THERE have been some recent signs that the recovery in the travel market may be here for the long-haul. This week, IATA, the trade body that represents most of the world’s big airlines, released a bullish forecast update for 2014. It thinks that its members are going to post a combined profit of $18.7 billion this year. This sounds impressive—and it would be the fifth straight year that the industry has been in the black. But it is built on wafer-thin margins of just 2.5%. This means that airlines remain hugely vulnerable to external shocks, says Tony Tyler, IATA’s boss. It would only take one of any number of unseen events—war, terrorism, a sudden rise in oil prices or a stalling economy, say—for profitability to be reversed.
Still, given the mess that the sector has been in for much of this century, this has to count as good news. North America looks particularly strong, with carriers in the region expected to increase their profit from $6.8 billion in 2013 to $8.6 billion in 2014. A lot of this is down to the overheads that American airlines have wrung from their businesses, through consolidation and cutting labour costs.
The news in Asia seems more mixed. Fears that emerging economies' growth might be slowing do not look like they will stop carriers in the region from posting a combined increase in profits—from $3 billion last year to $3.7 billion this. But this is still a long way shy of where they were just a few years ago. In 2010, for example they posted profits of $9.2 billion.
Meanwhile, another bullish piece of research has come from hotels.com, a big online-booking firm. It has released its latest hotel prices index, which is based on the price that its customers paid for rooms in around 150,000 properties around the world. It found that the average cost of a hotel room in 2013 rose for the fourth consecutive year. Prices are still lower than they were in 2007, before the financial crisis, but, in general, the report says there is cause for optimism. Higher prices are a sure sign that the sector is strengthening, which is good news for the hotel chains (and hotel-booking services) if not the consumer.
Monte Carlo has the world's most expensive hotel rooms according to the survey, at £198 ($329) a night. Muscat in Oman is second with New York third (see table). The cost of a room in London, meanwhile, rose by 10% to £121. Interestingly, prices in Rio de Janeiro dropped by 5% in 2013 compared with the year before, to £167. This is partly because Brazil's currency has weakened, and also because it has been increasing hotel capacity in anticipation of this year's football World Cup. One imagines that the influx of visitors for that event may well mean that Rio sees its prices rise considerably again in 2014.
The cost of staying in Asia, meanwhile, also fell. Prices in the region dropped 25% on average. One reason was a fall in the value of the rupee and the yen, which hit outbound travel from India and Japan and had a knock-on effect in the rest of the region.
The cheapest place to stay of the 116 cities listed in the report is Phnom Penh at just £33 per night. Of course average room rates will be affected by all manor of things—not least the proportion of posh hotels to basic ones (the survey looks at all hotels from one- to five-star) and exchange rate fluctuation. But prices in the Cambodian capital fell by 16% even as tourist numbers rose handsomely, from 3.6m to 4.2m. Which just goes to show that, even as the good times return, travellers still have an eye for a bargain.
