Lately we’ve been talking about travel’s "paradoxical recovery," featuring better statistics for both the airline and especially the hotel industry, coupled with a weakening general economy and declining shares as the market bets on the bad macro news to first obscure and then overtake the micro improvements in demand and prices for flights and hotel rooms. This month, the contrast is clearer than ever.
The question for the last third of the year remains this: How big a toll will the economy exact? Already, there are signs that the weakening will make more rooms available for online travel agencies, though as we’ll explain this isn’t necessarily a boom signal for Expedia and Priceline. The hotel industry is growing restless about the pace of recovery. And airlines remind us of what a hard, thankless business they are in. When the economy improves, the price of fuel rises and the airlines struggle to get or remain profitable; let the economy stumble, and worries about falling future demand quickly outweigh positive impacts from (so far) decent pricing power and a drop in the price of crude oil.