Travel Agent Magazine. August 27, 2001 Weak Economy Imposes Mixed Effects on High-End Leisure Market DALLAS-Travel, like many other industries, has felt the effects of a slipping economy. Agents attending the Virtuoso Travel Mart held last week in Dallas say the high-end luxury market has been among those least affected by the economic downturn, although it, too, has had its share of hiccups. Says Virtuoso CEO Matthew Upchurch: "The luxury market has suffered because the economy is down, but this is the reality in any industry." "We've definitely felt the effects of the slowing economy," says West Oehmig, chairman of Tennessee Valley Travel in Chattanooga. "Travel has dropped off considerably on the corporate side, and on the leisure end people are either taking fewer or less expensive trips," says Oehmig. Although Tennessee Valley Travel generally caters to more high-ticket clients, Oehmig says that every full-service agency has been hit by the economy. "The only agencies that are still going strong are those that specialize in a niche, such as cruises, or the ultrahigh-end products." One of those agencies making the most of their specialization is The Cruise Professionals, based in Mississaugua, Ontario. Chairwoman and CEO Mary Jean Tully is consistently ranked by the cruise lines as one of the top 10 retailers in the industry, and this year is no different. "My sales are up $2.1 million over last year, she says. "We are having a great year." Exception to the Rule. Still, Tully admits that she is one of the exceptions in the recent travel trend. "During times like this, the total sales ticket is more likely to diminish because travelers will cut costs by settling for an inside cabin or taking a shorter cruise." Linda Schmidt, a frontline agent with Elicott City, Md.-based Bennett World Travel, is also an anomoly. "I'm busier than I have ever been," she says. And, Schmidt says, her clients are not shying away from more expensive accommodations. Even families, who tend to be more conservative during times of economic stress, are dropping between $8,000 and $10,000 to go on a cruise. Tammi Van Volkinburgh, office manager for Gayle Gillies Travel in Rancho Santa Fe, Calif., where the energy crisis has compounded the nation's economic woes, says it's business as usual with a few minor exceptions. On the corporate side, Volkinburgh says some clients tried to save money by booking through the Internet. "They realized it was more time-consuming and therefore more costly, so they came back," she says. On the leisure end, she says clients are still traveling and booking as far out as they did before the economy took a nosedive, although she attributes this segment's sustainability in part to the overcapacity in the cruise industry. For instance, Virtuoso's sales of Silversea have increased by more than 50 percent since last year. At the same time, however, Silversea's capacity will have increased by 130 percent between 2000 and 2002. "The increased capacity has forced cruise lines to lower prices, making even the high-end products affordable," says Volkinburgh. Likewise, says Virtuoso President Kristi Jones: "We have been able to convert more clients to the luxury sector because it is a cheap time to book." High Hopes. Even though travel, including the luxury sector, is not what it was at this time last year, agents are confident things will pick up. "This was to be expected," says Oehmig. "Things were going so strong for so long that it had to slow down sometime. In the same way that the recession will end, travel will pick up again." Adds Tully: "People would rather forsake an extension on their house or a new car than give up their God-given right to travel." After all, "How you gonna keep 'em down on the farm after they've seen Paris?"   Back         Top of Page

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