Experts Foresee Some Rare Deals in Year Ahead

What to expect from travel in 2002? It’s a daunting question after this traumatic year. Call them brave or call them foolish, but a dozen industry gurus were willing to hazard an answer when I asked them recently. Here’s what many of them see:

* Leisure passengers flying in smaller numbers but paying more.

* Cheaper cruises, closer to home.

* More family travel and more people driving.

* Lots of deals, if you know where to look.

“This is a great time to go off and see the world,” says Peter Yesa- wich, president of Yesawich, Pepperdine & Brown, an Orlando, Fla.-based marketing, advertising and public relations firm specializing in travel.

An unprecedented drop in transatlantic air traffic has left airlines with empty seats, making Europe an especially good deal, he says. Cruising will be a bargain too, as more new ships hit the seas at a time when some Americans are balking at boarding what they view as floating targets, according to his company’s surveys. And he believes many hotels, faced with lowered demand, will also cut rates, especially in big cities.

Air travel will be an exception, at least for vacationers, Yesawich and several other experts say. Although there may be some deals through winter and spring, Yesawich predicts that “you’ll see [leisure] fares rise as you go through the year.”

There are lots of unknowns, of course. One is the overall economy. Robert Mandelbaum, director of research for PKF Consulting, a hotel industry research firm, doesn’t see a turnaround until the second half of 2002. If the economy comes back earlier, hotel and other travel costs may increase. (The Travel Industry Assn. of America predicts 8.4% fewer Americans will travel this winter compared with last.)

Another factor is post-Sept. 11 anxiety. “Everyone is nesting and staying close to their roots now,” says Kathryn Sudeikis, national vice president of the American Society of Travel Agents and a vice president of All About Travel in Mission, Kan. But she adds: “At some point, they’re going to get cabin fever and say, ‘This is crazy.’”

For those planning to venture forth, here are some signposts for next year:

* Flying: “I see fewer people flying, paying more,” says Gary Schmidt, co-owner of Travel by Nelson in Woodbury, Minn., and author of “Fly for Less” (Travel Publishing, 1998). He predicts air travel will be down by 20% or so as more businesses rely on e-mail or charter planes for convenience and safety, and “all the publicity about security” scares off other would-be passengers. “I’m amazed at how many people say they’re going to drive,” he adds. Experts also cite the soft economy as a factor in the air travel decline.

Increased fares are partly a question of supply and demand. With the airlines’ cutbacks in flights after Sept. 11, fewer seats are available, and that usually increases prices, experts say. Tough new security procedures are costly to implement, and “that would drive fares up,” says David Stempler, president of the Air Travelers Assn., a Washington advocacy group. And airlines must make up for the huge losses of this year, Yesawich says.

Also a factor is an industrywide restructuring of air fares that Northwest Airlines pioneered in November. “For 2002, the airlines will continue to narrow the pricing gap between the business and pleasure traveler,” predicts airline expert Terry Trippler, president of Trippler & Associates Inc. in Minneapolis. So leisure fares would go up, business fares down, in his view.

Not everyone agrees. “I think it’s going to be a buyer’s market” for air fares, says Tom Parsons, chief executive of Bestfares.com. He’s figuring that business travel won’t bounce back before the end of 2002 and “the leisure traveler isn’t going to buy if ticket prices go up.”

Randy Petersen, founder of Inside Flyer magazine and an expert on frequent-flier miles, sees 2002 as a “rather boring year” for air travel, with fares pretty stable. He does expect airlines to devise ways to persuade business travelers to fly again, such as offering them a free trip for every three to five trips taken.

Also on the bright side: The airport congestion of the 1990s may ease as fewer people fly.

* Cruising: For 2002, Mike Driscoll, editor of the newsletter Cruise Week in Wilmington, N.C., sees “the lowest prices in the history of the modern cruise industry.” Fares for January sailings are down by as much as half from last year, he says. Some Caribbean cruises have been priced as low as $60 per person per day, Yesawich notes.

Several other gurus see the same, but all offer this caveat: The full picture won’t be clear until the end of the so-called “wave season,” the January-to-March period when about 40% of the year’s bookings are made.

“The cruise lines are hoping for a nasty January in the Midwest”--poor weather--to bail out the business, Driscoll says.

The reasons for low prices are many. The Sept. 11 tragedy has been brutal for the industry. Cruise companies rely on airlines to get people to many departure ports, and they sell exotic destinations, both hard hit in the aftermath of the attacks. And they’ve been adding cabins rapidly: 16 ships and 22,477 berths this year, and 13 (bigger) ships and 25,380 berths slated for 2002, says Jim Godsman, president of the Cruise Lines International Assn.

But neither he nor Michael Crye, president of the International Council of Cruise Lines, is willing to admit to overbuilding--yet. “The demand is there,” Crye says, although it depends on the price. And Yesawich’s doubts notwithstanding, Schmidt says, “Cruises are the hottest-selling things we’ve got.”

Cruise lines have adapted to fearful fliers by pulling ships from the Mediterranean and relocating them in North America and the Caribbean next year. As a result, second- and third-tier ports such as New Orleans, Baltimore and Mobile, Ala., are suddenly popular, meaning more Americans will be able to drive to their ports in 2002, Crye notes. Cruisers from the West Coast will also have more options.

One side effect is that although prices are down overall, European cruises may not be any cheaper next year because fewer ships will be there, Crye says.

Other cruise trends experts see in 2002: catering to the increase in family travel with linked cabins and kids’ activities; “magnificent spas”; sophisticated entertainment for aging baby boomers; and more so-called flexible dining (without fixed seating times).

* Lodging: The best deals in 2002 will be in first-class and luxury hotels in big urban centers such as Chicago and New York that cater to business travelers, especially if they depend on airlines to get their guests there. On that most of our gurus agree. But they don’t see eye-to-eye on whether prices will fall in 2002.

PKF Consulting projects that the average daily rate will drop from $100 for this year to $95 in 2002, based on a survey of the 75 largest U.S. markets, Mandelbaum says. Occupancy is seen falling from 66.3% to 60.6%, the lowest level in the last three decades, he adds.

Smith Travel Research projects rates will increase 2%, and so will occupancy, slightly (by 0.2%), says Vice President Bobby Bowers.

And here’s a middle view: Bob Diener, president of discounter Hotel Reservations Network (www.hoteldiscount.com), sees good rates through about March, “but we expect many of those rates will steadily go up.”

Much depends on a hard-to-predict economy and another wild card: whether terrorism continues to be a problem in the U.S., experts say.

* Deals: One trend that affects all travel is what Yesawich calls “controlled offers.” These are discounts that hotels and airlines post on the Internet (often anonymously, as on the auction site www.priceline.com), e-mail to travel agents or mail to regular customers. The idea is to fill excess rooms or seats at whatever price they can without tipping off the public to lower rates. That way the hotel or airline staves off pressure to offer low rates when business picks up again and also saves on advertising. (A travel agent can provide “one-stop shopping” for such offers, agent Sudeikis notes.)

“It’s created a whole underground deal culture, and we expect that to grow” in 2002, Yesawich says.

His summary advice for deal seekers in the new year? “Go online, and think foreign.”

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Jane Engle welcomes comments and suggestions but cannot respond individually to letters and calls. Write Travel Insider, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012, or e-mail jane .engle@latimes.com.