Lots of people are asking me about financial crisis. Two types of questions I get asked. The first is "how did this happen" and the second "is the travel industry doomed as a result"
On the question of "how" I have just read an article that gives the best explanation I have come across. In today's online version of the New York Times, Vikas Bajaj writes a great piece called "Plan’s Basic Mystery: What’s All This Stuff Worth?". In it he goes deep into the strange asset/securitisation products that were put together by Bear Stearns, Lehman etc and caused this whole mess. Worth a read (login required).
Despite the madness of these products and chaos that has resulted from their collapsed I am convinced that the Travel industry will not only survive this crisis but will come out the other end thriving. You might call me an optimist but my view is based on history.
The travel industry in America bounced back from 9/11 in a quarter. In fact the whole online merchant hotel business (and retail for that matter) was created out of the ashes of that tragedy. Hotels gave cheap rates to Expedia, Travelocity and Orbitz etc. Expedia completed its acquisition of Travelscape and soon after bought HRN/Hotels.com.
In Asia, the whole business ground to a halt during the SARs crisis. Hong Kong and the region around it could not pay travellers to come visit. Now Macau is the centre of the gaming and Asian hospitality market. Bali has suffered through two horrific attacks and proposals for bizarre religious laws. Yet manages to survive and fight back each time.
In Europe London and Madrid also suffered horrific attacks in recent years. Yet still the customers flock to Spain and UK the for holidays and breaks.
Travel has survived tragedy and shocks before and will do so because at the core humans love to travel. But the secret to survival is reinvention, not hiding and hoping to ride it out. Growing through 9/11 came from reinventing online hotel distribution. SARs from reinventing the Asian hospitality industry. To get out of this Wall Street induced melting Bull will require the industry to once again find efficiencies in distribution, marketing and supply management. Mobile anyone?
Note - an observant reader (ok my mother) has pointed out that my melting "bull" reference doesn't work given the obvious udder on our molten friend above.
thanks to my number one anonymous commentator for the photo