PHOTO: Trafalgar president Paul Wiseman is the leader of a tour company that is proving travelers are more bullish than ever on seeing the world.
Though it has been widely documented that the Trump travel ban and crackdown on immigrants has dealt a staggering blow to inbound tourism, outbound tourism seems to be going great guns. At least that is the case for Trafalgar, the global tour operator and flagship brand of The Travel Corporation.
Trafalgar reported yesterday that its bookings are so robust it has been able to guarantee 100 percent of its 2017 departures of its tours for Europe, Britain and Asia.
The standard practice with group tours is that any departure must be booked by a certain minimum number of people to make it profitable for the operator. If you book a tour and the required minimum is not met, the departure may be canceled and you will have to make other plans.
But this year Trafalgar has been able to cast that concern to the winds. All of its tours for Europe, Britain and Asia for the entire year of 2017 are now guaranteed departures. Customers can book without fear of having to reschedule.
It is the first time this has happened since Trafalgar’s president, Paul Wiseman, joined The Travel Corporation, in 1998.
Why is this happening?
Of course it is never possible to distill the precise reason for a market trend, but there are a few factors that appear to be driving the trend.
- The strength of the dollar in comparison with nearly all other world currencies at the moment, massively boosting the buying power of Americans on the ground in foreign destinations.
- Low fuel prices, which are contributing to lower air fares.
- A soaring stock market, pushing the 401ks of Americans to higher levels, essentially putting money and spending power in people’s pockets.
- The combined effect of items one and two, lower air fares and greater purchasing power of the dollar, over a long enough period to allow tour operators like Trafalgar to reduce their prices, which are set years before tours actually depart.
We may also speculate that there could be some reverse reaction to what may be termed “the Trump effect.” The narrative of uneasiness and the current market conditions just don't jive.
Google “Trump anxiety” and the mega search engine will retrieve thousands of articles about the effects reported by therapists on their patients of the daily uncertainty of living under the Trump presidency. It has generated a new syndrome, the obvious name of which, Trump Anxiety, has quickly spread through the Internet.
Love him or hate him, Trump is a change agent that has brought social and political upheaval to America, and the uncertainty has rapidly spread to foreign countries.
Google “Trump uncertainty” and you will receive another massive trove of documents on the possible effects of the undeniable element of uncertainty brought by the current president. His volatility is universally acknowledged, and now it is coupled with the power of the most powerful office in the world. One day he launches a tweet criticizing a company and the stock goes tumbling. Nothing is predictable.
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It is conventional wisdom that markets do not like uncertainty. Some, like George Soros, have predicted that the uncertainty will cause global markets to falter. But now the stock market is soaring, analysts are re-thinking the effect of uncertainty. It is not necessarily always bad.
Peter Coy writes in Bloomberg/Business Week, “Uncertainty is not always bad. It simply means the distribution of possible outcomes — both upward and downward — has widened. Investors in the stock market seem to be betting on the upside of the distribution, judging from the 6.5 percent rise in the S&P 500 since the election.”
According to CNBC, analysis by Ned Davis Research indicates that a low presidential approval rating actually corresponds historically with healthy stock market growth.
“It turns out, at least historically, that a divided country has been relatively bullish for stocks, perhaps keeping optimism from becoming too extreme,” Davis wrote recently.
As part of the uncertainty, no one knows how long the current stock market rally will last.
Paul Brandus writes in USA Today, that the Dow rose 221 percent under Obama’s presidency and has grown an additional 10 percent since Trump was elected last November. Are we due for a correction, or heaven forbid, a crash? How long will the markets continue to defy the old maxim that markets don’t like uncertainty? How long until some of the effects of upheaval – the crashing of the Trans Pacific Partnership, tensions with China and Mexico, a promised border tax, repealing the Affordable Care Act, etc. – come home to roost?
But meanwhile, there are opportunities. When it comes to investment in travel, the current constellation seems to be spurring outbound travel. Get out there and get it while you can.