Read us | Listen to us | Watch us | Join Live Events | Turn Off Ads | Live |

Click on your language to translate this article:

Afrikaans Afrikaans Albanian Albanian Amharic Amharic Arabic Arabic Armenian Armenian Azerbaijani Azerbaijani Basque Basque Belarusian Belarusian Bengali Bengali Bosnian Bosnian Bulgarian Bulgarian Catalan Catalan Cebuano Cebuano Chichewa Chichewa Chinese (Simplified) Chinese (Simplified) Chinese (Traditional) Chinese (Traditional) Corsican Corsican Croatian Croatian Czech Czech Danish Danish Dutch Dutch English English Esperanto Esperanto Estonian Estonian Filipino Filipino Finnish Finnish French French Frisian Frisian Galician Galician Georgian Georgian German German Greek Greek Gujarati Gujarati Haitian Creole Haitian Creole Hausa Hausa Hawaiian Hawaiian Hebrew Hebrew Hindi Hindi Hmong Hmong Hungarian Hungarian Icelandic Icelandic Igbo Igbo Indonesian Indonesian Irish Irish Italian Italian Japanese Japanese Javanese Javanese Kannada Kannada Kazakh Kazakh Khmer Khmer Korean Korean Kurdish (Kurmanji) Kurdish (Kurmanji) Kyrgyz Kyrgyz Lao Lao Latin Latin Latvian Latvian Lithuanian Lithuanian Luxembourgish Luxembourgish Macedonian Macedonian Malagasy Malagasy Malay Malay Malayalam Malayalam Maltese Maltese Maori Maori Marathi Marathi Mongolian Mongolian Myanmar (Burmese) Myanmar (Burmese) Nepali Nepali Norwegian Norwegian Pashto Pashto Persian Persian Polish Polish Portuguese Portuguese Punjabi Punjabi Romanian Romanian Russian Russian Samoan Samoan Scottish Gaelic Scottish Gaelic Serbian Serbian Sesotho Sesotho Shona Shona Sindhi Sindhi Sinhala Sinhala Slovak Slovak Slovenian Slovenian Somali Somali Spanish Spanish Sudanese Sudanese Swahili Swahili Swedish Swedish Tajik Tajik Tamil Tamil Telugu Telugu Thai Thai Turkish Turkish Ukrainian Ukrainian Urdu Urdu Uzbek Uzbek Vietnamese Vietnamese Welsh Welsh Xhosa Xhosa Yiddish Yiddish Yoruba Yoruba Zulu Zulu

Economic headwinds will slow 2008 US domestic travel

Written by editor

WALTHAM, MA – Global Insight, the world’s leading company for economic and financial analysis and forecasting, recently acquired by IHS, today released the third quarter 2008 update of US Travel Insig

WALTHAM, MA – Global Insight, the world’s leading company for economic and financial analysis and forecasting, recently acquired by IHS, today released the third quarter 2008 update of US Travel Insights, which calls for a year-over-year decline in the total number of domestic Person-Trips, and continued, albeit less robust, growth in international arrivals.

Recent challenges in the US and global economies, exacerbated by the global credit crisis and a less vigorous tax rebate bounce, will cause domestic travel volume to falter in the second half of 2008. While volume will decrease, travel spending will continue to show some growth due to rising transportation and hotel prices. Travel inflation has been problematic since 2006, however, relief is already underway as transportation and accommodation prices have begun to moderate.

US Travel Insights forecasts domestic leisure and business travel, international arrivals, visitor spending, and travel inflation. It is created in partnership with D.K. Shifflet & Associates, the foremost authority on US travel volumes, visitor spending, and trip behavior.

Domestic Travel

The combination of rising inflation, increasing unemployment, tightening credit conditions, high levels of consumer debt, declining housing wealth, and stagnant wages are finally taking a toll on domestic travel. While business travel has been declining in the wake of shrinking corporate profits, particularly in travel-prone industries, leisure travel remained resilient. In 2009, leisure travel will finally capitulate to souring economic conditions. Although total US domestic Person-Trips are expected to reach a seasonally unadjusted 573 million in the third quarter of 2008, up from 566 million (+1.6%) in the same period last year and up from a preliminary 487 million person-trips in the second quarter, both leisure and business travel are expected to decline in the fourth quarter, falling by 0.3% and 4.6% versus a year ago, respectively.

“Consumers and businesses are being buffeted by the combination of economic uncertainty, declining profits and real wages, and rising travel costs,” said Kenneth McGill, executive managing director of Travel & Tourism Services at Global Insight. “So much so, that they have finally begun to postpone, or reduce outright, their travel plans,” he concluded.

Full year 2008 domestic travel is now expected to reach only 1.987 billion Person-Trips, down 0.6% over 2007. Leisure travel, about 76% of total, will register 1.5 billion Person-Trips, a 0.5% increase over last year. Business travel’s expected decline of 3.8% will unfortunately negate leisure’s rather anemic gain. Business travel will reach only 484 million Person-Trips this year.

“As the economic difficulties continue, we anticipate further stress on consumers’ wallets as well as their psychological well being. Although the travel slowdown will vary by traveler type and purpose, we can expect businesses to further reduce travel budgets, especially in the more discretionary group/convention market. In the leisure market, international remains an opportunity for the USA, but domestic leisure is under increasing duress. Clearly this is a time for very selective target marketing,” said Doug Shifflet, president and CEO of D.K. Shifflet & Associates.

As the US and global economies remain in recession for much of 2009, US Travel Insights expects both trip purposes to decline, although leisure will begin to recover in the second half of the year. Total Person-Trips will again fall by 0.6%, driven by a 0.5% decline in leisure and single percentage point decline in business trips. Unfortunately, business travel will not begin to recover until the first half of 2010. Given expectations for longer-term growth in total Person-Trips, it will be 2011 before total domestic trips recovers to the levels achieved in 2006.

Travel spending growth will reach a cyclical high in 2008, advancing by 6.4% over 2007, with much of this fueled by travel inflation. Falling volume and lower travel inflation will moderate 2009 and 2010 growth, slowing to 3.3% and 3.7%, respectively. Total domestic spending is expected to reach $847.6 billion in 2009, up from $820.7 billion in 2008. While business trips comprise 24% of the total volume, they account for 30% of domestic travel spending. At $495 per Person-Trip in 2008, business trip spending will be about 70% higher (+$203) than leisure.

The US Travel Insights’ Travel Price Index (TPI) expects trip inflation to rise by 8.2% in 2008, driven by significant increases in transportation and accommodation costs. Relief has already begun, however, in the form of moderating oil prices and average daily room rates. This favorable trend will begin to accelerate beginning in the second quarter of 2009. The full year 2009 TPI will fall to 3.5% and remain in the 2-3% range throughout the forecast horizon. “Expectations of slowing demand and rising supplies will ease some of the pressure on hotel rates, gasoline prices, and food and beverage costs,” said Jennifer Fuller, director of Travel and Tourism at Global Insight and principal author of US Travel Insights.

US International Arrivals

The weaker dollar and relative, albeit softening, strength in the economies of key origin markets continues to drive international arrivals. Through June, international arrivals are running 11% ahead of the same period a year ago according to the Department of Commerce/OTTI. Clearly, the strength of foreign currencies against the dollar, relatively strong origin market economic performance, and a renewed interest in the US has combined to drive arrival performance. On the back of an 11.3% increase in 2007, US Travel Insights expects full year 2008 arrivals to register 60.8 million, up 7.2%. While this torrid pace will begin to moderate, we expect international arrivals to remain strong over the next 2-3 years. Total arrivals are expected to advance by 4.9% and 5.1% in 2009 and 2010, respectively.

Most key US international origin markets are showing strength. Canada and Germany are expected to register two consecutive years of double-digit arrival gains in 2007 and 2008. The United Kingdom, destination US’ largest overseas source market, will reach 4.8 million arrivals this year, increasing 5.7% over 2007. Only Japan has failed to send more visitors in 2007 and 2008, primarily due to sluggish economic performance and a relatively narrow incidence (about 5%) of international travel among their population. Growth is expected to resume in 2009, where a 6.2% increase will result in 3.7 million Japanese arrivals.

US Travel Insights combines econometric models of domestic travel and international arrivals with travel volumes and spending data from D.K. Shifflet & Associates ( and the US Department of Commerce’s Office of Travel & Tourism Industries (OTTI) ( For more information on Global Insight’s travel & tourism services, please visit