Foreign visits to the U.S. show signs of life

by Tom Johansmeyer on

Travel to the United States finally grew in October! After six months of declines, thanks to an Easter bump in April, foreign visitation finally ticked higher, an increase of 1 percent year-over-year, according to data from the U.S. Department of Commerce. If you take the holiday factor out of the equation, the last year-over-year increase came in August 2008. It’s difficult to tell whether the October gain signals a turn, since the 2009 result was measured against the first month following the financial mayhem of September 2008.

Four million people visited the United States from abroad last October and spent $10.3 billion in the process. Unlike the visitation statistic, spending was down … considerably. The cash shelled out by international visitors was off 13 percent year over year. But, the declines are shrinking. For the first 10 months of 2009, visitor spending amounted to $100.9 billion, a decline of 16 percent from the same period in 2008.

Thirteen of the top 20 countries in terms of visitation to the United States posted increases in October — six of them in double digits. Brazil, Australia, China, South Korea, Venezuela and Colombia delivered the greatest gains.The news was mixed from our neighbors. Visits from Canada fell 1 percent from October 2008 to October 2009, which is still an improvement over the year-to-date decline of 7 percent. Mexico, meanwhile, showed a 2 percent increase in October and a 5 percent decline for the year. Slightly more than half of the 4 million visitors to the United States came from overseas — i.e., not Canada or Mexico — an increase of 1 percent year-over-year. Through October, 19.8 million people crossed water to hit the United States, an 8 percent drop from the first 10 months of 2008.

Visits from Western Europe were down 5 percent for October and 11 percent for the year, while Asia posted a 2 percent gain and a year-to-date decline of 11 percent. The greatest gains were in the South American market: visitation to the United States was up 22 percent for October and 6 percent for the first 10 months of 2009.

[Photo by hjl via Flickr]

LetMeGo to pit hotels against each other directly

by Tom Johansmeyer on

Normally, I’d think that a website inviting hotels to beg for bid on the insane and detailed requests of travelers would be a nonstarter. But, we’re in the middle of a brutal travel market recession. And, this decade has been awful for airlines and hoteliers alike. So, if the industry is going to learn any lessons from this turbulent decade known as [well, nobody really figured that out what to call it], the first should be that it needs to make a regular practice of going every extra inch to pull in a new guest.

So, the success of new business LetMeGo.com, which will create a marketplace in which travelers can indicate the specific amenities they want – from bunny slippers to cheese plates – will depend on whether the travel and hospitality industry has figured out that it will always be prey to a fickle economy. If the service providers in the hotel business realize this, they will understand that the extra effort is necessary, even when the travel market is on fire.
Using LetMeGo.com’s website, which is still in beta, companies peddling hotel rooms, vacation homes and other forms of lodging will be able to view the itineraries posted by prospective guests. They can bid for the affections and dollars of these travelers, with this data being used by the traveler to make a decision. The process is completely transparent to the participants – every bidder can see each other’s bids, and the user, of course, can sell all bids on his itinerary. But, it isn’t open to the public, as nobody needs to know what you’re looking to spend on your vacation. Since everyone can see each other’s offer, there’s incentive to cut further to attract your interest cash.

According to VentureBeat, “a good number” of lodging companies have signed up for the service and there’s already an affiliate program in place to drive traffic to the site. Could this be the future of the hospitality business? I can think of worse. If the site takes off, it will be easier for hotels to identify exactly what their guests want, deliver on it and use it as a way to differentiate themselves in an increasingly competitive market.

So, the future of winning online travel cash will involve head-to-head competition, with everything out in the open. If I were one of the competitors, I wouldn’t be thrilled about this, but there’s no better experience for travel buyers: it’s designed to help us win.

A gloomy travel market for 2010 will follow an ugly 2009

by Tom Johansmeyer on

Everybody seems to want the travel market to recover next year, but it looks like more time will be spent in yards, instead. According to a new USA Today/Gallup poll, only 16 percent of us are going to hit the skies or crash in hotels more than we did in what will go down in history as a dismal 2009. Close to a third said they are going to spend less time in guestrooms and cramped plane seats. The main reason, of course, continues to be the state of the economy.

Slow improvements to the economy, according to some industry analysts, should push demand for tickets and hotel rooms higher – not to mention services related to the convention and meetings business. But, the baseline is set pretty low, with 2009 having been so weak. American Express, the largest travel agency in the world, doesn’t see a recovery coming anytime soon.

The bar has been reset, and it’s low. It will stay low for a while.

The big beast to be tamed in the travel market, doubtless, is business travel. Until the corporations start to send people on the road more liberally, the airlines, hotels and other businesses involved in travel will continue to feel the squeeze.

What’s going to happen by sector? See below.

Airlines: Industry analysts see hints that the market is turning, with demand for seats up year-over-year (by month) since May. United Airlines sees “a very encouraging trend line,” and US Airways notes a steady improvement. But, the latter continues that a decline of 30 percent to 35 percent in corporate spending has been a drag, and November was the first month in which it was up year-over-year. And, November 2008 wasn’t a tough month to beat.

Analysts believe that “even a modest rise in the USA’s gross domestic product,” says USA Today, will kick the airlines back into profitability. Gary Kelly, CEO of Southwest, isn’t that optimistic, telling the newspaper, “Business travel still lags, and I don’t know that I’m comfortable in reporting that we’ve seen any improvement in that market.” He doesn’t expect business travel to bounce back next year.

Hotels: What can I say that Melanie Nayer hasn’t? Not much, really. The past year has been miserable, with PricewaterhouseCoopers reporting occupancy plunging to 55.2 percent this year, from a 2006 peak of 63.3 percent. Next year, it’s expected to tick up only to 55.8 percent.

Room rates fell precipitously in 2009 relative to 2008, causing an average decline of 16.4 percent in the industry’s average revenue per available room-night. PwC expects 2010 to be worse than 2009, conflicting with the Business Travel Monitor report from American Express. But, there’s room for both views. Leisure travelers will have to spend a bit more, but hotels in business-heavy markets will still win some favorable pricing.

Conventions: Look for a slight increase next year – again, relative to a brutal 2009. For the good news about the conventions, you’ll have to wait until 2011 and 2012, says Roger Dow, president of the U.S. Travel Association. Through the end of 2010, approximately 40 percent of corporate and association meeting planners, reports USA Today, are likely to postpone or sink off-site meetings for the next year.

Foreign visitor spending in U.S. gets ugly

by Tom Johansmeyer on


The U.S. Department of Commerce tells us that spending in the United States by foreign visitors fell 13 percent to $10.3 billion for the month of October – off $1.6 billion from October 2008. For the entire year, international visitor spending plunged 16 percent. Spending fell $18.6 billion. The good news is that the October decline is better than the year-to-date drop, which the international travel market may be on its way back.

Visitors to the United States spent $8 billion in October on goods and services related to tourism and travel, off 12 percent year-over-year. This money was spent on “food, lodging, recreation, gifts, entertainment, local transportation in the United States, and other items incidental to foreign travel,” according to a Commerce Department statement.

Passenger fare receipts – including air and other forms of international travel to the United States – fell close to 16 percent to $2.2 billion for the month of October. This is off more than $420 million compared to October 2008. October was the twelfth month in a row in which travel and tourism exports declined year-over-year.From January to October this year, foreign visitors dropped $100.9 billion getting to and hanging out in the United States. But, they 16 percent by which they trimmed their spending is not without similarity on our side of the equation. U.S. travel imports – i.e., those of us visiting other countries – reached a mere $81.6 billion, off around 13 percent ($12.1 billion). The result was a trade surplus of $19.2 billion for the first 10 months of 2009, representing a decline of 25 percent from the 2008 travel and tourism trade surplus.

The tanking of the travel market at the end of 2008 – following the near-collapse of the global financial services market in September – marked the end of more than five years of consecutive monthly growth in travel and tourism exports. For the past 12 months, the situation has been grim, but the pressure appears to be easing, at least slightly.

The broader economic climate seems to be improving slowly, but it remains vulnerable to many risks. Another financial time bomb could send everything off the rails again, so it’s certainly too soon to say the travel market is returning to normal. There are signs, however, that it could be headed in the right direction. Fast and easy answers, on the other hand, will remain elusive for a while.

Hawaii needs your help!

by Tom Johansmeyer on

Hawaii needs $1.23 billion and could use your help. Governor Linda Lingle is calling it a “fiscal crisis” and says it won’t be fixed with budget cuts alone. Essentially, the fiftieth state wants everyone else to chip in. This year’s budget gap is $721 million, which will be followed by $509.5 million next year. The state might not hit pre-recession levels until 2014.

According to Lingle, “The stark reality of continuing declining general fund revenues means the state does not have sufficient resources to cover all expenditures.”

The problem is exactly what you’ve seen here on Gadling for a while – the travel market sucks. Hawaii relies on tourism to bring in the cash; the industry touches 74 percent of the state’s jobs directly or indirectly (at least as of 2007).

Georgina Kawamura, the state’s director of budget and finance, tells Reuters, “I can only remain hopeful that we are now at the bottom and will start to pick up.”