The article will probably be moved, so I will post the text in full below:
For the Week of: January 10, 2011
Here it comes, the much anticipated travel industry predictions for 2011. During the past eight years 70% of my predictions have come true! Here’s what I think will happen in 2011 (part 1 of 2). Part two to continue next week.
• #1 – Airlines will start charging for carry-on bags in 2011 –
The airlines have become addicted to ancillary fees (like charging for checked luggage) and will keep pushing the envelope with the introduction of carry-on fees for anything more than a single piece of carry-on (like a purse or laptop bag).
• #2 – Airlines will charge extra for using a credit card –
I know this sounds crazy but the airlines pay anywhere from 2-4% of the cost of your airline ticket to credit card companies when you charge your airline ticket to a credit card. Charging a fee to use your credit card is actually being done now in Europe by some airlines. As the airlines continue to get bigger and bigger with more financial muscle, they will start attacking this cost. I expect some kind of a blockbuster deal with PayPal to launch the initiative.
• #3 – American Airlines and US Airways will merge –
This will not be a match made in heaven as AA and US both have labor problems that may veto such a merger. American has been watching United merge with Continental, Delta merge with Northwest, Southwest merge with AirTran, and may feel like they are being left at the terminal. If this merger happens American would benefit from new US Airways routes on the east and west coast but it would not be a blockbuster merger like Delta and United enjoyed as they added lucrative international routes which US Airways does not bring to the table.
• #4 – There will only be four major airlines left standing –
United, Delta, Southwest and American. All the others will be small players as the megas capture 85% of all flyers. This will give everyone access to great networks but the price of travel will go up a lot as competition is eliminated.
• #5 - Car rental companies will charge a “no show” fee in 2011 –
I thought this would have happened last year but am convinced it will in 2011. Car rental companies have been quietly putting the systems in place to be able to launch a new “no-show” fee for renters who make a reservation and do not show up or cancel a reservation. I anticipate this fee will be patterned after the hotel industry’s no-show fee and will probably assess the cost of one day car rental as the penalty. Expect this fee to be implemented in stages and if successful will quickly be followed by all the major car rental companies.
• #6 – Cuban cigars anyone? Cuba will be opened to American travelers –
For decades Americans have been prevented from visiting Cuba. 2011 will be the year that the U.S. breaks the political blockade and allows U.S. citizens to tour our southern neighbor. The first thing that will happen is that cruise ships will immediately make Cuba a new port of call.
• #7 – Fuel surcharges will explode –
One of the biggest costs for airlines is fuel. With oil heading toward $100 a barrel this summer you can expect big increases in fuel surcharges in the coming months. Book your airlines tickets now to lock in prices.
• #8 - Southwest Airlines will not start charging baggage fees in 2011 –
Southwest is the only major airline not charging baggage fees. A year ago I predicted they would join all the other airlines and start charging for checked bags. I was wrong. Southwest has made a strategic decision to use this as a marketing differentiation despite the fact they could generate as much as a billion dollars by charging for checked bags.
• #9 - Use your frequent flyer miles this winter/spring as they will become almost impossible to use as the economy picks up later this year –
The window to maximize your frequent flyer miles is closing fast. In 2009 and 2010 the recession caused the airlines to remove thousands of flights from the skies as they tried to balance rapidly declining demand with supply. As the economy continues to build in the coming months it will become harder and harder to find empty seats to use your frequent flyer miles. Today it often takes twice as many miles plus redemption fees in order to find a seat.
• #10 - Domestic airfares will skyrocket this summer –
The airlines are on a roll. Last year they were able to raise airfares as much as 20% in some markets. This spring and summer as the economy picks up steam you will see a not-so-quiet jump in airfares, by as much as $100 round trip in many markets as increased demand allows airlines to squeeze more profits out of every seat. Airfares have no place to go but up, up and away. (Top)
• #11 - IRS to increase vehicle reimbursement rate to 60 cents a mile in 2011 -
The Internal Revenue Service recently announced that the allowable vehicle reimbursement rate for 2011 would be 51 cents per mile. However, take a look at the gas pump and you can see that $3 plus gas rates will quickly cause the IRS to increase the rate. I suspect it may almost reach 60 cents a mile this year. (Top)
• #12 – 2011 will be the year of the taxi cab for business travelers –
Corporate travel departments are getting smart and encouraging travelers to consider taking a taxi cab instead of renting a car in some large US cities. The cost of renting a car including tax and fees and parking and gas can often run as much as $100 a day in major metropolitan cities. Many simple business meetings or conventions can be handled with a simple cab to the hotel and a cab back to the airport. In those cases the taxi is often the fastest, easiest and cheapest transportation. On the other hand visiting multiple customers and traveling long distances still makes a car rental your best bet. (Top)
• #13 - 2011 will see the end of the “best travel deals” of the decade –
The slow climb out of the recession of 2009 has given us some of the best travel deals in our lifetime. There are still very good values in travel in 2011 however the “giveaway” prices we saw in 2009 and 2010 are long gone. There still appears to be a good window for good prices for travel this winter and early spring. If you have the money to travel – do it now! (Top)
• #14 – Book early to get the best prices in 2011 –
Hotels, resorts, cruise lines and wholesalers all tell us they want to get reservations on the books early to make sure they build a solid year. It appears they are trying to offer their best deals when you make your vacation plans months in advance. So to get your best deal you will probably need to make your reservations at least 90 days in advance. For cruise reservations the best deals will end in February. Deals to Europe end in the next few weeks. (Top)
• #15 - In 2011 there will be two classes of travelers, the haves and the have nots –
Airlines are rapidly building their marketing efforts around their best customers in order to coax them back. They will give all the perks like free baggage and seat upgrades and express check-in to these frequent travelers. The rest of us schmucks will be forced to wait in long lines, get stuck in middle seats by the bathroom and pay for our luggage and a long list of services. (Top)
• #16 – A passport will soon be required to graduate from college –
We are now in a global economy that requires both an active participation and knowledge of the world we live in order to be successful in business. It amazes me why colleges do not mandate international travel as part of their curriculum. A month of traveling the globe is worth more than two years in a classroom. A passport will replace the drivers license as the prominent identification for business travelers. (Top)
• #17 - People will start sending their luggage by FedEx instead of checking it with the airlines –
Every major airline (except Southwest) now charges as much as $100 roundtrip to have you check on your luggage. While travelers hate these fees the airlines have figured out they can charge these fees without suffering the wrath of their customers. We anticipate that UPS and Fedex will promote to travelers a new service that will handle their luggage door-to-door at a cost equal to or less than the cost of taking your luggage to the airport and paying those fees. We recently priced having FedEx send a 40 pound package from Lincoln to Atlanta at a cost of $18.04. If you are checking in two pieces of luggage you will save about $14 to send them via FedEx. (Top)
• #18 - 2011 is the start of the decade of “more hidden fees” –
Seems like every part of the travel industry has jumped on the fee bandwagon. For years the airlines have charged hidden fees for changing tickets ($150), fuel surcharge ($10 - $200), calling their phone to book a ticket ($20), etc. Now the hotels have jumped on board by charging resort fees ($10-$25 a day), parking fees ($10-$75 a night), internet fees ($10 a day), early departure fees (one night penalty), energy surcharge fees ($5 to $10 a day), etc. Car rental companies add fees for extra drivers, insurance, and a host of other “gotcha fees”. Unfortunately, this bait and switch pricing is giving the travel industry a black eye that someday may make travelers say “I’m not going to take this anymore and simply stay home. (Top)
• #19 - Boarding passes will become paperless for business travelers –
After a slower rollout than I expected 2011 will finally be the year that boarding passes become paperless for business travelers. Currently, once a reservation is made the traveler can either go online to print out a boarding pass on a piece of paper and take it to the airport or get a paper boarding pass when they check-in at the airport. The airlines have aggressively developed the ability to have the boarding pass bar code emailed to your PDA device (blackberry) or cell phone. The traveler then just waives the PDA or cell phone at a scanning device at the security checkpoint and heads for the gate. In 2011 we expect this technology to become available at most airports and this will quickly become the preferred method of obtaining boarding passes for business travelers. This technology will also be available for leisure or family travelers, however, frequent business travelers will take the most advantage of it. (Top)
• #20 –Four out of ten hotel rooms go empty in 2011 -
Despite the hotel industry’s claim that the recession is over and that prices are rebounding the fact remains that over 40% of hotel rooms will be empty in 2011. Obviously some markets like New York City and other metropolitan areas will see double digit growth in hotel rates because of limited hotel room supply. However many areas of the world travel have not rebounded much and hotels will continue to offer very attractive rates. (Top)
• #21 – Hotels have learned from the airlines how to nickel and dime customers to death –
Nothing makes me as mad as arriving at a hotel and find that in addition to my $150 hotel rate I have to pay a resort fee of $15 a day (which was not a part of the rate when I made the reservation). Now hotels charge for internet and a host of other hidden fees. This is hogwash. (Top)
• #22 – Luxury travel is up and getting stronger -
Everyone, even the well-off, want to search for a good deal. 2011 will see the strengthening of the luxury travel market. Even though the top end hotels are seeing a resurgence there are still suppliers offering strong discounts. This is a fantastic time to take advantage of amazing prices on luxury travel suppliers. Luxury cruise lines in particular are offering deep discounts for early bird bookings. Luxury hotel prices which were often at 50% off last year have risen but there are still some great deals out there as hotels struggle to keep perishable hotel rooms full. Luxury travel is still not cheap but is the best value in 2011. (Top)
• #23 - Airlines passengers will get more protection from the Feds in 2011 –
The government does not do many things very well in my opinion, however, new passenger protection rules implemented in 2010 have to be one of the best things our government has done this past decade. The new rules assess hefty fines on airlines that hold passengers hostage on the tarmac for more than three hours. The airlines all cried this new rule would cause serious slowdowns in the system. Funny thing happened once the new rules went into affect. All the tarmac delays disappeared. Now the government is zeroing in on requiring the airlines to disclose airline ancillary fees so there is more transparency in airline prices. With only four major airlines on the horizon I think the Feds will have to monitor these giants to protect us all. (Top)
• #24 - Missing a connecting flight in 2011 could keep you stranded in an airport for up to four days -
Once again, with airlines flying their planes 90% full means they only have a few seats available if a flight is cancelled or delayed. Add a major storm into the mix and missing your connecting flight in 2011 might mean you are sitting in the airport waitlisted for the next available seat, which might be two to four days later. One more reason to pay a little extra and fly on direct flights. Look no farther than last Christmas when people were stranded for days from the blizzard. I might add that the best way to deal with a snowstorm is to make your reservation using a professional travel agent. One call and they can help you out of your pickle. (Top)
• #25 - WI-FI In-flight internet will flurish in 2011 –
2011 will be the year of in-flight internet on the majority of flights. You will be able to access broadband internet access while flying on most long-haul and wide-body flights after paying a $10 access fee. (Top)
• #26 – Airlines’ new motto is “We’re not happy until our customers aren’t happy”-
All of the airlines have major customer relations problems (except Southwest) and as they get bigger I expect things to get even worse. (Top)
• #27 - Visiting grandma (during spring break or the holidays) will cost you double from two years ago –
Airfares dropped like a rock in 2009 when the economy tanked. The economy strengthened in 2010 and airfares went up almost $100. In 2011 airfares will continue to climb during the year and especially during the heavy travel seasons of spring break and summer and during the holidays. If you paid $350 to visit grandma last year for Christmas you can expect to pay $100 more for that same trip during the holidays this year. (Top)
• #28 - Many flight attendants will be AARP members in 2011 –
The reason that many airlines dim the lights during flight is so that you can’t see how old many of their flight attendants are (joke). Seniority rules with the airlines and as they cut more and more flights the only people left are those most “senior” staff. You will notice a lot of grey hair especially on international flights which are the most coveted by attendants and require the most seniority to bid for. Most airline staff today are likely to have two cards in their wallets – a union card and an AARP card. On a good note, these senior attendants are usually the best of the best. (Top)
• #29 - Non-stop flights will be king (and more expensive) for business travelers -
Most travelers are fed up with all the problems of flight delays and cancellations. Many business travelers today will only travel if they can find a non-stop or direct (one stop but do not have to get off plane) flight that minimizes the chance for problems. Expect prices for direct flights to be as much as $200 more than connecting flights as airlines are finally able to squeeze out a financial premium that saves travelers time and hassle.
• #30 - Companies tell travelers to “carry-on”and will stop reimbursing travelers for baggage fees –
If a business traveler checks in two bags on a business flight it can add as much as $100 in baggage fees to the price of the trip. Using a $400 average price for a domestic airline ticket means the $100 in baggage fees adds 25% to the total cost of flying. Many companies will be watching this cost closely in 2011 and some will even change their travel policies so that on trips of 3 nights or less the company will require the traveler to carry on their luggage and not reimburse them for the baggage fees. (Top)
• #31 - Comfort and safety are king in 2011 -
The glitz, glamour, stress, and high rolling of the past decade will make people in 2010 search for the security of days gone by. Travelers will be searching for contemporary design that is not eclectic as much as something that is practical, comfortable and warm. Safety and security will also be high on the travelers list as the world seems to be spinning out of control. (Top)
• #32 – Airlines will simply stop answering the phone during a snowstorm -
Want to try to reach an airline during a massive blizzard? Good luck! The airlines are staffed to handle normal call volume. Throw in a snowstorm that cancels 10,000 flights and you will have better luck calling the moon than the airlines. Why not make life simple and book your reservations using a professional, friendly travel agent. Let them fight your battles for you. (Top)
• #33 - Travel agents are back in vogue -
Having a great travel agent makes a trip easy and fun, plus saves time and money. Travelers are returning in droves to travel agents as they want someone to coach them to make sure their travels are worry free. (Top)
• #34 - Business travelers will slowly move back to the Marriott from the Hampton Inn -
Business travelers across the globe were told in 2010 that they would lower their travel costs by using less costly hotels. This means they traded the $150 a night Marriott and stay at the $90 Hampton Inn in 2010. As the economy improves in 2011 many business will once again take their eye off of travel expenses and start allowing business travelers to step up one star in hotel stays (from 3 star rated hotels to 4 star). (Top)
• #35 - Airlines will print money in 2011. -
All the airlines have made draconian cuts in capacity (number of flights and seats) in 2009 to allow them to survive the recession. In 2010 they expanded their revenue by adding billions from ancillary fees (baggage, etc). Add a stronger economy to billions they now generate from baggage fees and other fees and you can see that 2011 may be good news for the airlines. The airlines will take a hit from rising fuel prices but they can simply add a fuel surcharge as fuel prices go higher. (Top)
• #36 - Using London Heathrow airport as a connecting airport will put you in a Piccadilly -
Do everything you can to avoid connecting through London’s Heathrow airport in 2011. London’s Heathrow is a security nightmare. Add 4 hours to your connecting flight in London or you will be in a Piccadilly. (Top)
• #37 - Security procedures will make you feel like you had used a Chiropractor -
Homeland Security is getting real serious about beefing up security checkpoints to make sure that security is tighter. The public has been outraged by some of the techniques however, I think that security will only get more strict in the years ahead. (Top)
• #38 - Airport parking prices will increase again in 2011 -
I was really surprised to see that airport parking rates increased as much as they did in 2010. This year as the economy improves I expect to see another round of price increases in airport parking. (Top)
• #39 - Car rental prices to see double digit increases -
Expect car rental prices to jump up again in 2011 as travel picks up steam. This industry has seen major consolidation. One company now owns three major brands. The long term result of this will be higher prices.. In addition to price increases car companies will add revenue to their bottom line by trying to up-sell you with upgrades, insurance, and new services like GPS. (Top)
• #40 - Rent for Clunkers -
Car rental fleets are getting older and older. It used to be that rarely would you see a rental car with more than 12- 20,000 miles on the odometer. Unfortunately, car rental companies are holding onto their cars so long that some cars have as much as 40,000 miles. I guess you could say cash for clunkers has turned into rent for clunkers in 2011.
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