Have bad times finally checked out?

The reports are happily similar but virtually all segments of travel are reporting good news for 2011: everything from airline profits to projected hotel occupancies and healthier business travel are all looking rosy. But wait a minute.
 

Are the bad times in travel really behind us?
 

Not so fast, say some predictors.
 

"Everyone’s business is a little better — nothing gangbusters," said Maria Zec, general manager of the Peninsula Chicago Hotel. "We’re all cautiously optimistic, but we have to get through January and February again, and that’s always kind of tough," she tells the Chicago Tribune.
 

She is not alone in predicting an uptick in travel but nothing major. Any hospitality comeback could be delayed or drawn out.
 

Across the country, business-travel spending has long been recognized as a key indicator of better economic times. Biz travel has been increasing slowly, as companies remain cost conscious, according to the National Business Travel Association. They project spending will not return to peak levels until the end of 2012.
 

There are also some not-so-encouraging signs
 

The price of oil has reached US$80 per barrel. That and the increasing use of oil by China and India lead travel authority Arthur Frommer to believe that airline prices will continue to soar in the months ahead.
 

“The response of cost-conscious travelers? We must all place greater emphasis on reducing the price of our accommodations, meals and sightseeing when we travel,” he said.
 

Cheapflights is also predicting air fares will rise, which means both business and leisure travelers will be discouraged — though no one knows how much this might curtail future air travel. And the dreaded fees will not be good news as resorts emulate airlines by adding fees to pillows, bed sheets, soap and even toilet paper, predicted Travel Agent West.
 

All the recent good news seems to disturb well-known travel commentator Joseph Brancatelli, whose “Road Warrior” reports primarily cover business travel.
 

“Anemic airline profits (in the 2 to 3 percent range) will be hailed by analysts as a fundamental change in commercial aviation economics (they’re not), and rebounding hotel-chain profits will be used to claim the lodging industry as a whole is back on the road to health (it’s not),” he writes.
 

He makes the point that what travelers don’t see defines present reality.
 

Airline fares have gone up but so have oil prices. “And since jet fuel is now the largest component in the price of an airline ticket, that has the carriers in a panic. And no wonder,” he writes.
 

The industry registered just three profitable years in the first decade of the 21st century and are saddled with billions of dollars in debt. And 3 percent profit margins aren’t much cushion against surging commodity prices, he argues.
 

Hotel’s rising profitability?
 

“When you hear that the big hotel chains such as Marriott, Hilton, Starwood, and InterContinental racked up healthy 2010 profits, do remember that these companies are franchisers. They manage very few hotel properties and own even fewer hotel buildings. The companies and investors who own the buildings and pay fees to the big-name hoteliers are nothing like healthy,” writes Brancatelli.
 

One in five US hotel properties are estimated to be in default. On an average night, only 55 percent of the US’s guest rooms are occupied.
 

Hotel sales have only recovered to their 2005 levels, while average room rates have dropped.
 

And that all-important indicator of business travel?
 

Perhaps it’s too soon to tell how it will fare in the next few months but many experts are joining Brancatelli in urging that travel providers keep the champagne on ice and don’t pop the cork just yet.
 

By David Wilkening