Hot destinations, hotter prices

We want new experiences and value for money. Here are the emerging places to go, writes Jane E. Fraser.

Australians have consistently proven themselves to be hard to deter. The travel industry bounced back relatively quickly from major events such as the September 11, 2001 terrorist attacks and the SARS outbreak and although most industry leaders are predicting an economy-driven trend to domestic travel, international travel is by no means off the radar.

The founder of Lonely Planet guide books, Tony Wheeler, predicts big growth in travel to South America, particularly Peru. He says Peru has "everything in one package", from the "lost city" of Machu Picchu and the Inca Trail to surf breaks, canyons and Lake Titicaca.

Wheeler says Colombia will be a hot destination as it starts to shake off its dangerous reputation. The capital, Bogota, combines Spanish colonial-era architecture with modern city amenity, museums and galleries, while Cartagena, a Spanish-era walled city and seaport on the Caribbean coast, is "quite incredibly picturesque".

Wheeler predicts there will also be a lot more interest in the Central Asian republics of the former Soviet Union. "Borat, of course, focused interest on Kazakhstan ... and I'd have to say my brief visit to Kazakhstan was the most interesting couple of days of my whole year," he says. Kazakhstan's capital, Astana, has some "weird and wonderful" architecture, he says, while Baikonur in the south is home to the Russian Cosmodrome.

Wheeler says cheap overseas destinations such as Vietnam and Thailand will stay popular, as they will put a lot of effort into shoring up tourist numbers and release more keenly priced deals.

Flight Centre analysts are predicting large numbers of people will travel to cheap and friendly Asian destinations such as Vietnam and Bali. Brunei and the United Arab Emirates are also on Flight Centre's radar, particularly with passengers making a stopover en route to Europe with Royal Brunei Airlines, Emirates or Etihad Airways. A spokesperson says the oil-rich sultanate of Brunei, best known for the incredible wealth of its Sultan, offers tax-free shopping, beautiful scenery, "cultural reverence" and opulent surroundings for discerning travellers.

The rest of Flight Centre's top 10 destinations are Croatia , New Caledonia , Mexico, the Czech Republic , Spain and Chile.

How we'll travel

One of the strongest trends in travel is the growing popularity of cruising - for all ages.

Cruiseabout's Joell Ogilvie puts the shift down to all-inclusive pricing, new ships and more imaginative itineraries. "The volatility of the economy has seen cruising's appeal strengthen as people opt for all-inclusive deals," he says. "Cruise lines are also offering shorter itineraries out of Australia, which ensures cruising appeals to a wider market."

The general manager of Harvey World Travel, Glenn Cusack, says his company has noticed a growing interest in cruising among younger working professionals. Travel Associates' David Lovelock says there's also a trend towards all-inclusive holidays and stay/pay offers (such as stay four nights, pay for three) at high-end hotels and resorts.

The adventure travel sector remains strong with companies reporting healthy bookings. However, a recent survey by indicates many travellers will be looking for relaxation rather than experiences. More than 40 per cent of survey respondents said their ideal holiday would be "'total relaxation", while 20 per cent wanted the opportunity to spend more time with family and 18 per cent said they wanted to learn about new cultures. Almost 60 per cent said escaping the daily grind was their main motivation for taking a holiday.

How we'll book

Almost 80 per cent of Australians report they use the internet (a higher percentage than the US), so the shift to making travel bookings online is permanent.

The general manager of Zuji, Peter Smith, says his firm's biannual research on online booking trends shows a 54 per cent increase in the past three years. Of online shoppers in Australia, 53 per cent of those surveyed have purchased an airline ticket online; 47 per cent have booked accommodation online.

Smith says the trend to online booking "can't be ignored". Webjet, an air fare booking site, processed almost $100 million worth of bookings in the three months from July to September. The company predicts a 12 per cent increase in profits this financial year.

What we'll spend

Most travel companies are experiencing a slowdown with many experiencing a 30 per cent decline in bookings compared with this time last year. But it's not all doom and gloom.

According to research done by the ANZ, Australians will enjoy a 7.1 per cent increase in household disposable income next year (4 per cent when adjusted for inflation).

ANZ economist Riki Polygenis says the increase in spending power is largely due to tax cuts and lower interest rates, boosted by Federal Government handouts. He says much of that extra disposable income will go into savings, with only some being spent.

However, the deputy chief executive of the Australian Federation of Travel Agents, Jay Westbury, is more bullish. He says Australian companies have hundreds of millions of days of accumulated employee annual leave sitting on their books; staff may be encouraged - or forced - to take leave. Westbury says travellers also tend to adjust to economic circumstances by shortening their trips or travelling at home instead of internationally.

Federal Government figures show a 5.9 per cent increase in the number of domestic airline passengers for October, compared with the same time last year, indicating Westbury's optimism may be well-placed.

A recent survey conducted by insurance provider has found the youth market, in particular, will continue to travel. Of 1000 travellers surveyed, most aged younger than 35, half said they planned to travel about the same amount as in previous years, while almost 25 per cent said they planned to travel more.

Glenn Cusack says Harvey World Travel agents are seeing solid levels of forward bookings for international travel. "Given we are apparently already in a recession, this is not necessarily being reflected in leisure travel plans," Cusack says.

"It takes a lot to get between an Australian and their overseas holiday."

Currency specialist HiFX predicts the value of the Australian dollar will range between 55 and 78 US cents across the next few months.

How we'll fly

Expect aggressive pricing from airlines, says CAPA Consulting's aviation consultant Ian Thomas. Delta Air Lines, the world's biggest carrier, has confirmed plans to launch flights from Los Angeles to Sydney in July, a move tipped to trigger the first serious air fare battle on the Qantas-dominated route in more than a decade. Jetstar and Tiger Airways will be intensifying "bottom-end" fare offers.

December air fares were at their lowest in a decade, with airlines slashing fares to put bottoms on seats. American Express says while air fares are predicted to increase slightly next year, there may be short-term fare reductions as the economic slowdown bites.

Expect to find "variable tiers" of economy-class service as business-class travellers downgrade and new aircraft mean airlines can be innovative.

Where we'll stay

Dransfield Hotels & Resort director, Dean Dransfield, says Australians will downgrade their spending. Even those who can still afford luxury accommodation will often feel guilty about booking. Dransfield believes some will take the opportunity to stay in a higher standard of accommodation for the same money, as hotels begin discounting.

American Express is predicting only modest increases in Australian hotel prices, with lower occupancy rates keeping price increases at bay. Dransfield says bargains will be found in destinations that rely on airline travellers, as people take to their cars. He also predicts an increase in short-stay packages, as many people are afraid to take extended leave.

Dransfield says some hotels will experience very high levels of demand as people are forced to take annual leave over summer. However, there should be plenty of opportunities after summer.

Leisure travellers will also find good weekend deals at hotels experiencing lower demand from business travellers during the week. "Last time (there was a downturn), they got very good at creating packages, of adding value, as a way of growing business on the weekends," he says.

Dransfield also says the trend towards staying in apartment hotels will continue, as most travellers prefer to have a self-catering option.