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Pricing tactics vary by sector as consumers return to travel

06/27/2020| 9:57:59 PM| 中文

There is no conclusion about what’s going to happen to prices in the travel industry.

As the travel industry slowly and erratically reopens, some airlines and hotels, as expected, have begun slashing rates to lure travelers back to their struggling businesses.

But while some of those discounts have indeed been steep, industry executives and analysts say the unpredictable nature of a Covid-19 recovery could protect at least some sectors from the widespread discounting seen after other crises, such as 9/11 and the Great Recession, that ended up dragging pricing down for years.

“There’s a lot of people saying, ‘Oh, you’re going to have to offer the lowest prices in the market to get people traveling again,’” said Jack Richards, president and CEO of Pleasant Holidays. “We don’t necessarily agree with that because, I think, top of mind is going to be safety and sanitization protocols and convincing travelers that it’s safe to travel. We think price -- although it’s important -- it’s not going to be the leading variable to get people traveling again,” he said.

There are exceptions, Richards said, adding that Las Vegas, for instance, “appears to be focused on the lowest room rate to drive occupancy.”

On the flip side, he said, some other suppliers have increased prices to cover additional costs related to Covid-19 cleaning requirements.

Still, most agree that it’s difficult to predict how pricing will play out in the long run, given uncertainty about airlift; reduced air, hotel, cruise and tour capacity to accommodate for social distancing; and general unknowns about when widespread travel will be able to resume.

Hayley Berg, economist for the booking platform Hopper, said domestic fares are down 20% to 30% compared with last year, and international fares are down 20% to 23%.

Cruise lines, on the other hand, report that pricing remains strong amid high demand for both new and rescheduled travel for next year.

“Looking into our crystal ball, we are expecting basically a static price from this year,” said Steve Born, chief marketing officer for the Globus family of brands.

Still, given the many uncertainties, industry consultant Robert Jocelyn warns it “would be a mistake to make any kind of generalization [about] what’s going to happen to prices in the travel industry as we come out of Covid-19, or as we continue to live with Covid-19.”

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TAGS: discounting | pricing | Pleasant Holidays | cruising
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