For travel retailers, 2018 looks like it could be a banner year.
Booking windows on products from cruises to tours have lengthened, indicating a generally healthy industry, and the trend is expected to continue into 2018. While longer booking windows will likely also trigger price increases from suppliers, the general health of the economy and consumer confidence running at an all-time high should mean increased sales all around in the year to come.
Despite events that are beyond human control, like the hurricanes that devastated parts of the Caribbean and Florida in September and October, 2017 was widely regarded as a solid year, with agents' sales outpacing 2016.
"The hurricanes and some other weather events that took place kind of slowed down a little bit of the momentum, but we're back on our feet now and everybody's moving forward," said John Lovell, president of Travel Leaders Network and Leisure Group. "So 2017's going to close well up over 2016's performance, and we expect 2018 to do the same."
Debbie Fiorino, senior vice president of CruiseOne, Dream Vacations and Cruises Inc., agreed that momentum will continue into the new year.
"We don't see the momentum changing," she said. "Nothing magical happens on Jan. 1; it's just a calendar. So we can see that the bookings are already there, and we're turning the year better than we turned the year into 2017."
Booking windows have lengthened for several reasons. For one, cruise lines are making itineraries available earlier, said Bryan Shilling, managing director of AAA Travel Products and Services. Lines are also protecting pricing integrity as sailing dates get closer, a practice that has been in place for several years though its effects are only appearing now.
The big unknown about longer booking windows is what impact they will have on pricing in 2018.
"I think it's going to be based on the demand dates," Shilling said. "So yes, I think pricing will increase over high travel periods; not necessarily as much in the lower travel periods."
Lovell agreed. "Yields are up, the average price is up, which means our agency community is making more money off the same sale," he said. "All of our indicators say 2018 is going to be a very, very strong year for us, and we do anticipate yields continuing to hold steady, if not rise in some cases."
The good news is twofold: Higher prices mean higher commissions for agents, and consumers are likely to be willing to pay them based on the health of the economy and the highest levels of consumer confidence in years.
"Politics aside, it's a great environment," Fiorino said. "Therefore, people are spending their discretionary income and feeling good about it."
Lovell pointed to high consumer confidence and the gross domestic product being up 3.3% in November as indicators of a strong economy.
"Everything seems to be very, very strong," he said. "Stock markets, all of them are at record highs. Inflation continues to be low. All the leading indicators and, really, the biggest one for us is consumer confidence are very strong. What that does is it really says to the consumer that they can make a purchasing decision and feel confident about it."
According to the Conference Board, its Consumer Confidence Index was at a 17-year high in November after rising for the fifth consecutive month. Consumer opinion about current business conditions, the short-term outlook and the job market all improved over the prior month.
Conference Board senior economist Brian Schaitkin said the rise in consumer confidence "bodes, in my view, particularly well for the travel industry. We've heard a lot over the last few years about the preference of millennials for experience over things. Many of those millennials struggled to get jobs shortly after the Great Recession. They've now been able to get jobs. They're in a position where they're starting to have more discretionary income, and that's going to translate into spending on travel."
Schaitkin said that the Consumer Confidence Index, which is based on the results of a monthly survey conducted for the board by Nielsen, includes a question asking respondents if they plan to take a vacation in the next six months.
"That number is now higher than it's been at any point since the end of the Great Recession," he said. "So that's another sign that spending on travel is likely to remain strong in the coming months and into 2018."
The new year could also bring with it the potential for a stronger U.S. dollar, making foreign travel cheaper.
Schaitkin said the dollar "weakened somewhat" in 2017, making some international destinations more expensive than they had been in the past (a notable exception being the post-Brexit U.K.).
But in 2018, the Federal Reserve is expected to raise interest rates several times as the economy continues to grow.
As a result, the U.S. will likely have interest rates rise at a faster pace than other mature economies, meaning the U.S. dollar should get stronger, making foreign travel more affordable.
"Travel across the board is very, very strong right now," Lovell said.
"It's not just the cruise market. It's not just the river cruise market. The FIT market is strong. Europe continues to be strong 2018 is shaping up to be a very, very good year.
Shilling agreed, saying, "All of our advanced bookings are showing some really solid growth, and barring something that we can't foresee, I think it's going to be a strong 2018 all the way through."