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 Travel & Outdoors | July 2005 
Tourism Holding Up Well Despite High Energy Prices
 Wire services
| | Early this year, Airbus officially unveiled its new Airbus A380 large passenger aircraft. The beast is 239 feet, 3 inches long, 23 feet, 5 inches wide, and 79 feet, 7 inches tall. Its double-decker design gives is 49% more floor space and 35% more seating than the next largest plane in the world, the Boeing 747-400ER, allowing for a base passenger capacity of 555 (which can be expanded up to approximately 800). Airbus is also touting that the A380 will give airliners a lower deck on which to place lavatories, sleeper cabins, crew rest-areas, business centers or even a day care center. |
Vacationers coping with surging energy prices this summer could take shorter trips or pass up that extra souvenir or fancy dinner. But most people do not seem to be cutting back dramatically on their spending or skipping holiday travel altogether.
That helps explain why the tourism business in the United States is holding up well, industry experts and economists suggest.
A recent survey by the Federal Reserve found that reports from the tourism and hospitality sectors were mostly positive. Tourism was "exceptionally strong" in New York City. Atlanta, St. Louis and San Francisco all saw brisk activity.
Money spent on air fares, lodging, dining, souvenirs and other tourism components rose to $571.3 billion, at a seasonally adjusted annual rate, in the first three months of 2005.
The most recent figures available from the Commerce Department's Bureau of Economic Analysis also show that spending from January through March was 6.6 percent higher than the same period in 2004.
Overall economic activity also is expanding solidly despite high energy costs.
Oil prices reached record territory in March and set a closing high of $61.28 a barrel in early July. Gasoline prices last week set a record of $2.33 a gallon nationwide, the Energy Department reported.
"There is clearly sticker shock when you drive past a gasoline station and see prices above $2 a gallon. It concerns travelers and justifiably so," said Allen Kay, a spokesman for the Travel Industry Association of America.
"People will make some changes to their travel plans. They may not stay as long or travel as far. But they almost certainly will not cancel," Kay said.
The association, as part of its summer travel forecast, estimates that people in the U.S. will spend around seven nights away from home on vacation this summer, down from 7.6 nights last summer.
Travelers plan on spending an average of $1,019 on their longest leisure trip this summer, which would be 7 percent less than in the summer of 2004, the association said.
Nancy Milton, a spokeswoman for the St. Louis Convention & Visitors Commission, said tourism barometers there are positive. Hotel occupancy is up from last year and visitor inquiries are plentiful. Most vacationers to the area come by car, she said.
"The low-cost attractions once you get here helps to offset high costs for gasoline," Milton said. "We have a free zoo, free art museum and free science center."
Laurie Armstrong, a spokeswoman for the San Francisco Convention & Visitors Bureau, said 2005 is proving better than 2004 and so far energy prices "are not yet having a noticeable effect."
Most of San Francisco's visitors arrive by plane, she said. About one-quarter of hotel guests rent cars.
Vacation spending is being supported by an improved job market, income gains and a rekindling of home mortgage refinancing, which is leaving people with extra cash, said Mark Zandi, chief economist at Economy.com.
Those factors are helping to offset the potentially negative impact of higher energy prices, he said.
A weaker dollar compared with other currencies makes it more expensive for Americans to travel abroad, so people decide to vacation in the U.S., Zandi said.
The flip side of the weaker dollar is that it is a cheaper and thus more attractive destination for foreigners.
Some 49.1 million international visitors are expected to come to the U.S. this year, which would represent a 6.5 percent gain over 2004, according to an estimate by the Travel Industry Association of America.
"There is a pent-up demand for travel" that had taken a big hit from the attacks of September 11, 2001, said Kathryn Sudeikis, president of the American Society of Travel Agents.
"People will moan about high energy prices or fuel surcharges, but they haven't said 'no thanks' about taking a vacation," she said.
Justin McNaull, a spokesman for AAA, said expensive gasoline so far does not appear to be crimping summer road trips. "From a summer vacation standpoint, the automobile still rules the roost," he said.
Tony Berger, chief operating officer for Cendant Corp.'s hotel group, says business is brisk. "Despite higher gas prices, summer road trips are strong, benefiting our economy chains, including Days Inn and Super 8," Berger said.
Ed Mortimer, director of congressional and public affairs at the U.S. Chamber of Commerce, said the group is pleasantly surprised that travel and tourism seem to be holding up so well in light of the high energy costs.
"From everything we've seen at this point, people are just swallowing the increased energy costs and finding a way to travel and vacation," he said. |
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