Travel affiliates and suppliers reading Expedia’s and Travelocity latest year-end forecasts d will have to decide which online travel agency has ‘got it right’.  In its fall Travel Trendwatch issue, Expedia.com depicts a rosy picture for price-driven travel consumers looking to book both air and hotels, while in its most recent data report, Travelocity shows more of a mixed bag, suggesting that airline capacity cuts have begun to not only stem – but reverse – the airline industry’s downward pricing slide, though they expect year-over-year hotel and resort price declines this fall will be still deeper compared to summer’s declines.

In a nutshell, here’s what each online travel agency (OTA) projects for the travel industry as we begin to wind-down 2009.

Expedia suggest that “…Travel prices will not skyrocket this fall, despite some reports.  There will be plenty of hotel and vacation package deals in the U.S. and abroad as average daily hotel rates (ADRs) and average package prices remain lower than last fall.”

Due to lower jet fuel prices and the strength of the U.S. dollar, Travel Trendwatch notes that airfares to Europe are down appreciably (Expedia references several examples where airfares form the US to European capitals have fallen by more than 22% since the fall 2008), while similar drops in average airfares to many U.S. destinations are also the norm.  More importantly, Expedia says that pricing will likely remain depressed, with perhaps the exception of flights around the Thanksgiving and Christmas holidays.

However, based on Travelocity’s recent airfare analysis, despite seeing fares that are lower year-over-year by some 14% – 18%, “Over the last eight weeks, airfares have shown some signs of stabilization,” said Genevieve Shaw Brown, Travelocity’s Senior Editor. “The year-over-year percentage decrease has decelerated as departure date approaches. This is a change from summer airfare, when fares continued to fall even as departure date neared,” she noted.

This, together with the fact that airlines are now flying fewer seats than any time since 2001, is why Travelocity suggests travelers should think strongly about booking their airline tickets now rather than waiting in the hopes of fares falling further in the weeks and months ahead.

Brown puts Travelocity’s suggestion into the following perspective: “This is by no means the end of great deals for travelers, but it’s in travelers’ best interest to look to hotels for great savings and not get so fixated on the cost of a flight.”  In their view, ‘banking’ the deals in place now is the best way to hedge against expected rise in fares that will likely follow.

So, as a travel affiliate or a travel supplier, which of the two outlooks from these notable industry sources – not to mention large supporters of the travel affiliate marketing channel – should you believe?

In our opinion, we argue that it’s in the best interest of every travel affiliate and travel supplier to reserve judgment for the moment, and look for direction instead at the stock market and in the new claims for jobless claims reports filed weekly by the U.S. Labor Department during the next several weeks.

If the ‘worries on Wall Street’ that have bubbled to the surface the last several sessions continue, and investor pessimism mounts causing the Dow to retreat further, and more rounds of layoffs and job losses are announced, then TravelDividends believes Expedia Travel Trendwatch’s conclusions will be validated.   No matter how much the airlines have reduced their network capacity, or hotels drop their rates, there will be fewer ‘bums in seats and beds’ as both leisure and business travelers pull-back from traveling and stash their cash.

If on the other hand, Wall Street is merely experiencing some short-term profit taking as investors (and consumers) have accepted that the current ‘jobless recovery’ will continue unabated, travel suppliers, travel resellers and travel affiliates will likely experience an ‘upbeat’ travel market, and therefore will see their business prospects more aligned with Travelocity’s predictions.

We’ll be watching these leading economic indicators (as well as other travel-industry metrics as well) in the weeks ahead…but what about you?  How closely do you monitor travel industry trends like those proffered by Expedia and Travelocity, and based on your experience, what’s been their past track record in ‘calling’ trends relative to your company’s and travel affiliate program’s performance?  Whether you’re a travel affiliate or a travel supplier, what do you see as the travel industry’s near-term prospects?

We’re interested in hearing from both our travel affiliate and travel supplier readers, so please share your thoughts by posting a comment or sending an email.  We’ll also follow-up on this post in the weeks ahead to see which of these two well respected OTAs ‘got it right’!

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