Year
As for the rest of the travel industry, the company cited high debt repayment, coupled with reduced enterprise valuations, limited access to capital and lower expected future demand for products and services.
"As in previous recessions, we fully expect that the current market will not support the breadth of travel firms that were created during the last expansion cycle,” said Managing Partner Michael W. McCormick. “We expect 2009 will bring consolidation and restructuring for the travel industry in most every sector."
The Hudson Crossing 2009 Trends in Travel Investment report offers seven major predictions to guide business decisions in the New Year, including anticipated trends related to online and luxury travel, venture capital investment, the health of U.S. airlines, and the rise of mobile technology.
Hudson Crossing summary findings for 2009 include:
An OTA Will Change Hands: The space for Online Travel Agencies (OTAs) has become crowded and a widely anticipated downturn in consumer spending on travel will force one major OTA into a change of ownership.
Luxury Brands Feel the Pinch: Once unassailable luxury brands will feel the chill of the economic downturn as more affluent consumers experience an accelerated erosion of their net worth and make downward adjustments to their willingness to spend on travel.
Venture Capital Stands Aside: Corporations (instead of venture capital) will lead the investment activity. As a byproduct of this acquisition activity, Hudson Crossing expects failures of smaller firms in travel who are in the 3rd or 4th positions in their marketplace with less access to capital and fewer strategic alternatives.
Hotel Industry Hit Late: The global hotel industry will manage this downturn better than 2002-2003, but will feel the full brunt of the economy in late 2009.
Online Advertising and Media See Growth: Online advertising and media oriented businesses will be the sole bright spot in short-term travel investment performance. The current economic weakness has had no effect on online media properties, which continue to see unabated growth in their online visitors.
The Real Advent of Mobile Computing: The long expected rise of mobile computing in travel has been greatly over-hyped. Hudson Crossing expects the advent of two viable mobile computing platforms (the iPhone and BlackBerry Storm) to have a catalytic effect upon the use of mobile travel applications.
"A year of transformation does not equate to a year of failure in travel,” said McCormick. “Strong companies that embrace opportunities for change will emerge even stronger as they head into 2010 with perhaps even more customers, better products and fresh market strategy."