Travel and Tourism
Jarred in the first quarter of the year by bloody uprisings in the Middle East and North Africa and by a 9.0 earthquake, a devastating tsunami and radiation leaks from a crippled nuclear plant in Japan, the international travel and tourism industry still hopes that the rebound that began at the end of 2009 will continue in 2011. The outlook is a mixed picture, with officials in some segments claiming that the effects of the first-quarter blows will be temporary while those in other segments predict dire circumstances.
U.S. executives are hoping that American travelers will opt to stay close to home and overseas visitors will seek America’s less chaotic shores, driving the rebound in the domestic industry in the process.
American Airlines says it is seeing only a “modest decline” in revenues as a result of the earthquake and tsunami that hit Japan. US Airways has no service across the Pacific, but the company says its total bookings declined around 20 percent on the day of the Japan earthquake on March 11, with booking remaining down a “couple of percent” from pre-disaster levels. Still, says company President Scott Kirby, “it’s psychological more than anything, as people deal with the uncertainty of supply chains around the world. I think it will be a temporary effect.”
Officials at destinations in the Asia-Pacific region are less sanguine. Hawaii, the top U.S. destination for Japanese travelers, foresees “terrible” economic consequences for its economy. “It’s going to be terrible. It’s going to be rough. It’s something that we have to come to grips with,” says Gov. Neil Abercrombie. More than 1.2 million Japanese visited the islands in 2010, contributing $1.9 billion, or 17 percent of the economy.
Rising oil prices as a result of upheavals in supplier nations in North Africa and the Middle East are expected to drive up travel costs. Caribbean tourism officials estimate that if cruise prices and airfares go up, U.S. travelers, the Caribbean’s main tourist base, will want to stay close to home, benefiting Caribbean tourism. Airline watchers contend, however, that intense competition will force carriers to absorb any hike in the cost of fuel rather than pass it along to passengers. What likely will increase for air passengers are “hidden” fees paid to airlines for various services. The Consumer Travel Alliance says consumers paid more than $9.2 billion in fees to U.S. airlines in 2010 for checked baggage and other services, but these fees were hidden from most travelers when they purchased their airline tickets because the airlines do not disclose their fee information to travel agents and other distributors.
“Buying a plane ticket has become an Alice in Wonderland experience where a consumer has to agree to purchase the ticket before being told how much the trip will actually cost,” says Andrew Weinstein, executive director of Open Allies for Airfare Transparency. “Airlines should be able to charge whatever they want for their services, but they should have to share all of those prices with travelers in advance, so consumers can make informed buying decisions.”
Pressure on Washington
U.S. travel and tourism bounced back decisively in 2010 after succumbing to the dismal global economy in the previous two years, and the industry wants to keep it that way. Travel executives are pressing the Obama administration and Congress to rapidly develop visa and entry policies to bring more visitors into the country. They argue that the industry contributes to the administration’s goal of doubling exports and creating 2 million jobs by 2015. An increase in overseas travel to the United States by an average of 15 percent each year between now and 2015 would add $105 billion and 765,000 jobs to the U.S. economy, according to a U.S. Travel Association analysis.
“We are eager to work with our elected leaders to capitalize on the more than $4,000 spent by the average overseas visitor each time they come to the United States,” says Roger Dow, the association’s president and CEO. “Allowing extraordinary visa wait times and dissatisfaction with our entry process to detour foreign visitors is akin to shredding a winning multimillion dollar lottery ticket. Let’s get to work on creating a travel process that is the envy of the world and provides our fellow Americans with the jobs they desperately need.”
Total domestic and international spending on U.S. travel and tourism-related goods and services ended 2010 with nearly $1.34 trillion in economic output, up $102.3 billion from 2009, according to the 2010 edition of “The State of U.S. Travel and Tourism” published by the U.S. Department of Commerce’s Office of Travel and Tourism Industries. The report, which was released March 15, says Americans spent $94.5 billion abroad on travel and tourism-related goods and services for the year, up 4 percent from 2009, while international visitors spent $123.0 billion on those goods and services in the United States, an increase of 12 percent from 2009. In the fourth quarter of 2010, hotel industry occupancy increased 7.1 percent to 53.5 percent from the same quarter in 2009, average daily rate rose 1.9 percent and revenue per available room was up 9.1 percent.
African-Americans constitute one of the country’s top three fastest-growing markets in all segments of the travel and tourism industry, including sports tourism, meetings, adventure travel, heritage and cultural tourism, religious retreats, romantic getaways, eco-tourism, wellness vacations and international travel, according to Black Meetings & Tourism. With a buying power estimated to reach $1.1 trillion by 2014, African-Americans account for 45 percent of the $90 billion in total revenues generated by multicultural travel, Black Meetings and Tourism says.
Travel planners catering to African-Americans cite growing numbers. Of attendees surveyed at the 2010 African American Travel Conference in Niagara Falls, N.Y., 89 percent said they were finding new travelers in their community and 62 percent said the average number of passengers per tour is 36 and up. Based in Salem, Ohio, African American Travel Conference comprises more than 2,000 travel planners serving the African-American community. The survey findings were published in the organization’s 2010 African American Travel Industry Report.
According to preliminary data from the Commerce’s travel and tourism industries office, the Top 5 destination regions in 2010 for U.S. citizens traveling overseas by air, including to Canada and Mexico, were Europe, the Caribbean, Asia, South America and Central America. Five point six million Americans traveled to Europe between January and June, down 1.1 percent from the same period in 2009; 2.9 million traveled to the Caribbean, up 4.4 percent; 2.8 traveled to Asia, up 10.1 percent; 1.3 million to South America, up 1 percent; 1.3 million to Central America, down 2.9 percent.
Although Africa ranked last among destination regions for Americans traveling by air in 2010, the number of visitors who went to the continent in the period (216,050) was a 16.5 percent jump over the same period in 2009, showing Africa as a faster-growing destination than the Top 5. In April 2010 alone, the increase in the number of U.S. visitors to Africa was 25 percent, compared to 7.7 percent for Asia and 2.1 percent for the Caribbean, minus 19 percent for Europe, 12.5 percent for Central America and 3.5 percent for South America. Whether travel to Africa is hurt by events in the first quarter remains to be seen.