Travel industry bracing for downturn

By Daniel Silliman


There were fewer business travelers in 2008 and industry experts expect the decline to continue in 2009.

A report released Thursday shows the industry is struggling and somewhat stagnant, but not doomed to the sort of depression some had feared.

"Consumers are responding as we might expect during an economic slowdown," said Suzanne Cook, senior vice president of research for the Travel Industry Association. "By no means is the sky falling. After years of growth, we're now looking at modest declines. The travel industry can manage the downturn."

In 2008, according to the Travel Industry Association's numbers, leisure travel decreased by about .2 percent. Next year, the group predicts travel will continue to decline, decreasing by 1.3 percent.

Surveys showed the largest financial concern for travelers was the price of gas. About 70 percent of people said gas prices could change their travel plans. More than 50 percent worried about the costs of air travel, entertainment, eating out, lodging and "the meltdown of the U.S. economy," according to the study.

"Worries," however, do not always translate into change. The number of North American passengers on cruises actually increased in 2008, moving from 10.2 million to 10.3 million. The number of people going to theme parks went up to 347 million, from 341 million.

Forecasts for next year show another six million going to theme parks. The number of people camping and going to a national park was pretty much steady, from 2007 to 2008, and ski resorts reported a record year.

The only part of the travel industry showing a really significant decline was Recreation Vehicles. There was, the study shows, a 24 percent decline in the purchase of RVs, and RVers reported they were traveling less, and closer to home.

According to the study's survey, people are still traveling, but find themselves being very sensitive to costs. Vacationers are price shopping, staying for shorter periods, and spending less while on vacation.

Still, leisure travel has been pretty constant, despite dire warnings of a worldwide economic collapse. In 2001, with the terrorist attacks in September, travel spending dropped by more than 12 percent. Industry forecasts expect travel spending to slow by almost 5 percent next year, but that will still be a total of about $795 billion spent on travel in the U.S.

The really troublesome numbers for the industry may come from the business sector.

Business travel declined by 3.6 percent in 2008, and 2009 projections put travel down another 2.7 percent. About 30 percent of businesses have canceled meetings because of travel costs; 46 percent have seen travel budgets decrease.

Industry experts are arguing that the numbers aren't just economic indicators, but demonstrate the way the economy could be stimulated through more travel.

"It's in the country's interests to stimulate travel as one of the best means to stimulate our economy," Cook said. "It should be seen as a part of the solution to our economic woes. There's no doubt that if we can spur travel, we can help to turn the economy around."

The industry association has not released a plan on how to do that.