It's biting...airfares and hotels drop prices

It's the holiday season, but from the emails I've received this week it seems the poor economy's taking a chunk out of the travel bookings and holiday cheer!

This month, Farecast tells me that despite holiday travel costing ~35% more than last year (probably due to increased gas prices) something odd has happened at the end of October. There's been a turnaround as fares have dropped as we enter the holiday and Christmas season and fares have actually fallen below last year's prices?! Now, it's safe to assume lower oil prices ($50 a barrel now from its peak of $145) may be the reason, but the truth is consumer confidence is at an all-time-low!

And connected to this squeeze is a tightening of the belt that's even affecting Vegas vacations. The hotels are already taking action. For CES in January 09, the hotels are cutting their losses and have dropped their prices by <$75. Even so, right now I think I'm going to skip CES and use the company's money more conservatively. So, no AVN either ;) The end of a tradition!

See below Can you can guess where the price line will plot from now until the end of 2008?

Go try Farecast.com

I love Farecast almost as much as I love TripAdvisor. And as I was booking my trip to Mexico City I noticed that Farecast has been acquired by Microsoft. But why? It's a great flight search engine, but that's been done by Orbitz, Expedia etc. No, what's cool is its historic database. That's where the real action is. Imagine what you could do with millions of historic flight fares stored and cross-referenced in a "black box" and available to you and me on the web?

Farecast gives you predictions on whether airfares will hold, go up or go down and that means, if you're a planner like me, you can decide when its best to buy a flight...now or later? Microsoft probably wants to take a peek under the hood of the database and also get its hands on the advertising inventory and eyeballs of Farecast repeat visitors. And I guess as Expedia was founded by Microsoft in 1995 it has some travel game experience.