Healthy Year Predicted for Leisure Travel Industry in 2008

Travel industry analysts are predicting a good year in 2008. Travel spending by Americans and foreign visitors is expected to reach $778.2 billion in 2008, an increase of 5.2% over the $740 billion 2007 spending projection. Domestic leisure trips will continue their modest upward trend through 2008. Rising 2.5% in 2007, domestic trips are expected to climb another 2% in 2008 to reach 1.6 billion trips. However, despite the healthy figures, leisure travel rates are still well below those of 2000, a watershed year in the travel industry.

Since 2000, when business travel seems to have peaked, leisure travel has increased by 19%. In the past couple of years, the public appears to have finally recovered from the travel fears generated by the events of 9/11 in 2001. For a few years the travel industry struggled through a significant drop-off in all areas while the public chose to stay close to home. Leisure travel is highly sensitive to the ebbs and flows of the U.S. economy and psyche. It rises during periods of strength and confidence, decreasing during times of consumer fear or doubt. Today, the success or failure of the lodging industry -- hotels, motels, timeshares, residential resorts -- is dependent on leisure travel.

"Even though we are seeing some stresses in U.S. economy such as declining house values and high debt levels, consumers remain quite confident and interested in travel," said Dr. Suzanne Cook, Senior VP of Research for the Travel Industry. "There is more pressure on consumer spending but the consumer is not expected to entrench."

Cook doesn't expect leisure travel patterns to change until gas prices pass $3.50 a gallon, an increasing possibility as competition for oil with China and India continues to drive up the price of crude. Even then, she doesn't expect consumers to give up leisure travel, just travel closer to home. "People value vacations and leisure travel and will do so regardless," she said, noting a subtle slowing of historical heritage tours and outdoor recreation. The current economic crisis generated by the collapse of the subprime lending industry is not expected to affect the leisure travel industry. “Those that do travel have typically higher income, which is a predictor of travel behavior," said Peter Yesawich, Chairman and CEO of Ypartnership. "I personally think impact on travel business will be less than people think intuitively." Yesawich believes that the majority of consumers affected by the subprime fiasco will be concentrated in that sector of the public that seldom has the financial wherewith all for leisure travel. "Data will reveal that the higher concentration of people who have been adversely affected in subprime market will be among those no travel households,” Yesawich said. Issues in the airline industry that began with 9/11 have also affected the U.S. leisure travel industry. Cutbacks in airline capacity since 9/11, long flight delays prevalent this summer, lengthy security procedures and rising ticket prices all affect leisure travel. More U.S. consumers are choosing to travel close to home rather than risk losing vacation time to long delays at airports or flight cancellations. International travel to the U.S., including from Canada and Mexico, has declined 11% since 2000. While today's weak dollar is luring more tourists from overseas, particularly from Japan and Western Europe, leisure travel rates to America are still well below 2000's level. Small increases in leisure travel to the U.S. are projected for 2007 (5.1%) and 2008 (3.7%). U.S. hotels, timeshares and resorts will have to rely primarily on the leisure travel plans of American citizens who, these days, prefer to travel within their own borders.