Over the weekend a number of international airlines dropped their business class fares through the floor. In some cases, as with KLM, the price was cut nearly in half.
Economy prices took a steep fall in May and then inched back upwards until last weekend as well. What are the airlines telling us?
This comports perfectly with my email traffic with African vendors over the last week.
The optimism first displayed around June is gone. There are decent camps in Kenya’s Maasai Mara that sold for $250 per person per night (full-board, two game drives daily) for this tail-end of the migration season last year, which over the weekend were being marked down to $50 per person.
This, of course, signals danger. Even in Kenya prices this low will not sustain an operation. In other words it’s better to close down.
Many are. In fact better properties like Elewana’s upmarket Tanzanian safari lodges have been “closed for refurbishment.” We all know what this means, but the fact is that it also means there are some good business people in that company.
Better to mothball the grand piano than keep it uncovered and unplayed.
Why now? Is it just the long predicted virus surge in the Northern Hemisphere?
No. It’s also the American election.
The tourism buzz from Japan to Cape Town is that a Trump defeat will signal an almost immediate explosion of a pent-up tourism market, and that a re-election of Trump will result in months, perhaps years of depressed travel interest.
Close, but no cigar.
Like monks on a mountain Marketwatch’s continuing mantra is that the economy will grow “well enough” with a split government but will falter with a unified government. That’s horrible, isn’t it? But from a capitalist perspective it could be true.
There are professional dissenters to this position. Marketwatch, however, is a good barometer for this discussion, because many travelers fund their trips with market proceeds.
Travel is the last item plucked from the piggy bank of disposable income. So the market as a whole rarely reflects many of its iconic parts, such as retirement travel.
Pensioners usually have disposable income that is more stable than non-pensioners, so we tend to predict pensioner travel weighting the market above the economy as whole.
Has anybody noticed recently the wacko connection between the market and the greater economy?
I believe a Trump sweep will prolong market optimism that will end in a catastrophic mess, but how long that will take I have no idea. I believe a divided government a la Marketwatch’s analysis will continue the status quo in the market for some time.
Most importantly, I believe a democratic sweep will tank the market, uplift the economic outlook and release enormous optimism among travelers. For retirees that could also mean a restraint on travel, a wait-and-see.
That view simply can’t be held by travel vendors and airlines. They don’t have any more time to “wait-and-see.”
So what we have at the moment is a collective holding of the breath as the bowstring is held back until the target comes into clearer focus. Fares and travel prices worldwide are being pushed down, primed to explode.
I need to add a massive caveat to all this.
There is a peaceful transition. Americans as a whole discount this concern despite the enormous press given it recently.
Only “24 percent of U.S. voters said that it is not very likely any transition will be peaceful while 18 percent said it is not likely at all,” according to Statista.
That’s not what the rest of the world thinks.
There is so much concern in South Africa that our election will not be peaceful I don’t know which dire prediction to show you. So just click here for a proper advanced Google search.
The same is true in Kenya and even Tanzania.
So regardless of the viability of these projections, one thing is certain: The industry is assuming that nothing will change until the American election is resolved. If Trump is standing, things stay the same or get worse. If Biden is standing, the outlook improves and you can raise your tickets.