Taylor on Travel

The squeeze on finance is feeding through to major travel suppliers. US giant Marriott became the first hotel group to warn of cancellations and delays to new properties this week, putting tens of thousands of jobs at risk. It is unlikely to be the last.

Only this summer, Marriott was complaining of a crisis in human resources as demand for hotel staff outstripped the available workforce. Now it is compelled to warn of reduced investment and cuts at its Maryland headquarters, announcing it has called on $900 million in credit to cover a cash shortfall.

The reason is a sharp fall in revenue per available room (revpar). Having reported a 5.6% increase in revpar in the second quarter of the year and 3.4% increase in the third, Marriott forecast a 3% fall in the final three months of the year and flat or falling revenues per room throughout next year.

Elsewhere, Airbus has agreed to pay French aircraft-parts manufacturer Latecoere in advance for work on the A380 superjumbo owing to a "temporary liquidity problem" at the company. In other words, Airbus is injecting cash to keep the parts-maker going. According to an unnamed source: "Nobody can afford to see Latecoere in difficulty." Production of the A380 is already way behind schedule.

Back in the US, Virgin Group is ready to inject an unspecified sum into US domestic carrier Virgin America, which began flying last year and in which the group holds a 25% stake. Virgin America has already sought an additional $100 million this year.

In the circumstances, those hoping the UK can escape the worst of the economic showdown might want to consider the following. While US politicians have fought over a $700 billion bail out of the banking system - about £390 billion at the current exchange rate - the UK government and Bank of England have so far spent £350 billion if you total the injections of liquidity and nationalisations of Northern Rock and Bradford and Bingley.

This is the estimate of The Guardian economic expert Will Hutton, not me - and the Treasury is reportedly working on plans for an even bigger rescue.

Given the relative sizes of the US and UK economies, the proportion of gross domestic product these sums represent and the likely impact on public spending and taxation, which economy faces the bigger hit do you think?

The latest Ascent Marketing Intelligence figures for travel trade sales are good - very good in the circumstances.

A 2% year-on-year decline in sales this summer, when TUI Travel and Thomas Cook - the two biggest companies, controlling around half the market - reduced mainstream capacity by more than 10%, is remarkable.

It meant the average rise in prices exceeded the headline rate of inflation. That is not great news for bargain hunters, but late-discount deals have been the bane of the industry for as long as anyone can remember.

The collapse of XL Leisure Group in September removed another 7% of capacity - a body blow for the staff, a shame for the minority of holidaymakers who were unprotected and a headache for agents and tour operators, but no disaster for the industry's outlook as a whole.

Also remarkable, overall bookings for this winter to September were 1% up year on year - and bookings for September itself were up 3%.

In both seasons, it has been the low-price business that has been lost while more costly sales have picked up - suggesting those with less cash are trading down with Ryanair or no longer flying. That conclusion appears borne out by latest UK air traffic figures suggesting a 5% fall in passenger numbers in September compared with a year ago.

Summer 2009 remains too far off to call. Ascent reported a 3% drop in September bookings on a year ago - which would leave demand ahead of capacity in the coming year. But how many people would commit to a holiday next August at the moment? The post-Christmas sales will provide the first real picture of what to expect.

Two notes of caution are in order.

First - many smaller travel businesses will struggle to find airlines seats as a result of XL Airways' collapse and the resulting prices may deter a proportion of clients, hitting next summer's market. Yet this is no time for start-up carriers to jump in. Tour operators would be wise not to pin hopes on such an outcome.

Second - the Ascent figures take us up to the end of September. But the world economy - and the outlook for the UK in particular - took a decisive turn for the worse in October. The recession penny has only really dropped since the government nationalised many of the high-street banks on October 8. We are in a new situation.

The industry mantra that consumers won't forego their annual holiday had better weave its magic - because the screw is tightening on spending.

Latest figures from the US - where the downturn and popular awareness of it is in advance of the UK - show consumer spending fell at an annual rate of 3.1% between July and September. That is the sharpest fall since 1980, and the annual fall in purchases of big items - furniture and cars - was 14%.

The figures surprised economists - though what does not these days? Yet the contraction in the US economy, at 0.3% over the quarter, was lower than in the UK where GDP fell 0.5% in the same period. Consider the relative size of the two economies - the world's largest against one considerably smaller than Germany's - and you get some idea of the problems facing Britain.

UK house prices are now falling at the fastest rate since the early 1950s, making a mockery of previous claims that the current house-price decline would not be as bad as the early 1990s - remember those? The real decline of 18% in the past year, allowing for inflation, is worse than the headline rate of 14.6% according to Nationwide figures. That compares to an 18.8% fall spread over four years from 1989 to 1993.

None of the above figures include the last month, remember - when the government nationalised the banks, Iceland went bust and the world's financial system lost $2.8 trillion.

Economists increasingly predict recession through 2009 and stagnation for 2010, which sounds like small chance of recovery before 2011. In the meantime, a Credit Suisse analyst suggests, "households are spending on things they need, not on things they want".

The Chartered Institute of Personnel and Development reports one in four UK employers are preparing to make staff redundant, warning of "a torrent of bad news" for the labour market. Managers, white-collar professionals and skilled non-manual workers are "most likely to suffer redundancy" says the CIPD - the kind of people who generally holiday abroad, maybe more than once a year.

Verbal repetition or chanting to ward off danger and bring reward has a long tradition. Unfortunately, so do recessions - and mantras have yet to be shown to help.