Record foreign travel spending in 2008, unlikely to continue

by Tom Johansmeyer on

Records were broken last year. International visitors to the United States spent $142.1 billion on travel and tourism-related activities (including traveling to and within the country), according to preliminary U.S. Department of Commerce statistics. This is up 16 percent from 2007 – which was a record-setting year, as well.

Visitors spent $110.5 billion on travel and tourism-related goods and services in 2008, a 14 percent increase year-over-year. This includes food, lodging, recreation, gifts and entertainment. They spent another $31.6 billion on travel using U.S. carriers and vessel operators, a 24 percent spike from 2007.

Last year’s success was driven largely by spending early in the year, as international visitors to the United States took advantage of a weak U.S. dollar and generally robust financial conditions. Toward the end of 2008, of course, market conditions turned, setting the tone for 2009. In the fourth quarter, travel and tourism spending by international visitors fell 10 percent, and preliminary data for the beginning of this year indicates a tough market to come (which isn’t exactly a secret).

Travel and tourism spending by visitors from outside the country accounted for 8 percent of all U.S. exports last year – not to mention 26 percent of services exports. This makes travel and tourism the country’s top services export. Travel and tourism exports grew faster than imports y a ratio of 2:1 in 2008 and constituted more than 20 percent of the total U.S. services sector trade surplus.

Spending by visitors from the United Kingdom and Canada grew most in hard dollar terms ($2.5 billion each), followed by Germany ($1.3 billion), France ($1.2 billion) and Italy ($1 billion). In percentage terms, Italy and France led the world, with its visitors spending 38 percent more in 2008 than in 2007. Argentina, the Netherlands and China turned in solid increases, as well – 32 percent, 32 percent and 31 percent, respectively. Of all the countries reported, only Argentina, Hong Kong, Japan, South Africa and Taiwan did not set visitor spending records.

The top five international markets for U.S. travel and tourism exports were: Canada at $18.7 billion, United Kingdom at $17.5 billion, Japan at $15.1 billion and Germany at $6.5 billion.

The trend is likely to come to a close this year, given the pressure of a worldwide financial crisis and the resurgence of the U.S. dollar. The travel industry is expected to shed more than 200,000 jobs in the United States this year, and the many travel deals available tell the rest of the story.

Buckle up; it’s going to be a rough year for the travel industry.

Traveler sentiment up … reality not told about it

by Tom Johansmeyer on

In February, the U.S. Traveler Sentiment IndexTM climbed to 90.2 from 78.2 in October 2008. An increased in the perceived “affordability of travel” is the driver of this trend. Since travel companies are desperate to fill seats and guestrooms, potential travelers are showing a bit more optimism.

The index, which is part of the travelhorizonsTM survey conducted by Ypartnership gauges traveler sentiment and is benchmarked at 100 with a starting date of March 2007. It is derived from six statistical measures.

“We are very encouraged that more people are signaling a willingness to travel for leisure purposes,” said Peter C. Yesawich, chairman of Ypartnership. “This is the first increase we have observed in the Index since January 2008, which indicates that the discounts travel providers and destinations are offering are working to attract more travelers, even in this down economy. As it turns out, this is actually a terrific time to travel because some of these great deals are sure to disappear once the industry begins to recover.”

Yet, the outlook is far from positive. The U.S. Travel Association expects a 5.6 percent drop in business travel this year – revised downward from an initial estimate of 3.5 percent. And, the reason for the increase in traveler sentiment – aggressive price-cutting – isn’t sustainable.

U.N. Predicts Substantial Drop in International Tourism for 2009

by Kraig Becker on

The United Nations has released a report indicating that they expect global tourism to decline in 2009 thanks to deteriorating economic conditions according to this story at MSNBC.

Overall, the international tourism market is expected drop as much as two to five percent, with Europe taking the biggest hit of all. But the highly diversified economies there are likely to weather the storm far better than smaller countries that are more dependent on tourism to fuel their own economy.

In 2008, international travel actually rose by two percent, but the second half the year saw a steep decline as the global economic crisis spread. That growth is in sharp contrast to the previous four year when growth averaged more than seven percent.

Still, Talib Rifai, the Secretary General for the U.N.’s World Tourism Organization, says that this is not a crisis for the tourism industry per se, but instead reflects the general economic trends from around the world. He says that the interest in travel is still very strong, but those who would generally be taking an international vacation are electing to save their money or take trips closer to home.

For those still intending to travel abroad however, this means travel deals should be abundent throughout the year, and likely into 2010 as well. A competitive travel market is a boon for travelers, so take advantage of the deals while you can.

Obama listens to travel industry gripes

by Tom Johansmeyer on

Leaders from across the travel industry met with President Barack Obama today to discuss … not a bailout. It’s no secret that luxury suffers when times are tough, and for many, any form of travel is not essential. Delta is cutting capacity, and the industry as a whole is getting ready to shed more than 200,000 jobs this year.

So, what is an industry of “frivolity” worth to our economy? A whopping $740 billion in annual spending … which fuels 7.7 million American jobs.

Travel is more important to us than we may realize. Sure, it provides some recreation and allows face-to-face business meetings. But, it also keeps the goods on grocery store shelves turning over, as each travel industry employee puts food on the table.

Unlike many corners of the economic world, this group of travel executives approached the president with a solution. They believe we need to bring more international visitors to the United States (a tough proposition with the recent turn in the U.S. dollar’s fortune) and do something to stem the downturn in meetings and events.

Roger Dow, President and CEO of the U.S. Travel Association, says, “We are pleased that President Obama recognizes the power of travel to strengthen America’s economy.” He continues, “The travel community has an ally in President Obama and we appreciate the leadership he intends to bring to increasing travel to, and within, the United States.”

Of course, no exec would give up a chance to lobby the man in the Oval Office. The travel industry pushed for the passage of the Travel Promotion Act, which would yield the first U.S. marketing campaign targeted at growing the number of international visitors. Smart idea … as the average foreign visitor drops $4,000 inside our borders per visit.

Okay, it’s kind of a bailout. But, at least it comes with a plan. The executives at the meeting are listed after the jump.

  • Roger Dow, President & CEO, U.S. Travel Association
  • Jonathan M. Tisch, Chairman and CEO, Loews Hotels; Chairman Emeritus, U.S. Travel Association
  • Jim Abrahamson, President, the Americas, IHG
  • Jim Atchison, President and COO, Busch Entertainment Corp.
  • Jeff Clarke, CEO and President, Travelport
  • Howard Frank, Vice Chairman and COO, Carnival Corporation & plc
  • Barney Harford, President and CEO, Orbitz Worldwide
  • W. Stephen Maritz, Chairman and CEO, Maritz Holdings Inc.
  • Bill Marriott, Chairman and CEO, Marriott International, Inc.
  • Jay Rasulo, Chairman, Walt Disney Parks and Resorts
  • Colin Reed, Chairman and CEO, Gaylord Entertainment
  • Frits van Paasschen, President, CEO and Director, Starwood Hotels and Resorts
  • Tom Williams, Chairman and CEO, Universal Parks and Resorts

Travel to lose 200,000+ jobs

by Tom Johansmeyer on

Nearly 200,000 travel-related jobs were lost in 2008. Another 247,000 are forecasted for 2009. And, the financial crisis is still developing. While we lament the loss of six- and seven-figure investment banking jobs, let’s not forget what those big money gigs mean for the travel industry.

Consider your average Wall Street titan. He’s still pulling down more than $1 million a year (somehow). So, he’s sitting on the couch in his rather large Chelsea apartment, wondering, “Do I need to take that golf trip down to Naples for the weekend?” For him, it’s throwaway. If he doesn’t head out for a few days, his life doesn’t change much.

Now, multiply this by several Wall Street titans for that weekend. Most of them decide to stay at home. Who suffers?

Well, an empty restaurant is a waiter’s nightmare. It’s also rough for the spa therapists, housekeepers and everyone else along the “travel supply chain.” Eventually, the companies have to cut back, and we see how that 247,000 projection becomes a reality.

For this reason, 10 of the largest hotel companies in the United States have urged members of Congress to remember the importance of business travel when developing legislation and regulations that may “unintentionally hinder economic recovery and cost American jobs.”

The hotel companies are: Carlson, Walt Disney Parks and Resorts, Fairmont Hotels and Resorts, Hilton, Hyatt, InterContinental Hotels Group, Loews, Marriott, Starwood and Wyndham Worldwide.