The history books will be fairly kind to 2014. Although it was a year of mounting anxiety for international diplomacy, it was also a year of economic recovery, with scattered hints of prosperity, here at home. For the business of travel, the economic trends overshadowed the anxiety, and our industry exceeded expectations.

People traveled. Travel companies performed well. And along the way we made interesting and even memorable news, summarized here in our year-end list of the top topics of 2014. 


It's not merely an emerging market anymore. It has emerged. Nothing exemplifies this more than Royal Caribbean International's decision to deploy the industry's biggest and newest cruise ship, the Quantum of the Seas, for an inaugural season in Shanghai.

The move reflects the reality that China's consumers are now in a position to demand and to appreciate the best that the travel industry has to offer, something that the hotel industry figured out early on.

For the last several years Western hotel companies have been jostling for new locations and development projects in China, and the trend has now reached well into the provinces. Luxury brands like Ritz-Carlton and Four Seasons are not just in Beijing and Shanghai, but also in Sanya, Pudong, Chengdu and Shenzhen.

Sheraton is opening resorts in places unfamiliar to most Westerners, such as Diqing and Jiuzhaigou.

Airlines are also beginning to venture beyond the traditional gateways as China Southern recently opened a route linking San Francisco with Wuhan, the capital of Hubei province and the first Chinese city other than the traditional hubs of Hong Kong, Beijing, Shanghai and Guangzhou to attract a nonstop route to the U.S.

Cruise lines are also finding China to be fertile ground, as typified by Royal Caribbean Cruises Ltd.'s joint venture with Shanghai's to launch a Chinese cruise brand, SkySea Cruises. Carnival Corp., not to be outdone, is pursuing joint ventures with shipbuilders that could lead to the creation of a new Carnival brand as well as a source of purpose-built ships for the Chinese market.

Recognizing the huge potential of bilateral trade, tourism and investment, the U.S. and China inked an agreement during President Obama's China trip in November to offer multiple-entry business and tourist visas to each other's citizens with a 10-year validity period, a move that will further facilitate travel and help make China the largest overseas market for inbound U.S. travel within a decade.

Another sign of China's arrival in the fast lane is that the World Travel and Tourism Council held its annual summit in China this year for the second time in five years -- an unusual move, and one that was widely recognized as appropriate.

The Economic Rebound

It was slow in coming, but it showed genuine traction in the travel sector, with record-breaking performances from air, cruise and lodging supplier groups, coupled with increased visitor numbers, rising agency sales and encouraging trends in the economy at large.

The recovery became, at long last, unmistakable in 2014. And best of all, it set the stage nicely for 2015.

This year's precipitous drop in fuel prices, by itself, is a cause for celebration. December opened with regular unleaded crossing the $2.75 mark and heading south, down from $3.25 a year ago. That 15% drop is putting hundreds of millions of dollars into consumers' pockets every week, and the travel industry is sure to attract some of that extra purchasing power in the months ahead, particularly as the unemployment rate continues to fall.

The drop in fuel prices also took some pressure off airfares, which might be one reason why long-haul international travel by U.S. citizens has been on the rise all year, along with inbound travel from abroad.

Travel agency air sales for most of the year were building to a six-year high, reflecting record load factors in the airline industry. Hotels have been keeping pace with rising occupancy rates and revenue gains, while cruise lines headed into the fourth quarter buoyed by double-digit earnings gains in the third.  

At the top two online travel agencies, Priceline and Expedia, the increased demand drove increases in gross bookings of 28% and 29%, respectively.

Sinatra said it all: a very good year.

Carnival's Rebound

After multiple PR hits from the Concordia disaster and the high-profile engine room fire that disabled the Carnival Triumph in the Gulf of Mexico in 2013, the industry's biggest cruise player got back on track in 2014.

The best evidence of that is in the company's financial performance. For its fiscal third quarter, ended Aug. 31, Carnival Corp. reported net income of over $1.2 billion on revenue of nearly $5 billion, beating analysts' estimates. The company also revised its estimate of its full-year profit above the consensus estimates, a factor that has pushed its stock price to a three-year high.

Even the thought-to-be-damaged Costa brand is rising with the tide, taking delivery in October of a new flagship, the 132,500-ton Costa Diadema.

It's clear that Carnival Corp. is no longer in its wound-licking mode, and the appointment of CLIA chief Christine Duffy to head its flagship Carnival Cruise Lines is sure to help reinvigorate the brand in 2015 and beyond.

The company this year launched an aggressive outreach campaign and contest to engage consumers, through digital and social media, in designing new marketing initiatives for all nine Carnival brands, which have been rarely linked in consumer-facing ads.

Carnival is also stepping up its game in the all-important China market, where it will be homeporting four ships in 2015 and developing new partnerships with China State Shipbuilding Corp. and Fincantieri that could pave the way for a three-way joint venture to build ships in China and, possibly, the launch of a new Carnival brand in China. Watch that space.

DOT Consumer Rules

It would be a big deal if the Transportation Department (DOT) took it upon itself to regulate Google, or to require travel agents to disclose their incentive commission deals, or to dictate which flights should appear first in response to Internet search displays. But when the DOT issued a proposal to do all these things, plus a dozen more, it triggered one of the hottest debates of 2014.

In the name of enhancing consumer protections, the DOT in May released long-awaited proposals that would extend the DOT's jurisdiction far across the Internet and deep into travel agency operations, by classifying search firms such as Google as "ticket agents" and dictating specific display criteria to any entity (airline, agent or search engine) that arranges flight information on a screen in response to a customer query.

The proposal elicited a mountain of responses from the industry, with airlines and Internet firms complaining that the DOT was going too far and agency interests, such as ASTA, complaining that the DOT was missing the point entirely. Even consumer groups were split on the issues.

A major goal of ASTA in the case has been to get a DOT rule requiring airlines to make all their ancillary services available for sale through the agency channel. The DOT stopped short of that, proposing instead that airlines display to agents, but not make bookable, the fees and terms for three particular services deemed "intrinsic" to air travel: first and second checked bags, carry-on bags and advance seat selection.

Airlines howled in protest that this list was arbitrary, accompanied by a chorus from ASTA that it didn't go far enough.  

The DOT has no target date for taking action and may request additional input from the industry before it does. Either way, the stage is set for more regulatory battles whose outcome could affect the industry's evolution for years to come.


After an acrimonious debate during which virtually everyone took potshots at the airlines, the Transportation Department in May approved IATA's controversial Resolution 787, setting the stage for what the carriers call a New Distribution Capability (NDC) for the travel agency channel.  

The resolution was an effort to set guidelines for a standardized messaging language, XML, that would facilitate a more detailed and interactive exchange of information between customer, agent and airline during the shopping and booking process.

That is how IATA described it, but the industry spent most of 2013 accusing the airlines of attempting to overthrow long-established business practices, putting an end to anonymous comparison shopping, raising fares, intruding into passengers' privacy, stealing travel agency clients and shooting Bambi's mother.

After multiple rounds of reassurances from IATA that NDC was voluntary and that all long-established business practices were likely to coexist for decades, the industry opposition melted and the DOT approved the resolution.

Overnight, nothing changed.

Nobody claims to be "using NDC" yet, but by the end of the year various airlines and intermediaries had begun to experiment with new ways of handling ancillaries and fare bundles, using "NDC concepts."  

In a white paper titled "NDC and You," ARC reminded agents that NDC won't happen all at once and will be used differently by different airlines, which means the biggest challenge for agents may be juggling "a variety of processes and business rules for each airline, travel agency contract or market."

IATA should have called it MNDC, for "Multiple New Distribution Capabilities."

A Revolution in Cruise Dining

The "main dining room" in cruise ships is going the way of the phone booth, and it's easy to see why. Passengers love the flexibility and the opportunity to avoid regimentation, and cruise lines are seeing dollar signs on the bottom line from the proliferation of specialty restaurants and upscale dining venues.

The trend can be traced to the turn of the century, when the first seagoing Johnny Rockets made its appearance on Royal Caribbean's Voyager of the Seas and Norwegian Cruise Line adopted the Freestyle Cruising theme, which made a choice of dining rooms with open seating a core feature of Norwegian's onboard experience.

And then it mushroomed as other lines began to experiment with multiple dining venues, branded restaurants, fast food and everything in between, from celebrity chefs to specialty snacks. The trend dovetailed perfectly with the growing importance of onboard revenue from all sorts of activities, of which food and beverage is, on most ships, the most ubiquitous.

But nothing epitomizes the revolution more than Royal Caribbean's move this year to gut the main dining room and Viking Crown Lounge of the Oasis of the Seas, by any standard a major retrofit for a ship that was only 5 years old.

Into drydock it went, emerging this fall with three new restaurants where the main dining room had been, and with a restaurant and lounge for suite guests occupying what had been the Viking Crown Lounge, traditionally a signature feature of Royal Caribbean ships.

When the line formally unveiled its Quantum of the Seas a month later, the ship featured no fewer than 18 dining options, including five complimentary, full-service "main" restaurants, with no set seating times, plus a range of options, from fine dining to pubs and pizza.

The Quantum of the Seas was Royal Caribbean's first ship without a main dining room, but it won't be the last.  

The Sharing Economy

The sharing economy has been around since before the garage sale, but a number of trends converged in 2014 to bring about an explosion of entrepreneurs, smartphone apps, willing consumers and wannabe service providers, bringing "disruptive innovation" to several segments of the travel business.

Best known is Airbnb, which began in 2008 with a rented air mattress and is closing 2014 with an estimated market valuation of $13 billion and rising. Airbnb's analogue in the vehicle market is Uber, which began a year later and has been valued at about $40 billion.

What these new household words have in common is a business model and smartphone app that enables amateur service providers (apartment dwellers, homeowners or car owners) to serve as hosts or drivers to willing consumers seeking lodging or transportation.

What they also have in common is the enmity of local government regulators, taxing authorities, housing advocates, taxi and limo drivers, hotel operators and other members of the Establishment.

Yet they persisted throughout 2014, and despite a corporate culture that seems more frat-house than boardroom, they even managed some serious mainstream outreach.

Airbnb and Uber, for example, rolled out variations for business travelers, complete with a tie-in to Concur, the corporate travel expense management service.

Even if the phenomenon spreads no further, one upside of the rapid spread of car services like Uber and Lyft is that they have triggered reforms and upgrades by some local taxi operators who felt the need to clean up their acts to meet the new competition.

How far the sharing concept can spread is still up in the air, but it might not be up there literally. The FAA this year shot down a proposal under which private pilots could carry passengers on a ride-share model, but if disruptive innovators have taught us anything, it's that they don't often take "no" for an answer.

Traveling Technology

Travel technology used to be a term used to describe search and reservation systems, but that's last year's definition. We're now talking about technology that enables and empowers travelers in the act of traveling.

Your itinerary, guidebook, map, pamphlet of words and phrases, currency converter and camera are now on your smartphone, along with apps that will: help you pack; navigate through the airport; hail a cab; pick out points of interest; find a bathroom, bicycle or ATM; piece together a walking or driving tour; avoid traffic jams; comparison shop for restaurant prices; and open your hotel room door at the end of the day.

And the trend is just beginning, as technology is no longer merely superimposed on the travel experience but built into it. Royal Caribbean and other cruise lines are making WiFi an integral part of the shipboard experience to facilitate and exploit consumers' addiction to social media.

And on the Quantum of the Seas, passengers can use a smartphone app to book a dinner table and pay for onboard purchases with the WowBand, a bracelet with an imbedded chip that, literally, can open doors.

The chip-in-a-bracelet phenomenon made its travel industry debut in 2013 with Disney World's MyMagic, and consumers took to it instantly. They were ready for it, demonstrating once again that the more we use technology, our learning curves get shorter and our expectations rise higher.

Travel is reaching the point where it's not enough for a venue or experience to be device-friendly. The next generation of travelers will expect technology to be an integral part of the experience.  

Destinations in turmoil

Trouble spots are a fact of life, but 2014 had more than its share as one destination after another was roiled by natural or man-made hazards, from terrible diseases to terrible storms.

Israel, which had been on track to have a record year for tourism in 2014, saw a temporary cessation of U.S. airline service during the peak summer season this year after a rocket launched from Gaza landed near Tel Aviv's Ben Gurion Airport.

During the ensuing 50-day war between Israel and Hamas, tours and cruises were diverted from the area, but booking activity quickly resumed after the August cease-fire.

Meanwhile, Egypt, which helped to broker the cease-fire, continued its struggle to rebuild its tourism industry amid ongoing political uncertainties, as major operators gradually return to the destination.

But in 2014 we put a number of new red pins in the map for the political turmoil in Ukraine and Crimea; for the Ebola epidemic in West Africa that frightened some travelers away from the entire continent; for the Napa earthquake; for Hurricane Odile, which devastated Cabo San Lucas; and for the economic reversals that threaten Atlantic City tourism, which never fully recovered from Hurricane Sandy.

But there were also unexpected bright spots in the late-year thaw in relations with Cuba and the continuing good news from Haiti, a country whose tourism potential seems perennially jinxed by poverty, political upheaval and disaster. In 2014, however, the tide may have turned, with new port and infrastructure investments by Carnival, new air service from American, new hotel projects by Marriott and Hilton, and tour programs on the books from G Adventures.

Setback for space travel

Finally, 2014 will be remembered for a tragic setback in the development of space tourism. On Oct. 31, Virgin Galactic's SpaceShipTwo, on its fourth powered test flight, broke up in midair and crashed in the Mojave Desert, killing one of the two pilots aboard and injuring the other.

The cause of the crash remains under investigation, but an early consensus formed that the space plane broke up because of human error: an accidental deployment of a feathering or drag-inducing control surface intended to slow the plane's descent when in glide mode.

Further testing of the space vehicle was immediately put on hold pending the outcome of the investigation, setting the program further behind schedule and triggering some cancellations from among the hundreds of celebrities and thrill-seekers who were holding reservations.

The crash was a traumatic interruption for the project and its backers, but in a broader sense it was also the latest in a series of delays and setbacks. Virgin Galactic's ebullient and optimistic founder, Richard Branson, has been pursuing the goal of space tourism for a decade and initially predicted passenger service as early as 2007.

But with a project of this scale, complexity and risk, delays would be inevitable and tragedy always possible. Given the distances we have already traveled, successful space travel is almost surely in our future.

This was not the year, but we can see it from here.

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