An Internet search on the phrase “hoard cash” or similar terms will produce the typical 4 million hits, and many of them will refer to a recent disclosure by the Federal Reserve Board that U.S. corporations are sitting on nearly $2 trillion in cash, which is some kind of record.

The hits will also include some references to Commerce Department data showing that the personal savings rate of consumers has been above 5.5% all year and stood at 5.8% in the third quarter, up from a mere 1.2% in the comparable quarter of 2005.

The economic climate of 2011 will depend on many factors, including tax policies, currency values, oil and other commodity prices, the weather, the news and the war. But most significantly it will hinge on what we decide to do with all that cash.

The first move

Economists tell us that until companies start investing their cash to increase production and create more jobs, the economic recovery will limp along in low gear. They also say that until consumers start borrowing and spending again, there will be little incentive for businesses to expand.

Clearly, somebody in this scenario has to make the first move.That somebody might have been the federal government.

The administration’s recent agreement with congressional Republicans to extend the Bush-era tax cuts for two years removes a big element of uncertainty for investors and corporations, and that could help to loosen their grip on those greenbacks. Generally speaking, investors like to know the tax consequences before they make a move.

But the tax package does more than merely freeze the Bush tax cuts. It also includes a 13-month extension of unemployment benefits, plus a temporary rollback of 2 percentage points in employee withholding for Social Security, which would put a bit more money into every paycheck.

The White House estimated that the payroll tax cut alone would put an additional $112 billion into circulation.

Prior to the tax accord, the consensus among economists had been that gross domestic product growth in 2011 would be in the 2% to 3% range.

The stimulative effect of the tax package sent forecasters back to their spreadsheets to revise their projections upward. Depending on whom you read, the revised forecasts anticipate an additional 0.3% to 1% in GDP growth owing to the stimulative effect of the tax cuts.

This bodes well for the economy and for travel.

Confidence returning

Even before President Obama rolled out the tax accord, the Conference Board had been tracking a steady rise in consumer confidence, which jumped to a five-month high of 54.1 in November, from 49.9 the month before.

That confidence, moreover, was reflected in the Commerce Department’s data on retail sales, which moved up 0.8% from October to November, to nearly $379 billion, a 7.7% increase over November 2009.

The markets have beenPreview2011-inside responding to the news. By mid-December, a rising Dow Jones index crossed into territory that it hadn’t seen since September 2008.

Considering that the travel industry managed a recovery of its own in 2010 despite an uncertain economy, the prospect that conditions will be as good or better in 2011 should be welcome news.

An improved economic climate is, of course, a key ingredient for continued recovery for travel in 2011, but some segments of the travel industry face additional challenges that go beyond economics.

Technology challenge

Retail travel distribution, for example, appears to be facing another battle over game-changing technology because of the re-emerging rift between the airlines and the GDSs.

Early in the decade, the industry saw the first of its “full content” wars over the issue of so-called “Web-only” fares, discounted rates that the airlines made available only on their websites. The absence of those fares from the GDSs posed an obvious threat to travel agencies and travel management companies and gave rise to dire warnings that airlines were endangering the distribution system with fragmented content.

Eventually, GDSs negotiated full-content agreements with airlines that brought these fares, or most of them, back into the agency channel.

That scenario is being played out again, but in a way that is even more threatening for agents.

The first content war was about capacity-controlled and marginally profitable discount fares and the willingness of the airlines to distribute them through the GDS. There was no technical reason why the fares weren’t in the GDS, because the stumbling blocks had to do with costs and marketing strategies, not functionality.

The issues today are different on a number of levels. The content at stake is not a marginal loss-leader fare but a profitable new paradigm for marketing air travel.

The airlines’ reliance on ancillary services as a revenue source is morphing into a strategy of rebundling those services into customized packages for particular travelers.

This strategy is changing the very nature of the booking process. In effect, it is beginning to require technology that does not yet exist in the agency channel.

At bottom, there is no technical reason why GDSs cannot present enhanced and customized content for agents and travel managers to search, book and track. And there is no technical reason why these transactions can’t be settled through traditional payment systems.

But all the necessary links and connections do not yet exist, and getting these dots connected is likely to be a prolonged process that could extend beyond 2011.

Widespread agency handling of ancillary transactions, for example, awaits the deployment of a universal e-ticket equivalent to the miscellaneous charges order. This digital form, the Electronic Miscellaneous Document, has been in development for months. ARC only recently activated the capability to process them, but U.S. airlines and GDSs have not.

These technology issues could make 2011 a challenging year for travel retailers even as the economic outlook improves.

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