Strong dollar buoys holiday bookings

[Guest Jiminy]

Strong dollar buoys holiday bookings

Brisk early sales of flights, tour packages has industry eyeing best season since 9/11

By BRENT JANG

TRANSPORTATION REPORTER

Monday, November 1, 2004 - Page B1

Tour operators and airlines are seeing a surge in early bookings for winter vacations to sun destinations as the strong Canadian dollar inspires confidence among consumers.

In what's shaping up to be a record leisure-travel season, many Canadians have already begun making their holiday plans, booking flights and tour packages.

Based on early brisk sales, industry executives are forecasting a busy travel season that could eclipse the banner winter before the Sept. 11, 2001, terrorist attacks.

Jonathan Carroll, president of on-line travel retailer itravel2000, said he's hiring an extra 40 workers over the next two months to help his existing staff of 150 people process what he expects will be a continued jump in demand through spring break.

With the Canadian dollar at 82 cents (U.S.), up sharply from 63 cents just two years ago, the new purchasing power isn't going unnoticed.

Bookings through itravel2000 have soared 65 per cent compared with the same time last year, as Canadians increasingly recognize that "they're not getting hammered by a low dollar. The currency of choice in the sun destinations is the U.S. dollar," Mr. Carroll said.

The increase in bookings doesn't apply to all hot spots, but the trend is heartening to the travel industry. Tour operators report a spike in overall sales in the range of 5 to 20 per cent from a year ago.

Two weeks ago, after the hurricane season subsided, phone lines started lighting up and on-line sales began climbing -- a surprise because bookings tend to be slow until there's a cold snap in Canada.

Many Canadians aren't waiting for the deep freeze, shrugging off worries of the past and unleashing pent-up demand for a winter escape. At least one-third of the spaces in some tour packages is already booked.

Tourism collapsed after 9/11, but has been generally on the mend since then, although Asia in particular got socked after last year's SARS outbreak and the war in Iraq. Mexico and parts of the Caribbean fared relatively well last winter, despite some lingering travel jitters.

Canadians will likely have plenty of company this winter in warm climes and on cruises. That's because Americans have gradually regained their confidence to venture beyond their borders while Europeans are emboldened by the strong euro, said Allister Paterson, chief executive officer of Air Canada Vacations.

"Hotels are going to be very difficult to get because of the world demand on them," he said. "We are in the good times now. I firmly believe that the rebound has occurred and we are in the good days now."

Advance bookings for winter getaways at Air Canada Vacations are up 20 per cent from a year ago.

If the trend of brisk bookings holds, then Canadians who procrastinate may be left with slim pickings for Christmas and March break, although last-minute deals could still be up for grabs during historically slower periods, industry executives say.

Mexico, Cuba, the Dominican Republic, Jamaica and Florida are expected to be among the favoured hot spots.

There could be a hotel-room shortage in prime markets at peak times, notably the Mexican destinations of Cancun and the Mayan Riviera, industry officials say.

With higher jet fuel prices and low vacancy rates at hotels, many tour packages are priced 5 to 10 per cent higher than a year ago, but that hasn't crimped consumer demand.

Louise Collignon, Transat Holidays' director of national marketing, said after an industry lull in the wake of 9/11, winter getaways are back in vogue.

"When you see the dollar so strong, you are more confident as a consumer," she said.

Transat A.T. Inc., the parent of Transat Holidays and World of Vacations, is seeing preliminary signs of a banner season, perhaps an increase of 15 per cent in traffic to some destinations.

"These vacations have become part and parcel of many people's lives," said Nelson Gentiletti, Transat A.T.'s chief financial officer.

Privately owned Skyservice Airlines Inc. -- which provides chartered aircraft service to tour operators such as Conquest, Signature, Sunquest and Sunwing -- is forecasting a solid increase in business.

Skyservice CEO Russell Payson said that, despite a rise in fuel surcharges on vacation packages, consumers are focusing on the new muscle in the Canadian dollar.

He expects to celebrate when the numbers come in for Skyservice's fiscal year, ending April 30, 2005.

"We've been profitable, and we're expecting a good year, probably our best year," Mr. Payson said.

But widespread profits are far from a sure thing. The increased traffic could translate into profit for tour operators in certain Mexican destinations, but cutthroat competition in some Florida markets threatens to put a squeeze on profit margins.

Introductory deals are sometimes offered to win market share. Last Friday, CanJet Airlines said it will launch weekly service for four months between Ottawa and Orlando, beginning in February, with one-way fares starting as low as $124 (Canadian) plus tax.

Airlines, facing tough times with high jet fuel prices, are seeking to stimulate new business in the winter because it's traditionally slow in the fourth and first quarters.

Fortunately, the strong Canadian dollar is helping airlines based in Canada cope, since oil is priced in U.S. dollars, said Jetsgo Corp. CEO Michel Leblanc.

Air Canada, WestJet Airlines Ltd. and Jetsgo have bolstered their transborder flights into the United States and selected chartered sun destinations over the past year, and expect to reap the benefits in vacation markets this winter.

WestJet CEO Clive Beddoe said it all comes down to a matter of rosy consumer confidence, with Canadians knowing that they're getting more bang for their buck on drinks, meals and souvenirs.

"Our dollar is certainly helping, no question about that," Mr. Beddoe said.

"It's just cheaper from the consumers' point of view, once they get to the destination."