Business | Tourism
Leisure travel deals vital as industry eyes economy
An economic recession in the US may mean fewer people will take vacations and leisure travel operators will have to cater more for consumers seeking deals.
- Reuters
- Published: 00:20 February 13, 2008
Los Angeles: An economic recession in the United States may mean fewer people will take vacations and leisure travel operators will have to cater more for consumers seeking deals.
Luxury travel hub Las Vegas has seen some weakness at the low end, but foreigners capitalising on the cheap dollar and US vacationers unable to afford a trip abroad will help soften the impact, industry executives say.
Online travel agencies could also suffer if travel declines but get better negotiating power with hotels more eager to rent rooms.
"I wouldn't say we're immune to what goes on around us. I think our business model is a little more resilient," Daniel D'Arrigo, chief financial officer at MGM Mirage, the world's second-largest casino operator, said at the Reuters Travel and Leisure Summit in Los Angeles on Monday.
Recent economic data points to a slowing US economy, increasing the risk of a recession.
"It's hard to ignore a lot of the bad news that's out there," D'Arrigo said. "Clearly the consumer is a little bit stressed."
Erosion in demand
He said some businesses on the Las Vegas Strip have already seem some erosion in demand for lower-end offerings.
One way to avoid potential damage to US hotel and casino business is to market aggressively to travel-lers from Europe who may be less impacted by US economic softness, he said. "Assuming the international economy does well, that should bode well for our Vegas properties," D'Arrigo said.
Paul Meyer, chief operating officer at casino game maker Shuffle Master, told Reuters that casinos typically do not suffer much during economic downturns.
"I think Vegas will be less affected than some other places," Meyer said. "I think to some extent gaming is recession proof."
For companies that sell travel bookings, economic softness can be both bad and good.
While a recession could erode travel demand, it also boosts demand for the bargains offered by online travel agencies like Orbitz Worldwide and Price-line.com.
Priceline chief executive Jeffery Boyd told Reuters that if airlines and hotels find themselves with unused inventory, they will send more unsold rooms and seats to online agencies.
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