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The Honolulu Advertiser
Posted on: Sunday, October 26, 2008

Holiday bookings not sagging much so far

By HARRY R. WEBER
Associated Press

Hawaii news photo - The Honolulu Advertiser

Flight bookings for the holidays are in line with what was expected before the financial meltdown. Above is the Newark, N.J., airport.

MARK LENNIHAN | Associated Press

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ATLANTA — Minneapolis business manager Roque Rossetti plans to make his annual trip home to Sao Paulo, Brazil, for Christmas. The 35-year-old said the sagging economy gave him no second thoughts about shelling out $1,200 for the ticket.

"If I wait longer, I'd probably pay more, and I might not end up going," he said. But, he added, "I'm secure. I don't have kids or a wife. My house is paid for."

Several carriers have said that advance bookings show their planes are expected to be as full as or fuller than a year ago over the late fall and winter holidays — largely because they have taken so many seats out of the air, a decision that was made when fuel prices were soaring. In fact, travelers who have not booked flights for the holidays could find it more difficult and expensive than usual to find the flights they want, when they want them.

Because of the capacity cuts, having fuller planes does not mean more people will be flying. It also may be tougher for ski resorts and sunny vacation destinations to keep their numbers up, though some are offering promotions to lure holiday travelers who may be hesitant to open their wallets in an uncertain economy.

"I think the consumer now has a lot of things on their mind — they're concerned about the economy, they're concerned about the election, but I think they have already made the decision about what they are going to do over Thanksgiving and Christmas," said Arne Haak, chief financial officer of discount carrier AirTran Airways.

Haak said the carrier — a unit of Orlando, Fla.-based AirTran Holdings Inc. — has not seen a slowdown in bookings over the holidays.

"In fact, Christmas looks very, very good," he said.

CONSUMER LAG TIME

The picture is similar at Atlanta-based Delta Air Lines Inc., an executive said.

"I think it might be the newness of the information," Ed Bastian, Delta's chief financial officer, said of travelers' response to the economic crisis.

He said most consumers are still trying to figure out what the crisis means to them. Bastian said Delta's domestic advance bookings for the holidays show fuller planes on a year-over-year basis and are in line with the carrier's expectations, though he noted that capacity cuts may be playing a role in that. On the international side, he said projected November-December seat occupancy rates based on advance bookings are down, though he noted that Delta is increasing capacity on overseas flights.

At American Airlines, a unit of Fort Worth, Texas-based AMR Corp., the projected seat occupancy rate based on advance bookings for the fourth quarter is down about 2 percentage points year-over-year, chief financial officer Tom Horton said. That's "not outside of the norm you might see varying from year to year — but remember, we are taking capacity out of the system," Horton said.

The fourth quarter, which includes the holidays, is traditionally a slow period for airlines.

MORE COST CONSCIOUS

Horton suggested the carrier is not expecting a big drop-off in sales during that period.

"I don't see anything unique to the holiday period right now," Horton said.

A big change may be that, with the economy suffering, people are looking for better deals.

During a recent stop at the Minneapolis-St. Paul International Airport, Denver-area attorney Georgeann Becker, 60, said that when she and her husband offered to buy their daughter a ticket to fly home from New York to visit them this Christmas, the daughter found a cheaper ticket online than offered by their travel agent, at around $350.

"I don't know that we're necessarily holding back. I think you do go out of your way to find the cheapest ticket," Becker said.

Esmeralda Perez, a spokeswoman for the Puerto Rico Hotel & Tourism Association, said travelers appear to be waiting to book their vacations until closer to the holidays.

The island's hotels and resorts are being more aggressive with promotions and packages than in past years to lure last-minute guests, she said. The government-sponsored Puerto Rico Tourism Co. has doubled its advertising and marketing spending as well.

Perez said the election in November may also be adding to the broader economic uncertainty. In past election years, she said, hotels have seen a surge of holiday bookings after the election.

Cayman Islands Tourism Minister Charles Clifford said cutbacks by carriers within the U.S. have pushed up fares to the islands. In response, Cayman Airways is adding nonstop service from Washington and Chicago to the British dependency beginning in December.

www.Ski.com, which books vacations at 80 resorts in the western U.S., Canada, Europe and South America, has seen sales slip compared to last year, said spokesman Dan Sherman.

As of September, Vail Resorts Inc. CEO Rob Katz said, the number of Colorado season passes sold was down 8.4 percent.

Advance lodging bookings through central reservations were down 17.7 percent in room nights over the same period last year.

AFTER THE ELECTION

Recently, the company announced new marketing promotions, including offering a free night to guests who book a five-night stay or more on dates around Thanksgiving, Christmas, New Year's and other major holidays coming up in 2009.

Katz expects the company's marketing message to penetrate after the election. "I think we will potentially see a different environment by Thanksgiving than what we're seeing today."

Andy Wirth, the chief marketing officer at resort owner Intrawest ULC, said consumers seem to be favoring ski destinations within driving distance this year, although he noted that airline capacity has held steady at the three airports that service its western resorts.

He is optimistic about a major marketing push planned for shortly after the November election. "The destination skiing customer is a very resilient customer base," he said.

Alain Brochu, a vice president of Intrawest's Mont Tremblant in Quebec, said that resort is seeing increased sales from promotions targeted to individual travelers this season. He said one strong seller is the $129 pass for three days of skiing.

"Preliminary results indicate that adapting to the market rather than trying to change it has generated good response," he said in an e-mail.

Airlines are not sure how long demand will hold up for them, and several expressed concern recently that demand will drop off in 2009 as the realities of a recession set in for more travelers.

AirTran's Haak said "obviously that is something we're going to keep an eye on."