Travel Forecast Upbeat for 2004

Domestic and international spending on travel is forecast to rise 4.4 percent

By: Kevin Brass

Travel business is expected to gain strength next year, fueled by international inbound visitors and the first increase in domestic business travel in more than three years.

In one of the first major global travel forecasts for next year, the Travel Industry Association of America projects a 4.4 percent increase in domestic and international travel spending next year over this year.

The TIA’s annual travel forecast, released during its Marketing Outlook Forum in Austin this week, is a traditional bellwether of the industry’s health.

Although many at the forum warned about the possibility of international crises that could hurt the forecast, several analysts noted that economic indicators suggest a rebound is possible.

“Travel spending (in the United States) will post gains but it will be a long winding road back to prior peaks,” said Richard Curtin, director of consumer surveys at the University of Michigan’s Survey Research Center. “Gains will be very slight.”

Last year, TIA forecast a 5 percent increase in travel spending for 2003; the actual increase will be closer to 3 percent, according to TIA data.

“Domestic leisure has been the industry savior,” said TIA spokeswoman Cathy Keefe.

At the American Society of Travel Agents annual conference in Miami this week, some in the industry said they already have started to see an uptick.

Mandy Chomat, senior vice president for sales and marketing of Sandals and Beaches Resorts, said he has been visiting travel agents across the country over the past few weeks.

“They’re telling me they’re starting to see the phone ring, people are traveling again,” he said.

Bookings for Sandals/Beaches resorts for next year are above what they were this time last year, said Chomat. “I feel it’s going to be a strong 2004,” Chomat said.

The increases in leisure travel have helped offset business travel (which is down 4 percent so far this year) and international travel (which is down 3.7 percent), according to the TIA.

However, the TIA said a growing economy should help boost business travel by 4.2 percent from 2003 to 2004, which would be the first increase since 1999.

Still, some executives said current studies may not accurately reflect the habits of today’s business travelers, many of whom use leisure rates and book through the Internet.

“Business travel is back, but it’s in a different form than we’ve ever seen before,” said Robert Dirks, senior vice president of brand management and marketing for Hilton Hotels.

Analysts were more bullish on the growth of inbound travelers next year, despite continuing sluggishness in that market. In the last decade, the U.S. share of international travel has fallen 37 percent, according to Department of Commerce data.

The latest Department of Commerce numbers released during the forum predict that the number of international visitors to the United States will grow at a rate of 5 percent from 2004 to 2006, thanks in part to a favorable exchange rate.

By 2007, 48.8 million visitors are expected to visit the U.S., up from 40.1 million this year, according to Helen Marano, director of the Department of Commerce’s Office of Travel and Tourism.

The effort to attract international tourists will be aided by a $50 million allocation to promote tourism from the U.S. government, the first of its kind. The $50 million will initially be used to target five countries Canada, Mexico, Japan, Germany and United Kingdom.

Small countries with thriving economies will likely provide a large percentage of the projected travel growth.

Increases of more than 30 percent from countries like Austria, Denmark, Finland and Sweden will help Europe traffic to the U.S. grow by 28 percent by 2007, according to Department of Commerce data.

“Granted, (the numbers) are from a smaller base, but this is a strong statement that these are other countries we should be looking at,” Marano said.

Asia Pacific traffic is projected to grow 13 percent from 2002 to 2007, with China and South Korea providing the bulk of the new visitors.

“Beginning in 2004, we expect a full turnaround for Asia travel to the United States,” said Adam Sacks, managing director of travel and tourism division of research firm Global Insight.

But Sacks added that 2007 Asia Pacific travel levels will still be 10 percent below peak 2000 levels. Traffic from Japan alone has declined 44 percent from 1997.

Still, new visa restrictions could derail the recovery in international visitors, executives warned.

Some travelers may have to wait two months to get a visa under new review policies, said John Marks, president and CEO of the San Francisco Convention & Visitors Bureau and the TIA national chairman.

“It’s hard to believe” the government is implementing these procedures at a time when “uncertainty about travel to the U.S. has never been higher,” he said.