Agent Issues Travel Weekly Preview: Looking ahead to 2012 By Bill Poling / December 27, 2011 Share 1 -- Preview 2012Travel Weekly's editor in chief, Arnie Weissmann, spoke to executives about their outlook for 2012. Click here to read. And Travel Weekly's staff writers looked ahead to 2012 in several industry sectors:Caribbean/MexicoCruiseHotelsLuxuryRetailRiver CruiseTechnologyToursAs a prediction for 2012, it's safe to say that the year is going to be a lot like a Wednesday. Such a forecast might make no sense to some people, but readers of a certain age, recalling the Mickey Mouse Club of the 1950s, will remember Wednesday as "Anything Can Happen Day." Given that this is a presidential election year, that control of the Senate could be up for grabs, that tax cuts are on the line and that fuel prices have proven they can go in any direction at any time, the macroeconomic and political climate for travel in 2012 will be as uncertain as ever. It's a reasonably safe bet that any improvements in unemployment and growth in gross domestic product will be modest. As the economy strengthened slightly in the fourth quarter, the Conference Board reported an increase in consumer confidence in November to 56%, an improvement over October as well as an increase over the previous November, but it anticipates that GDP will lag historical averages at least until the middle of the decade. The Federal Reserve's best guess is for real GDP growth of 2.5% to 2.9%, but that's down from a midyear estimate in the range of 3.3% to 3.7%. The employment picture continues to improve, but not by much. The Fed expects an unemployment rate of between 8.5% and 8.7% in 2012, which is not where anybody wants it to be. As for good news, household finances are strengthening, and the share of income that is devoted to debt service is declining, according to a recent report by Goldman Sachs. That could translate into a boost in consumer spending. As for which way the winds are blowing on Wall Street, think of it as Wednesday. According to a recent review of market analysts by CXO Access Group, in terms of projecting "overall market direction," a group of 60 analysts averaged about 50% and got marks for accuracy ranging from 27% to 68%. You're on your ownFor the travel industry, the simplest way to sum this up may be, "You're on your own." If the economy isn't growing much, then any significant growth for travel will depend not so much on the growth of the overall pie but on the appeal of the travel product relative to other forms of consumer and corporate spending. And if that's the case, the year might come down to the strength of travel's products, the industry's fundamentals and consumer attitudes. Fortunately, the travel product is better than ever, and the industry's fundamentals are solid, or at least solid enough. Travel doesn't generate the kinds of returns that investors find in pharmaceuticals or in the oil business, but it clearly attracts sufficient capital, as evidenced by the very existence of the A380 and the 787 Dreamliner, the Queen Mary 2, the Oasis of the Seas, the flotilla of new river cruisers and the money that has been poured into hotel construction and upgrades over the last decade. If there is any threat to travel's ability to hold its own in a stagnant economy, it stems largely from friction created by external factors, most notably consumer attitudes about what the U.S. Travel Association calls "the process," a word that sums up the myriad hassles that affect domestic and international travel, such as obtaining passports and visas, getting to and through the airport and getting through customs and other border controls. That's going to be one of the organization's focal points in 2012, but the industry might do well to address two other sources of friction that are not external and that could have an enormous impact on the industry's near-term future: instability in the airline business and in travel technology. The decade following the 9/11 attacks was not kind to the airlines, and while the major U.S. carriers have begun to get back on track, they're not all the way back. United-Continental and Delta-Northwest are still working out kinks from their mergers and their newly formed alliances with overseas partners; Southwest is undertaking the absorption of AirTran; American just entered bankruptcy, a step it spent the better part of a decade trying to avoid. These might be positive steps toward creating a stable and profitable airline network, but they are incomplete. And until these issues are more fully resolved, we will remain burdened with an underperforming airline industry that simply doesn't get the respect from consumers or the financial community that it ought to command. A related problem is the unsatisfactory state of travel distribution technology. The battle between the GDSs and the airlines over the handling of ancillary services and the introduction of new technologies has gone on for too long and has created inefficiencies for travel management companies, retail agents, online travel agencies and consumers. Airlines rolled out a menu of a la carte services before the distribution industry was ready, and the result has been chaos. Thirty years after GDSs became ubiquitous in agency offices and more than a decade after Expedia and Travelocity pioneered travel selling on the Web, shopping and booking is still too daunting a task for too many travelers. If there is no longer any question that travel is good, then the great challenge for the industry in 2012 and beyond may be to make it easy.