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passenger travel—the DoMiNo effeCt

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  • pg 1
									Today’s economy proves that
our airlines, car rental compa-
                                                    passenger travel—the DoMiNo effeCt
nies, hotels, and travel agen-
cies—the “players” in the Pas-
senger Travel Industry—are                                               By Dr. G.R. “Rocky” Mobaraki, MBA, PhD
totally interdependent. Efforts                                          Passenger Travel Services Committee (PTSC) Chair
                                                                         Director, Global Government & Strategic Programs, The Hertz Corporation
to cut costs or shift focus by


                                                    P
one impacts all others. More                                assenger Travel is considered by         shrinking in 2009, with Middle Eastern,
than ever before, they need                                 many economists to be a key ba-          African, and Eastern European markets
                                                            rometer of our economic health.          faring slightly better. The forecast also
to join forces to remain in the                     Travel trends—not just at home in the            indicates a correlation between Gross Do-
game and provide the kind of                        USA, but around the globe—register the           mestic Products (GDP) and the travel and
                                                    direction that the recovery will take. The       tourism industry. According to UNWTO-
service that government trav-                       outcome is unknown. But, one thing is            World Business barometer, when global
elers have come to expect. By                       certain . . . we have entered a new world.       growth exceeds four percent, tourism ar-
                                                       I always like to have a positive outlook,     rivals growth tends to be higher; however,
leveraging their strengths and                      and like the old cliché, I prefer to see the     when the GDP falls below two percent,
resources, the airlines, car                        glass half full rather than half empty. At the   tourism growth tends to be lower. With
                                                    recent NDTA board meeting, I began my            the global economy contracting in 2009,
rental companies, hotels, and                       briefing by asking the other board mem-          the impact on the travel and tourism in-
travel agencies will be able to                     bers what they wanted to hear first—the          dustry is severe. That is why the Interna-
                                                    good news or the bad news . . . The good         tional Monetary Fund has revised its 2009
withstand the downturn that                         news is that in the Passenger Travel Indus-      global GDP forecast from 3.9 percent to
currently dictates the passen-                      try (PTI), the government and the defense        -1.3 percent. (Nina Varghese, Business
                                                    contractors are still traveling strong. The      24/7 June 7, 2009).
ger travel industry.                                bad news is that the government and the             The PTI is challenged with the world-
                                                    defense contractors are the only segments        wide recession and reduced demand.
                                                    still traveling—demand is strong.                In response, all segments of PTI report
                                                       Euromonitor International, an inter-          year over year declines in passenger traf-
                                                    national provider of business intelligence       fic. “Revenue flat” seems to be the new
                                                    and strategic market analysis, forecasted        “revenue up” these days, and if Passenger
                                                    that the global economic downturn will           Traffic is any indicator of the economic
                                                    lead to the travel and tourism industry          health, then the economy is still strug-


18 |   Defense Transportation Journal   |   AUGUST 2009
gling to improve. While depending on                fleets, and finding banks willing to lend       Many hotels that never offered per diem
the price of gasoline and demand, air-              this money has been very difficult. Ad-         rates are now welcoming them, as well as
lines are reducing capacity to make ends            ditionally, the problems experienced by         discounts for leisure travelers.
meet, hotel occupancy is down, travel               the big three auto makers has increased            While the travel and hospitality indus-
agencies are focusing on opportunities in           overall pressure on how and from whom           try in general reflects the current econom-
leisure travel, and the car rental industry,        vehicles may be purchased. The car rental       ic condition globally, the US government
plagued with low rates prior to the reces-          industry is looking forward to the stabili-     travel has not decreased significantly year
sion, is now lowering rates even further            zation of the banking and auto industry         over year. While we may see a downward
to stimulate travel and keep cars from sit-         along with the resurgence in leisure and        shift, we do not expect to see the sig-
ting idle. To survive, the PTI has gone             commercial travel; however, no innova-          nificant fall off which is currently being
through major restructuring, cost cut-              tive revenue generating ideas are ruled         experienced on the corporate America
ting, layoffs, and temporary and perma-             out. In fact, for years the car rental in-      side. The majority of the travel agencies,
nent salary cuts, as well as other money            dustry missed out on utilizing fees similar     or CTOs, providing travel service to the
saving initiatives.                                 to those with airlines and hotel industry.      Department of Defense also rely on cor-
   The price of oil, which has dropped              Subsequently, the most important ques-          porate and leisure travel as a major source
substantially since the last edition of the         tions remain as follows:                        of revenue. As corporate and leisure travel
DTJ Passenger Travel Issue (lingering in                                                            continues to decline, greater pressure will
the $140s/barrel), is creeping up again.            •	 How	do	we	get	people	to	travel	again?        continue against the financial bottom line
The drop in gasoline price significantly            •	 How	 can	 we	 increase	 profitability	 in	   of these companies and challenge them in
helped the airlines because the airlines               this extremely competitive market?           continuing to be competitive in the US
fuel hedges at higher prices were being             •	 To	what	extent	will	the	fleets	be	right	     Government market place.
replaced at lower cost. The advantage air-             sized to meet demand?                           All of the players in the PTI chain are
lines have over other segments of PTI is            •	 What	services	will	be	abandoned,	and	        interdependent. The travel agency, airline,
the ability to flex capacity with the chang-           what locations need to be closed?            car rental, and hotels, along with other
ing economic environment, grounding                 •	 How	 can	 quality	 service	 be	 preserved	   PTI entities impact the entire travel expe-
planes when demand is weak and then                    with aging fleets?                           rience. Lower traffic for the airlines could
reinstating capacity when travel picks up           •	 Can	lost	revenue	be	generated	during	        mean fewer car rentals and lower hotel oc-
again. Considering all of this, the chal-              peak periods?                                cupancy. The economic downturn means
lenge is being able to time the supply              •	 What	other	service	costs	can	be	passed	      cost cutting measures for organizations of
and demand curve. Reducing capacity                    to the customers?                            all sizes, translating to lower travel across
could take up to six months to adjust                                                               the spectrum. This domino effect that we
in the system. Forecasting fuel prices is              Similar to the car rental industry, the      are experiencing now validates that there
also a difficult task, and saving fuel costs        lodging industry is also suffering a major      is a direct correlation between travel and
through hedging is impacted heavily by              downturn due to this worldwide recession.       the health of the economy.
the accuracy of these forecasts. Know-              Builders have begun to suspend or cancel           The good news for the government re-
ing this from the airlines gives the rest           projects as their banking resources have        mains to be low rates in every segment of
of the travel industry an indication that           dried up. Hotels are seeing declines in oc-     travel. However, the airlines, hotels, car
matching capacity with lower demand                 cupancy across the globe as corporations        rental companies, and travel agencies all
is the key to reduce variable costs and to          rein in their travel spending and airlines      have concerns that need to be addressed,
make fixed costs more manageable under              cut capacity. This has resulted in hotels       and we continue to work with DOD and
reduced revenue streams.                            competing for limited business. Both the        GSA in order to enhance programs that


The economic downturn means cost cutting measures for organizations of all sizes, translat-
ing to lower travel across the spectrum. This domino effect that we are experiencing now
validates that there is a direct correlation between travel and the health of the economy.

   The agility, innovation, and flexibility         transient and group sides of lodging are de-    are beneficial for all stakeholders. There
of the PTI are keys to surviving the tough          clining, resulting in layoffs, closings, and    are many ways government and industry
times. For instance, the car rental indus-          restructuring in most of the major lodging      can collaborate to meet the needs of all
try has been devastated by the economy.             chains. European hotels are expecting clos-     parties. If the Government desires to con-
The problems experienced with the de-               ings and chain bankruptcies if the trend        tinue benefiting from lucrative programs,
cline in leisure and corporate travel are           continues. The good news for the govern-        the needs of industry must be addressed,
compounded by the fact that car rental              ment travelers is that just about every hotel   or the government and its travelers stand
companies rely heavily on borrowing                 chain has discovered government business        the chance of seeing less attractive pro-
large amounts of capital to finance their           and is welcoming government travelers.          grams and increased costs. DTJ


20 |   Defense Transportation Journal   |   AUGUST 2009
                                                   airliNes                          Carlson hotels Worldwide      Northrop grumman
                                                   Csi aviation services             Linda Colovos                 Lisa Godfrey*
                                                   Ralph Paker                       Choice hotels international   sabre travel Network
                                                   Donna Heinz                       Lisa Kenner                   Jeffrey Goodell
                                                   Delta air lines                   Mary Sarkis
                                                   Denny Clifford*                                                 goverNMeNt
                                                                                     hawthorn suites-alexandria
                                                                                                                   Defense travel Management
                                                   flightWorks, inc.                 Stacie Liverpool
                                                                                                                   office (DtMo)
                                                   Cynthia Karnik                    hilton hotels Corporation     Andrea Carlock
                                                   kalitta Charters, llC             Scott Lamb*                   George Greiling
airliNes                                           Steve Green                       hilton Waikiki prince kuhio   Harold Hicks
                                                   North american airways            Newton Wong                   Paul Joyce
Mr. Denny Clifford, Director Military &                                                                            Bill Shirey
                                                   Lois Wilson                       hyatt hotels & resorts
Government Sales, Delta Airlines & NDTA
                                                   omni air international            Anna Marie DiBattista         ptsC CoMMittees & Chairs
PTSC Airline Subcommittee Chair                    Trisha M. Frank                   Ron Keith                     ptsC Committee Chair
                                                   southwest airlines                interContinental hg           Dr. G.R. “Rocky” Mobaraki,
Current economic environment                       Merrill Taylor                    Judy Silcox                   MBA, PhD
and industry trends                                                                  la Quinta                     Director, Global Government &
                                                   united airlines
                                                                                     Jake Paine                    Strategic Programs,
“We have lost several years of growth, and         Tom Billone
                                                                                     Lynn Shatterly                The Hertz Corporation
yields are under severe pressure. Airlines are     World airways
                                                                                     ltD hotel Management          ptsC vice Chair and airline
                                                   Lois Wilson
in survival mode. Cutting costs and conserv-                                         Eunice Gibbs                  Committee subcommittee Chair
ing cash are the priorities,” says Giovanni        bus                                                             Mr. Denny Clifford
                                                                                     Marriott international        Director, Military & Gov’t Sales,
Bisignani, IATA’s director-general. Although       trailways transportation system
                                                                                     Paul Somogyi                  Delta Airlines
                                                   Diane Walden*
dismal, these comments are the reality the                                           radisson – Waikiki            Car rental subcommittee Chair
airlines are facing in today’s challenging eco-    Car reNtal                        Newton Wong                   Mr. Mike Washkevich
                                                   advantage rent-a-Car              resort Quest hawaii           Director, Government Sales
nomic environment. According to IATA,              Mr. Bob Thunell                   Kathy Ahsam                   Avis & Budget Rent A Car
international passenger traffic is down al-        avis/budget rent a Car            starwood hotels               hotels subcommittee Chair
most 10% in May compared to last year.             Robert Krapf                      Ted Miller                    Mr. Scott Lamb
IATA also estimates that industry losses in        Mike Washkevitz*                                                Director, Government Sales
                                                                                     suite america
2009 will be $9 billion. One positive sign:        Dollar – thrifty                  Kim Dunbar                    Hilton Hotels Corporation
                                                   Automotive Group                                                travel agencies
air cargo, which is the leading indicator for      Mark Cronin                       Wyndham hotel group
                                                                                     Denise Benyak                 subcommittee Chair
world trade, dropped 17% in May versus             Randy Tietsort                                                  Ms. Kelly Kuhn
                                                                                     John F. Kennedy
prior year, which was an improvement from          enterprise rent-a-Car                                           President, Carlson Wagonlit
the 21% drop in April, and a signal that the       Lisa Burgess                      passeNger rail                Travel | SatoTravel
                                                   Bryan Scott                       aMtrak                        travel technology
negative trends have possibly hit bottom.          Xavier Trimiew                    Clifford Black*               subcommittee Chair
   Airlines are responding aggressively with       europcar                                                        Ms. Lisa Godfrey
actions to offset the losses in revenue, includ-   Tony Dolt                         travel ageNCies               DTS Program Manager
                                                   Olivier Jacquet                   Carlson Wagonlit travel |     Northrop Grumman
ing fare promotions, removing weight from                                            satotravel
                                                   Frank Langbein                                                  bus subcommittee Chair
aircraft (with some removing ovens, in-flight                                        Shelley Bickner
                                                   fox rent a Car                    Kelly Kuhn*                   Ms. Diane Walden
magazines, and entertainment systems and           Jose Giraldo                                                    VP, Sales, Trailways
                                                                                     Monnie Riggin
others incorporating lightweight meal carts        the hertz Corporation             Phyllis Leeth v. Scott        extended stay lodging
and lighter plateware and cups), and hedg-         Lori Leffler                      Marc Stec                     subcommittee Chair
ing fuel purchases at optimum timeframes.          Rocky Mobaraki*                   Craig Thompson                Ms. Toni Kleinops
                                                   payless Car rental                McNair travel                 Extended Stay America
Although fuel costs had decreased substan-
                                                   Kathy Johnson                     Karen Bacordo                 passenger rail
tially since an all-time high was reached                                                                          subcommittee Chair
                                                                                     omega World travel
last summer, the price of a barrel of oil has      exteNDeD stay loDgiNg             Joy Borja                     Mr. Clifford Black
                                                   equity Corporate housing                                        Chief Corp. Communications
doubled in the last few months.                    Kathy Lane
                                                                                     Diana McHugh
                                                                                                                   (Acting), AMTRAK
   If these headwinds weren’t enough, air-         extended stay america, inc.       travel publiCatioNs           travel publications & services
lines worldwide faced the fallout from the         Toni Kleinops*                    & serviCes                    subcommittee Chair
H1N1 flu virus, particularly in Mexico and         Rachel Tyler                      ameriforce publishing         Brent Albrecht
                                                   korman Communities                Brian Dunbar                  Advertising & Marketing
other countries hardest hit by this near-
                                                   Scott Foster                      oag Worldwide                 Director, OAG
pandemic. One major carrier has reported                                             Brent Albrecht
                                                   oakwood Worldwide                                               ex-offiCio
that the virus resulted in a revenue loss of       Mary Jacenich                     Christina Kosac               Ken Wykle
$250 million. The affects of the flu on airline    Debbie Lynch                      runzheimer international      President, NDTA
economic results seems to have subsided.           Daphne Medillo                    Kraig Rodenbeck               Denny Edwards
                                                   virginian suites                                                Vice President, NDTA
                                                                                     travel teChNology
                                                   Ms. Noelani Berkholtz
Military/government-specific issues                                                  iNNovata                      (*Subcommittee Chairman)
                                                   hotels                            Paul Chrestensen
The GSA FY10 airline bid process is                                                  Cathi Massi
complete. GSA is now analyzing bids for            best Western international
                                                   Dave Brogden                      Judy Smith
                                                   Mari Ann Gray
                                                                                                                     www.ndtahq.com | 21
                                                                                                 same itinerary twice, whether deliberate

   SAFE SUMMER DRIVING TIPS for Sharing
                                                                                                 or unintentional, results in charges back
                                                                                                 to the booking travel agency.
   Roads with All Vehicles from FedEx Ground                                                        Industry concluded that it needs to find
                                                                                                 a better way to assign responsibility for the
                                                                                                 source of the duplicate booking problem,


   I
       t’s summertime! Which means . . . summer breaks, family vacations, and mil-               which would reduce the instances of debit
       lions of drivers hitting the open road. More vehicles mean traffic congestion,            memos being charged to agencies by airlines.
       and a greater chance for accidents. With this in mind, FedEx Ground offers                Many in industry believe the Government’s
   tips for drivers on staying safe and sharing the roads with other drivers.                    ability to hold its travelers accountable for
      “Without a doubt, summer sees increased risks on the road,” said William Q.                certain transactions (such as duplicate book-
   Battle, managing director of Safety for FedEx Ground. “Safety should be the num-              ings) would be a move toward resolution of
   ber one priority! We all play a role in ensuring that the roads are as safe as they can       these recurring issues. Further education
   possibly be. Summer is a carefree time, but drivers should take actions to ensure             for travelers in the booking process will also
   their own safety and that of passengers, other travelers, and pedestrians.”                   help mitigate this problem. GSA, airlines,
      Keep these driving tips in mind when you’re behind the wheel this summer:                  travel agencies and other entities continue
                                                                                                 to work together in finding solutions to
   •	 Be patient. Stay focused – Adhere to speed limits and remain calm. Keep your eyes          these challenges faced by industry. This ini-
      on the road to avoid fender-benders that typically happen in stop-and-go traffic.          tial industry meeting kicked off discussions
   •	 Look	farther	ahead	–	Let	your	eyes	lead	your	wheels	as	you	drive.	Watch	for	               of these critical issues. Subsequent meetings
      brake lights, changing traffic signals, bicyclists, and other drivers entering             will be held monthly to further discuss and
      intersections.                                                                             find solutions for these problems.
   •	 Never	drive	when	tired	–	No	matter	how	eager	you	are	to	reach	your	destina-
      tion, don’t pull an all-nighter behind the wheel. Stop for ample rest and alter-           loDgiNg
      nate drivers whenever necessary.                                                           Mr. Scott Lamb, Director, Government Sales,
   •	 Pass	with	care	–	Use	care	when	passing	large	trucks	or	tractor	trailers.	Don’t	            Hilton Hotels Corporation & NDTA PTSC
      slide back in the traffic flow until you can see both of the truck’s headlights in         Lodging Subcommittee Chair
      your rearview mirror, and be mindful of a truck’s blindspots when passing. “If
      you can’t see the driver in his side view mirror, the driver can’t see you.”               Overall, the global economic challenges
   •	 Avoid	distractions	–	Keep	both	hands	on	the	wheel	and	avoid	in-depth	conver-               continue to have a negative impact on
      sations with passengers, as well as cell phones, texting, iPods, eating, and stereo        the lodging industry. Most hotel markets
      adjusting.                                                                                 are seeing 15% to 30% decline in overall
                                                                                                 revenues. Industry prognosticators (Smith
     These and other highway safety tips are followed daily by the more than 20,000              Travel Research, PK&F) are predicting
   independent contractors and drivers who operate their vehicles for FedEx Ground               a soft recovery for lodging starting in
   every business day, and who logged more than 1.3 billion miles in 2008.                       mid-2010. The results so far have been:

                                                                                                 •	 Restructuring	and	layoffs	by	many	ho-
                                                                                                    tel companies.

  >> Miles aND sMiles                                                                            •	 New	build	and	renovation	projects	de-
                                                                                                    layed or canceled for lack of funding
  FedEx will log many MILES and SMILES this summer. The company is providing vehicles               and credit.
  and drivers to lend a hand to the “Summer of Service” project initiated by the federal         •	 Lower	rates	and	special	packages.
  government’s Office of Personnel Management (OPM). Federal employees have been
  challenged to donate to area food banks, and due to their overwhelming response, extra            The good news for government travel-
  transportation was required. FedEx, a generous participant in worthy community causes,         ers is that many hotels are offering govern-
  answered the call for delivery to the DC Food Bank and Warehouse on June 26, July 31,          ment rates that would not discount to per
  and August 28. If your company would like to participate, call NDTA for more details.          diem in the past. In addition, extras like
                                                                                                 free internet, discounted food and bever-
                                                                                                 age, and free parking are being bundled
release of awards expected in late July/            lower fares), duplicate bookings (which      with the government rate to make the ho-
early August. Contract starts October 1,            have been an increasing problem as pas-      tel more competitive.
2009. Industry met with GSA in June to              sengers use the DTS and ETS systems),           Two major concerns are challenging the
discuss the resolution of several issues in-        and overcharge issues by GSA Audit in-       industry today. First, the economic efforts
cluding churning of bookings by agencies            cluding those related to itineraries where   of the White House and Congress have
(churning is deliberate booking, cancel-            the Fly America Act is involved. The du-     highlighted “extravagant” meetings and
lation, and rebooking of flights in order           plicate booking issue is at the forefront    travel spending by some companies—
to avoid fare rule restrictions or to obtain        because action by travelers to book the      even as they are asking for government


22 |   Defense Transportation Journal   |   AUGUST 2009
bail-outs. Unfortunately, this negative           Each member hotel and hotel company          car rental company, Advantage, filed for
publicity has had a “halo” effect on partic-      has programs tailored for government         chapter eleven bankruptcy.
ular destinations (Las Vegas, for example)        and government contractors. NDTA is             The good news for Federal Govern-
and on meetings in general—resulting in           pursuing more effective ways to promote      ment Travelers is that Government renters
companies cancelling events for fear of           these programs to its membership. In         continue to receive the lowest rates—and
bad press.                                        addition, the representatives from these     the most comprehensive benefits—in the
                                                  lodging companies are perfect contacts       auto rental marketplace. Due to the com-
                                                  for government and contractors to work       petitive nature of the Federal Government
                                                  with for special programs, meetings, and     Car Rental Agreement, daily rates have
                                                  extraordinary circumstances. We don’t        barely increased in the past two decades.
                                                  need to create a new hotel program              Perhaps even more importantly,
                                                  within NDTA, but we do need to find          Government renters are never charged
                                                  better ways for the NDTA membership          underage driver fees ($27 per day value)
                                                  to support our hotels!                       or additional driver fees ($12 per day
                                               •	 Government business has gained im-           value); Government renters also receive
                                                  portance for hotels and hotel companies      free collision/theft coverage ($25 per day
                                                  due to the economy. NDTA has an op-          value), and free liability coverage ($15 per
                                                  portunity to add more membership—            day value). Additionally, under the Fed-
                                                  if they provide education and business       eral Government Program, renters receive
                                                  building opportunities at their meetings     free unlimited mileage.
                                                  and forums. “How To Do Business with            The success of the Federal Government
                                                  a Military Base,” “How To Respond to         Car Rental Program stems from the close
   The hotel industry is very concerned           a Government Bid,” “Meet the Trans-          relationship between the Defense Travel
that this trend may continue, and we are          portation Officers,” and “How Govern-        Management Office (DTMO), which
calling on the administration, govern-            ment Travels” would be sessions that         handles the Car Rental Agreement, and
ment, and industry to start traveling and         would attract more hotels and lodging        the car rental companies. NDTA also
meeting again!                                    companies to our conferences and help
   The other issue that has been raised           the Lodging community feel part of
as a result of the current economy is the         NDTA. Along these same lines, asking
potential impact of per diem changes in           DTMO to do live demonstrations at
2010 and 2011 to the lodging industry.            the conferences would also be a “value
It’s no surprise that government business         add”. Perhaps a “Traveler Focus Group”
has become very important to hotels in            session could be included to help ho-
the last 6 to 12 months. This seems to be         tels understand how travel decisions are
the only segment of the lodging market            made. The lodging committee will be
that is not suffering steep declines, and in      working to implement many of these
many cases government travel is keeping           ideas in the months ahead. We need to
the doors open at hotels that would oth-          bring more relevant content to NDTA
erwise be looking at failure.                     programs to better sell NDTA within          plays a crucial role as the intermediary
   Although we do not expect GSA and              our organizations.                           between these two entities. Numerous
OMB to ignore changes in the lodging                                                           meetings take place throughout the year
market or the potential savings the gov-       Car reNtal                                      to ensure that both Government and in-
ernment can garner in this environment,        Mr. Mike Washkevich, Director, Government       dustry’s respective needs are met.
we do want to express our concerns and         Sales, Avis & Budget Rent A Car & NDTA             The role that NDTA plays in the re-
hope GSA and OMB will realize the im-          PTSC Car Rental Subcommittee Chair              lationship between Government and the
pact large rate declines will have on our                                                      car rental industry cannot be understated.
industry. We are hoping that this may be a     Car Rental companies are facing huge            NDTA provides a forum for the meet-
first opportunity for the lodging industry     challenges. The economic crisis of 2008         ings, offers guidance to both sides, and
to have impact on the GSA/OMB pro-             had a huge impact on many businesses            provides unbiased input on all important
gram and be included in the rate setting       and industries across the United States,        contract issues.
process going forward.                         and the car rental industry was no excep-          Currently, the most pressing agreement
   We also feel that NDTA has a role in        tion. Faced with a 25% decline in both          issue being reviewed is the $5 per Gov-
promoting a better relationship between        leisure and business travel, tighter restric-   ernment Administrative Rate Supple-
the lodging industry and government.           tions in acquiring funding for new cars         ment (GARS), which helps offset the
                                               from faltering banks, and having to look        cost (more than $100 per day value) of
•	 NDTA should encourage its member-           outside bankrupt Detroit automakers for         offering all of the aforementioned ben-
   ship to spend their travel dollars with     supply left virtually all car rental com-       efits to the Government. With mount-
   NDTA member lodging companies.              panies in dire financial condition. One         ing financial pressure (publicly traded car

                                                                                                                 www.ndtahq.com | 23
rental stocks fell by an average of 98% in       The growing trend of clients booking         them to add the DOD discount on top of
2008!), it is no longer feasible for most     vacations within 30 days of departure has       already aggressively priced packages.
car rental companies to offer full benefits   resulted in some suppliers introducing spe-        Royal Caribbean reports that the hefty
to Government travelers without an in-        cial short notice programs such as “pack        discounts the company has been offering
crease in the GARS fee. NDTA’s role in        and go,” non-refundable deposits, and           in recent months for cruises on its name-
this negotiation is invaluable.               other incentives. Cruise Lines have also al-    sake brand and sister line Celebrity Cruis-
   Looking forward, the world of the car      tered itineraries to offer more options that    es have been successful in getting people
rental industry is changing. Car rental       are less than 7 days and are spending more      booking again and that discounting
companies are adapting to the current         than one day in a port in order to respond      continues to be aggressive. By dropping
economic climate by keeping cars longer,      to customer needs and in turn reduce their      prices on the cabins, the ships are reach-
eliminating unprofitable locations, and       own costs. The cruise lines are even intro-     ing higher passenger levels, which im-
either eliminating—or charging more           ducing new air programs to help counter-        proves the revenue it produces per cabin,
for—benefits such as insurance, underage      act the downturn in the economy.                and that consumer behavior is stabilizing.
drivers, and unlimited mileage.                  Overall, leisure travel sales have slipped   They have lowered their revenue forecast
                                              in the industry, primarily impacting air        marginally to take into account selected
travel ageNCies                               only bookings; however, consumers are           areas of weakness including a more cau-
Ms. Kelly Kuhn, President, Carlson Wagonlit   still planning vacations. Suppliers and         tious view of onboard revenue, but over-
Travel / SatoTravel & NDTA PTSC Travel        travel companies that have responded to         all, their bookings continue to come in
Agency Subcommittee Chair                     the crisis by offering complimentary up-        within the range of earlier expectations.
                                              grades, onboard ship and resort credits,           Travel suppliers are encouraged and re-
Vacation travel is obviously at risk with     kids stay and eat free programs, etc., are      porting that they are back up to an average
the current economic crisis. Even con-        actually surpassing 2008 revenue levels.        of 80% capacity; however, the economic cri-
sumers that have discretionary income are        The entire leisure travel industry has       sis is changing the leisure travel industry, and
delaying the decision to take a vacation      continued to support the DOD customer           consumers can expect continued discount
due to fear of possible job layoffs.          with special discounts and is allowing          programs to fill ships and resorts. DTJ

								
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