High fuel costs and economic stress are taking their toll on yet another industry. The travel industry. An industry with multiyear growth is beginning to level off at mid year. And may only have a slight chance of ending the year with an increase, thanks to leisure travel sales.
The continued rising gasoline prices have already forced some consumers to cancel their vacation plans, according to a key consumer survey. Although leisure travel is still expected to continue growing this year, even if families are forced to vacation closer to home.
Although the number of domestic trips taken this year and next are not expected to decline, it has been suggested that the spending patterns and consumer choices may change. Substituting domestic travel for international trips, trading down in hotel quality, foregoing in-trip shopping or entertainment spending, and shorter stays are all viable options that will be considered.
Leisure travel was predicted to grow by 0.8% in the second quarter of 2008, and then pick up more speed with a 1.1% increase in the third quarter. Leisure travel is predicted to greatly increase in the second half of the year as Americans spend part or all of their tax rebate on travel. Time will tell if this prediction comes true.
The travel industry growth is being hurt mainly by the decline in business travel due to corporate cost controls and increased reliance on technology-based alternatives. This is expected to carry on through into the year 2009, as well. Unless we see some sign of relief at the pump, then some of these changes may be more temporary in nature.
But on a high note for our economy, the International travel to the United States will continue to grow. Due to the fact that our foreign visitors will continue benefiting from exchange rates and other factors that have combined to create an increase of international visitation. This is following strong increases from last year as well. It has been forecasted for foreign visits to reach 62.1 million next year, which is even 4.8% higher than the current year stats.
Although some reports indicate leisure travel to weaken in 2009, if problems caused by the credit and housing crises continue to hurt the overall economy. The total number of trips could decline by 0.4%, to 1.996 million, and leisure travel would see its first decline since 2003.
As a person that loves to travel and enjoys time away from the daily routine, I believe I speak for all of us when I say that I hope the economy starts to turn around soon. I wouldn’t want us to have to go home to our families and break the news that there will be no summer vacation next year.