The travel industry took a tremendous hit in 2008 and 2009 as the Great Recession took hold in the United States, Europe and elsewhere and kept travelers at home.
While airlines, hotels and other providers have since recovered much of the lost business, travel executives worried Monday that the recovery could hit some bumps and sink into a second recession.
“We have to be very cautious about a potential double dip for regions around the world that show some softening,” said Gordon Wilson, president and chief executive of the Travelport global distribution system. “Nobody can be complacent at this point.”
Carlson Wagonlit Travel president and CEO Doug Anderson said the U.S. economy grew in the first half of 2010, but the rate of growth slowed from late 2009.
“The biggest risk is that we slip back into something like what we’ve come out of, maybe something not as severe,” said Anderson, speaking on a CEO panel at the annual National Business Travel Association meeting in downtown Houston.
Southwest Airlines Co. chairman and CEO Gary Kelly said energy prices and their volatility could sidetrack the airline industry’s recent profitability. Extremely high oil prices, particularly at the July 2008 peak of $147 a barrel, can wreck any carrier’s finances.
“At $147 crude oil in 2008, no airline made money on any ticket it sold. At least in recessions, one can adjust the capacity,” Kelly said.
In addition, he said, “we’re concerned about the lack of an energy policy. The BP oil spill in the gulf doesn’t help that. In fact, I think it sets us backwards.”
All that worrying didn’t obscure the fact that the executives were pretty upbeat about the state of their companies, at least at present. Frits van Paasschen, president and CEO of Starwood Hotels & Resorts Worldwide Inc. called himself “cautiously optimistic.”
The recovery has been stronger than expected, and occupancies are growing in New York, Europe and other places, but “the economic picture looking out further is a little less certain,” he said. “We don’t have great visibility.”
Anderson said that companies “are cautious. They’re getting back into spending. They’re getting back to growing and developing their business.”
The U.S. decline started much earlier but was more gradual than in Europe, Anderson said.
“Europe was much more sudden,” he said. “It’ll probably take a couple of quarters to work its way through.”