Decline in Tourism Spending Continues in 1st Quarter 2009

As many in the tourism, travel and leisure industry have realized, the economy of 2008 deeply affected our annual revenues and customer counts.   According to the Bureau of Economic Analysis this trend has continued to decline for the first quarter of 2009.

“Real spending on travel and tourism declined at an annual rate of 5.9 percent in 2009:1 after decreasing 6.9 percent (revised) in 2008:4.  By comparison, real gross domestic product (GDP) decreased 5.7 percent (preliminary) in 2009:1 after a decrease of 6.3 percent in 2008:4. Real spending declined despite a drop in travel and tourism prices of 10.9 percent in 2009:1 following a 16.5 percent (revised) decrease in 2008:4.  Leading the decline was passenger air transportation (28.7 percent) and traveler accommodations (15.1 percent).”

Many factors such as high fuel costs and high unemployment have revealed this decline in many of the tourism, travel and leisure sectors.   The Hotel and hospitality industry was hit the hardest with the airlines following closely behind.   Retail shopping by travelers had the smallest decline.

• Passenger air transportation continued to contract—decreasing 5.8 percent in 2009:1 after decreasing 8.7 percent (revised) in 2008:4.  Real spending on domestic flights declined for the sixth consecutive quarter; however, real spending on international flights rose 10.5 percent after an increase of 10.1 percent in the previous quarter.
• Spending on accommodations posted a larger decrease—18.6 percent in 2009:1 after a 10.4 percent (revised) decrease in 2008:4.  The hotel industry continued to experience declining demand that was only partially offset by reduced room rates, leading to the decline in real spending.
• Retail shopping by travelers showed a smaller decrease of 1.3 percent in 2009:1 compared to a decrease of 11.6 percent in 2008:4.

As the economy slowly recovers there remains a positive trend in the tourism, travel and leisure industry – the consumer behavior.  Yes! Customers are still traveling, let us examine how.

Real Tourism Spending. Spending on passenger air transportation declined for the fourth straight quarter, falling 5.8 percent in 2009:1 after an 8.7 percent decrease in 2008:4.  However, international air transportation increased by 10.5 percent for the quarter. An 18.6 percent decline in traveler accommodations spending followed a decline of 10.4 percent (revised) in the previous quarter. Transportation prices continued to decline in 2009:1—decreasing 23.0 percent after decreasing 36.1 percent (revised) in 2008:4.  Auto travelers and tourists continued to pay significantly less for gasoline at the pump and airfare continued to become more affordable.

A fine example of how consumers are behaving to high fuel costs, we were recently discussing some honeymoon possibilities with an engaged couple.  They are marrying this November and wish to go somewhere warm and inviting.

They, like many others followed an uprising trend by online shopping.  Searching for the best prices and examining their options.   They opted for a cruise but the airfare to get to the ships departure doubled their cost.   Being in Savannah we suggested Carnival Cruises, which depart from near-by Jacksonville, FL, an easy, economical drive away.

The International air transportation may be up, but there is also an increase in local tourism by the locals themselves.  Seeking out day or weekend getaways and enjoying the local attractions.

Next we’ll examine as consumer behavior changes, so does the behavior of the industry.

Tourism Prices. Prices for passenger air transportation fell sharply in 2009:1—decreasing 28.7 percent following a decrease of 2.3 percent (revised) in 2008:4. Fuel costs continued to decrease allowing airlines to reduce fares to stimulate demand. Prices for accommodations decreased 15.1 percent after falling 7.0 percent in the previous quarter. Business travel continued to decline and those traveling were using lower cost lodging to reduce expenditures.

Airline costs for the traveler are decreasing and the savvy traveler is showing an up trend in utilizing the internet for finding a great deal.   We can’t watch TV for one evening without an Orbitz, Expedia or Priceline commercial.   The deals are out there and the consumer is coming, slowly but surely.

Total Tourism-Related Spending. The U.S. production that tourism spending generates not only includes the goods and services that are purchased directly, but also the inputs used to produce these goods and services—indirect tourism-related spending.  In 2009:1, total current-dollar tourism-related spending of $1.2 trillion consisted of $705.0 billion (57 percent) of direct tourism spending—goods and services sold directly to visitors—and $540.0 billion (43 percent) of indirect tourism-related spending—goods and services used to produce what visitors buy.

Despite a trend to settle for lower cost lodging the travelers are coming and they are spending into the national and local economy.   Be mindful that they are looking for deals such as restaurants where kids eat free.   Business men and women are actively seeking shuttles from the airport to their resorts vs. taking a cab or renting a car.  In the same note, group travel destinations are offering travelers all inclusive vacations and transportation at a lower cost than if they planned it themselves.

Yes!  They are still traveling and we at Coastal Data Enterprises, Inc. are fully researched in the how, when and whys.  We can help connect you with your potential customer!

1. Providing a professional representation of your service with a website that attracts the savvy tourist.
2. Not just any website but an SEO (Search Engine Optimization) website that will put your business at the top of their internet queries.  They can’t miss you!
3. The potential for an interactive website where the customer can make reservations, payments and receive confirmation on the great service you are offering.
4. Provide an in-house database that speaks to the website for all of your accounting, inventory and prospective in-office needs.  Saving your business precious time and resources yet building your customer base.

We are also well aware of the budgets afforded to those who do business in the tourism, travel and leisure industries.  Thus, Coastal Data Enterprises, Inc. provides FREE consultation and evaluation of your custom database and website needs.   We also provide flexible and professional tier-staged proposals to suit any budget or limitations.

As the old cliché says, they didn’t build Rome in a day and yes, the need for building your customer base and revenue is there – but in many cases, due to the declining economy – the funds for such expenses is not.

Our tier-staged proposals offer an affordable solution to build your business’ exposure to fit the growing Information Technology age.   Whether it be via monthly or quarterly payments and progress – as the economy picks up,  so will your company’s IT infrastructure to meet the ever growing number of potential customers and subsequent company revenue.

There is no longer a need to wait …. Contact CoDE today and see what we can do for you.

(Next BEA release – Travel and Tourism estimates for second quarter 2009 will be released on Wednesday, September 23, 2009)