So will the bruised and battered travel category right its ship in 2002? And how will marketing budgets be affected if things continue to flounder? Experts expect a rebound in the second half of the year. But their predictions are based on two assumptions-a lack of further terrorism affecting Americans and, perhaps an even bigger uncertainty, a possible economic upsurge. As answers unfold, marketing budgets that were down in 2001 may decline further, forcing marketers to turn to more targeted and cost-effective initiatives.
Within the airline business where earnings are eroding, ad budgets may be cut to provide a bottom-line boost. Image-advertising effectiveness has long been a controversial topic in an industry where price, scheduling and loyalty-program involvement often rank above brand preference in consumer decisions.
"There'll be strong pressure at most of the airlines to [trim spending]," said Brad Gerdeman, director-worldwide marketing for Delta Air Lines. "It's virtually impossible to truly prove the return on investment on advertising. We've done a lot of work internally and still it evades us: the rock-solid answers that you'd like to be able to give to management."
In September 2000, Delta decided to purchase ad time on General Electric Co.-owned NBC's coverage of the Olympics next month-a decision that no doubt would have been more difficult a year later. Still, Mr. Gerdeman said the airline intends to do what it can to capitalize on the opportunity.
"There are pros and cons to it, certainly," he said. "From the budget perspective, it's very difficult to take that on as sort of a fixed expense, if you will, going into next year. But we also recognize there are very few opportunities to demonstrate our leadership position and also to align ourselves with sort of the sentiment of the country."
Fortunately for airlines and hotels, even though businesses have moved to trim travel budgets, business travel is still largely an unavoidable necessity-and corporate expense accounts drive revenues. "Our research shows the business traveler is back, largely with the same enthusiasm as before; travel's a part of their job," said Jerry Dow, United Airlines' director-worldwide marketing. "It's leisure traffic that has dropped off most significantly and it's leisure traffic that's coming back more slowly."
If marketers decline to spend more to advertise as a recovery tactic, experts say they expect them to be more focused on maximizing the dollars they do spend. Delta, for example, will focus its spending on hub market Atlanta, plus Boston and New York, where it hopes to build market share.
Discounting will also remain a principal comeback strategy, experts say.
"Since Sept. 11, the cruise industry has offered the best deals ever seen," said Phil Kleweno, president of P&O Princess Cruises, in a statement.
Travel marketers may also turn increasingly to the less-expensive marketing tactic of using their databases of e-mail addresses to offer consumers special deals and opportunities.
"The evolution of the Internet has given travel companies an additional resource to be in con-tact with their customers," said Thomas Graves, an analyst with Standard & Poor's.
Delta recently sent e-mails to top-level members of its frequent-flyer program alerting them to a special check-in line that may reduce their waiting time at certain airports.
If travel marketers continue to struggle, experts say a wave of consolidation could sweep the travel business as companies look to maximize synergies and cut costs across all disciplines, including marketing. Royal Caribbean Cruises Ltd. and Carnival Corp. are both trying to merge with Princess in the cruise industry, and rumors have surfaced in the hotel sector that Six Continents and Starwood Hotels & Resorts World-wide may merge. Airlines are another story, since Congress has shown distaste for mergers. But if airlines face either a merger or an obituary then things may change. American Airlines was allowed to take over TWA as the latter filed for bankruptcy.