Travel prices are dropping faster than temperatures this fall. But look closely at who’s subsidizing these sales – it could be you.
Take Air Canada’s recent Thanksgiving fare discounts. You could fly from Vancouver to San Francisco for as little as $248, or from Calgary to Phoenix, Ariz., for just $198. Not bad. But who’s underwriting the fare reductions? Could it be…the taxpayer?
Bingo. Even as Canada’s largest carrier cut prices, the Canadian government offered its ailing airline industry $105 million in “emergency aid.” The funds are considered just the first step in a broad policy to restructure the Canadian airline industry, which is sputtering along after September’s terrorist attacks.
That’s nothing compared with the colossal $15 billion bailout the U.S. airline industry recently got. And what did the carriers do after Congress promised to subsidize these failing businesses? They slashed fares, big time. United cut its business fares in half, triggering a fare war with its rivals. Then Delta pulled the bottom out of leisure fares, offering a sale on tickets bought through December 15, plus savings of another 10 percent for travelers who book online.
Don’t think I’m picking on the airline industry. Tourism destinations are pouring money into bringing visitors back, though not on the same scale as the airlines. For example, the Las Vegas Convention and Visitors Authority launched an eight-week, $13 million advertising campaign designed to attract travelers to the gambling Mecca. We’re not talking about those kitschy spots that talk up the Casino City’s famous all-you-can-eat breakfasts, either. Las Vegas is using a never-before-released song by Frank Sinatra in its 30-second advertisements that are airing in Southern California, Phoenix, Dallas, Chicago, Houston, and the San Francisco Bay area.
Who’s paying to bring Ol’ Blue Eyes back? You guessed it. While you might find the city’s average hotel rate of $110 a night appealing -that’s almost half off from before September 11 – you are going to pay for the Chairman of the Board’s postmortem appearance. Depending on where you stay, you’ll get socked with a room tax of between nine and 11 percent, which is used to fund tourism marketing efforts. That’s some deal.
More troubling are the bargains at the epicenter of the disasters in New York and Washington. The Inter-Continental and Crowne Plaza properties in the New York and New Jersey area, for instance, lowered rates to between $109 and $149 through the end of this month. From all outward appearances, this was a true deal-the hotels included their entire inventory and dropped most other restrictions. But you have to wonder if these hotels, or others like it, will also be direct or indirect recipients of disaster relief. Or of a billion-dollar bailout in the tradition of Big Air.
Does that mean you shouldn’t take advantage of the bargains? Absolutely not. But it’s important to understand that these deals come with hidden costs. In some cases, such as the Las Vegas room tax, you’ll pay for it right away. But most of the time the surcharges are more subtle – a tax break given to a hotel or federal money offered to an airline. This is your money, extracted from your paycheck, deposited into the government’s coffers and then redistributed to the travel industry.
It would be foolish to turn down a bargain on principle. But it’s just as foolish to think the suppliers who are offering you these sale prices are actually able to turn a profit – and stay in business – in a market economy.
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