Volume I | Issue no. 7
The New Rules for Planning & Budgeting
Every year about this time, marketers of destinations, resorts and tourism attractions that operate on a calendar year begin working on their annual marketing plans and budgets (at least they should be). Typically, this involved reviewing what was done in the past year, making minor adjustments to the plan and updating the budget to reflect modest cost increases or reduction mandates.
For many, planning for 2010 can be characterized as anything but typical.
Late 2008 and 2009 have been described as devastating to the travel industry. As of this writing, Smith Travel Research is projecting 2009 occupancy to end down 8.4 percent, RevPAR to have declined 17.1 percent and demand to have fallen 5.5 percent. While demand is projected to grow again in 2010, forecasts are for occupancy and RevPAR to continue sliding, although less dramatically so. Why is this happening to us?
It’s been called the travel industry's perfect storm.
Contributing factors include, in no particular order:
These factors are causing travel marketers to take decisive action. There are few destinations out there are taking advantage of this unusual opportunity, by taking stock, adapting their strategy and being proactive. Those with deep pockets and an abundance of patience are cutting their losses, hunkering down, waiting for the worst to be over. The long-term viability of the remaining weaker players is being called into question. Some operators have already called it quits.
It reads like the disclosure statement from the mutual funds in your deeply discounted 401k:“Past History is No Indication of Future Performance.” Just because people have chosen your destination in the past doesn’t mean they will continue to do so. Change is inevitable, and in 2010, it’s even more so.
Where do we go from here?
The travel business as usual is no more. 2010 is the year to pause, take a deep breath, gather your senses and gain some perspective. Seth Godin fondly refers to this as Square One. At Wanderlust, we call it The Baggage Check. But whatever you call it, it’s time to take decisive action and begin at the beginning.