Arnie Weissmann
Arnie Weissmann

"It's a little bit scary, how good things are," Keith Baron, president of Abercrombie & Kent USA, recently told me. He said forward bookings for 2019 are up "huge double digits over 2018, which was an exceptional year. But it makes us nervous when we look at the economy and how fragile it might be."

Baron isn't the only supplier expressing a degree of concern when evaluating where we are in an economic boom that appears to be defying gravity. Employing the traditional definition of a bull market, this month we're entering the longest recorded bull market ever.

There are those who believe that globalization, the ability for companies to sift through huge amounts of data and the speed of technological advancement have rendered irrelevant the traditional economic boom/bust cycles (on average since 1945, five years of expansion to one of contraction).

Sebastien Bazin, chairman and CEO of AccorHotels, told me last December, "The previous cycles ... were before the digital world. You may very well see cycles that last 15 or 20 years because businesses have so much better information."

If Bazin is correct, the disruption of economic patterns fits into what appears to be the defining characteristic of the 21st century's mid-teenage years: Precedent is no longer a reliable indicator of the future. Just as climate change is disrupting millennia-old weather patterns and shifting political sentiments are upsetting 70-year-old alliances, perhaps economic theory is in transition, as well.

It can all be very disorienting, but I tend to bifurcate how I evaluate predictions. On one hand, I'll accept forecasts of dramatic changes that can be measured scientifically. For example, climate change is verifiable, so we can assume that traditional weather patterns aren't indicative of future ones.

But the past is still a good guide for patterns whose dynamics are driven by human nature. Politics, for instance. I'm currently reading a book about Chinese society that quotes a political philosopher from pre-Imperial China. His 2,000-year-old observations are uncannily applicable to today's global political trends.

Similarly, although economic theory evolves, acting on the belief that underlying economic rules don't apply to current situations tends to end badly.

"Irrational exuberance" for tech stocks led to the 2001 bust, and the 2008 crash could likely have been avoided if banks hadn't tossed aside sensible lending guidelines in pursuit of profits from bundled-mortgages derivatives.

I don't want to sound alarmist, but trade wars, rising wealth inequality and a U.S. budget that significantly increases government spending while slashing government revenue give me a queasy feeling.

All of this is to say that I don't blame A&K's Baron for being nervous, but I was very curious how the combination of good times -- and awareness that good times eventually end -- was driving his business decisions.

His investments, he said, were being directed toward tried-and-true destinations rather than spending heavily on emerging destinations.

"It doesn't mean we're holding back [on exploring new destinations], but dedicating resources to areas we know well and creating new experiences in those places seems to be the prudent way to plan growth," he said.

Should the economy begin to turn south, his investments to improve traditionally strong destinations suggests that those products will be well-positioned, whereas newer, softer products might struggle.

"We're digging and crawling under rocks to create new things in strong destinations where we know we can get a return on our investments," he said.

As an example of "crafting from scratch" in strong markets, he said that in a typical "chef's afternoon," clients might be brought to a market and then back to the kitchen to help prepare dinner. But some of his Southeast Asian itineraries now feature "crop-to-bowl" experiences, which bring guests to rice paddies to harvest alongside farmers and even thresh the rice. Steps to turn rice into noodles are skipped, but it ends with guests cooking their next meal.

"Thread count no longer defines luxury," he said. "You don't have to give up luxury to be adventurous. Adventure sits above five-star experiences."

A&K must also be mindful to support destinations where it has hard assets, he said, even when those destinations are challenged.

"Historically, Egypt has been enormously significant," he said. "We have [ships on the Nile] there, and it's important that those are operating full."

He said recovery from the Arab Spring fallout has been "extraordinary" -- more than 100% growth in the past two years and 80% growth in forward bookings for 2019. "It's key for us strategically," he said.

Any economic nervousness has not curbed the company's philanthropic activity.

"A&K's home is East Africa," he said. "We've partnered with Lifestraw to deliver clean water to 19,000 schoolchildren around Maasai Mara. Guests don't visit the schools, but we feel the social responsibility."

A&K's approach sounds very sensible to me. Assuming we're in a period of expansion overtime, one doesn't want to hold back and miss out on the upside of what could turn into double or even triple overtime. But exercising a conservative approach to investments, reinforcing those areas that have been reliable strongholds, is a hedge that seems reasonable for times when unpredictability is perhaps the only thing that's predictable.


From Our Partners

2021 Family Expo
Family Travel Expo
Register Now
Air Astana 1366
Air Astana
Read More
2021 Caesars Webinar
Watch Now

JDS Travel News JDS Viewpoints JDS Africa/MI