Marketing Review - Spring 2008 - (Page 22)

mongers have begun to speculate about another Great Depression. Looking abroad, we can see the noses running. GDP growth has been declining in Germany and France, Britain (just slightly), and the Eurozone as a whole, with Italy probably in recession. European banks face painful losses in the American mortgage market. Inflation in Europe ran at 3.2 percent in January, the highest level recorded since the euro was launched in 1999. Inflation is rising in China, Australia, Eastern Europe, Russia, and the Middle East as well. In all, the economies of the world seem a lot less healthy than they did a few months ago. Yet all this may not be as dire as it once would have been, thanks to the strength of the world’s other economic powers. China’s GDP grew by an estimated 11.4 percent in 2007, with 9.9 percent forecast for 2008. Nearly two-thirds of this economic output serves domestic markets; only 35 percent is export-based. And the fraction of Chinese exports headed to the United States has dropped in recent years from one-third to an estimated 20 percent. India’s economy grew by 8.5 percent in 2007, with something like 9 percent expected in 2008. Only 10 percent of GDP comes from exports, and only 18 percent of exports go to the United States. When the U.S. gets pneumonia, these countries help their other trading partners stay healthy. For anyone with cash to spend, the current downturn offers opportunities. Many of the assets now going at fire-sale prices are among the most desirable real estate available—vacation homes in resort communities, beachfront mansions, and depressed commercial properties. With prices at least 20 percent below recent levels and the dollar off by 30 percent, overseas buyers in effect can pick them up at half price. In Florida, California, and Texas especially, they are doing so in large numbers. This infusion of capital will help to limit the depth and duration of any recession. So will the continued prosperity of trading partners such as China and Japan, where low-dollar American exports are finding ready markets. We therefore expect that any recession in the U.S. will be shallow, and the economy will rebound quickly. On the present evidence, GDP and employment growth should be healthy again no later than the first half of 2009. Late 2008 is even more likely. Implications for Airlines: American busi22 TREND #6 Technology increasingly dominates both the economy and society. ness will be cutting back ruthlessly in 2008 and early 2009, allowing only the most necessary trips, while vacationers will stay close to home until they are convinced the recession is over and their jobs are secure. We expect to see air travel drop in 2008 and recover slowly through 2009. Economic conditions are encouraging those Americans who do travel internationally to visit destinations where the cheap dollar goes farther. Hot destinations include Mexico, Brazil, and Argentina in Latin America and Portugal and Eastern Europe on the Continent. Having been “discovered,” these destinations should remain attractive, even after the downturn is over. For Europeans, the cheap dollar would make the U.S. an almost irresistible travel destination under other circumstances. Unfortunately, hostility toward America’s war in Iraq continues to inhibit travel. Antiterrorist policies enacted after the 9/11 attack are even more discouraging. Transatlantic flights thus will remain slightly depressed, as European vacationers do most of their air traveling within the Continent. Implications for Cruises: The high end of the cruise market should remain very comfortable. The wealthy remain able to pay for luxuries even in the worst of economic times, and 2008 will be as mild a downturn as the U.S. could hope for. Family-oriented and economy cruises are less well positioned. Until some sense of job security returns to the workplace, most Americans will be shopping for bargains. Some may settle for cheaper kinds of vacation travel. We expect this problem, if it HSMAI MARKETING REVIEW • SPRING 2008 200487159-001/FLYING COLOURS/GETTY IMAGES

Table of Contents Feed for the Digital Edition of Marketing Review - Spring 2008

HSMAI Marketing Review - Spring 2008 Contents COLUMN: The Online Marketer COLUMN: Success Stories COLUMN: Guest Column Ten Trends Now Shaping the Future of Hospitality Turning the 2008 Consumer Tax Rebates into Hospitality and Travel Sales 25 Extraordinary Minds in Hospitality and Travel Sales and Marketing The Lure of Lore: Connecting with Customers Through a Unique Brand Story A Careful Balancing Act A Meaningful Relationship: How Technology Affects the Connection Between Hospitality Marketers and Meeting Planners SPECIAL SECTION: The 2007 HSMAI Adrian Awards Building Five Star Imagery

Marketing Review - Spring 2008

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