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U.S. Domestic Travel Rising to 2.005 Billion Person-Trips in 2008
U.S. Travel Resilient Despite Economic Challenges
International Arrivals to Increase 4.4%, led by Canada, Mexico, United Kingdom, and Japan
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Waltham, MA 18 June 2008 — Global Insight, the world's leading company for economic and financial analysis and forecasting, today released the second quarter 2008 update of U.S. Travel Insights, predicting a slight year-over-year increase in the total number of domestic person-trips, and a higher spike in international arrivals. U.S. Travel Insights, in partnership with D.K. Shifflet & Associates, provides forecasts of U.S. domestic leisure and business travel, international arrivals, and visitor spending. U.S. Travel Insights is the foremost authority on U.S. travel volumes, visitor spending, and trip behavior.
Domestic Travel
According to U.S. Travel Insights' second quarter update, total U.S. domestic person-trips are expected to reach 489 million in the second quarter of 2008, up from 487 million (+0.4%) from the same period last year, and up from the 444 million person trips registered in the first quarter of 2008.
Leisure travel, which comprises about 76% of all domestic person-trips, is expected to grow by 0.8% in the second quarter, while business travel is expected to contract by the same percentage. The primary driver for the slight increase in leisure travel is due to the better-than-expected economic growth in the first half of 2008.
"Rising travel inflation, particularly for transportation, has not yet dampened Americans' desire to travel, although it is causing significant cost-cutting changes in trip behavior," stated Douglas Shifflet, chairman and chief executive officer of D.K. Shifflet and Associates.
For the third quarter of 2008, leisure travel is expected to reach 437 million, while business travel will contribute an additional 132 million person-trips for a total third quarter forecast of 569 million person-trips. This represents growth of 1.1% and -0.4%, respectively, over the third quarter of 2007.
Leisure travel will be bolstered in the latter half of the year by Americans spending at least part of their tax rebate on travel. The divergence of leisure and business travel demonstrates differing trip motivation. Holiday and family and friends visits have thus far been undeterred by the slowing economy and rising oil prices. However, business travel is under rising pressure due to corporate cost control measures and the availability of improved alternatives such as Webcast meetings and conference calls.
U.S. Travel Insights predicts full year 2008 to reach 2,005 million person-trips, a 0.3% increase over 2007's 1,999 million person-trips. However, 2009 looks to be a more challenging year as both leisure and business travel are expected to backslide. The slowing economy and lingering influence of rising oil prices will finally take their toll. Total person-trips for 2009 are expected to decline by -0.4% to 1,996 million, with leisure travel seeing its first decline since 2003.
Travel spending growth will begin to slow in 2008, down from the inflation-fueled rates of 2006 and 2007. Total domestic visitor spending will rise by 3.6% this year, followed by an increase of only 0.9% in 2009. Changing trip behavior, such as substituting domestic for international trips, trading down in hotel quality, foregoing in-trip shopping or entertainment spending, shorter stays, and visiting destinations closer to home, have all helped to maintain the traveler's ability to go while coping with rising travel costs and economic woes.
"Rising hotel rates, gasoline prices, and air fares have thus far been met by changing trip behavior rather than a decision to stay home. This is strong evidence of the surprising resiliency of travel, particularly leisure trips," stated Kenneth McGill, managing director of Global Insight's Travel and Tourism Service Group.
While leisure travel will decline slightly, the domestic traveler will see some relief from rising travel costs in the latter half of 2008 and 2009. The U.S. Travel Insights' Travel Price Index (TPI) predicts trip inflation of about 2.7% for the last three quarters of 2008. Travel costs will slow further in 2009 to an average 1.6% increase for the year.
"Virtually every cost component of the TPI will begin to moderate over the next two years, including fuel costs," stated Jennifer Fuller, director of Travel & Tourism at Global Insight and principal author of U.S. Travel Insights. "Slowing demand and rising supplies will take some of the heat off of hotel rates, gasoline prices, and other trip costs."
U.S. International Arrivals
International arrivals to the U.S. from Europe, Canada, and Mexico have been remarkable over the past four quarters of 2007. Total arrivals in 2008 are expected to surpass 59.2 million in 2008, representing growth of 4.4% over last year and coming off an increase of 11.3% versus 2006. Through the first three months of 2008, international arrivals are up 15.3% over the same period last year. The rising value of foreign currencies against the dollar, their relatively strong and stable economies, and a renewed interest in destination USA have all combined to create a perfect storm of international visitation. Moreover, U.S. Travel Insights expects that trend to continue through 2009, as foreign visitors register 62.1 million trips, a 4.8% increase over this year.
The U.S.'s most important source markets - Canada, Mexico, United Kingdom, and Japan - are all contributing to growth, as foreign visitors come to key destinations such as New York, Orlando, Washington, D.C., and Las Vegas to play, shop, visit friends/family, and gamble. Japan arrivals are expected to rebound in 2008, after two consecutive years of decline, advancing 5.7% to 3.7 million arrivals. Canada and Mexico arrival growth slows after two years of double-digit advances, but remains at a very respectable 4.1% and 3.6%, respectively.
U.S. Travel Insights combines econometric models of domestic travel and international arrivals with travel volumes and spending data from D.K. Shifflet & Associates (www.dksa.com) and the U.S. Department of Commerce's Office of Travel & Tourism Industries (OTTI) (http://tinet.ita.doc.gov/).
For more information on Global Insight's U.S. Travel Insights, its Travel Price Index (TPI), or Global Insight Travel and Tourism services, please visit www.globalinsight.com/ustravelinsights.
Media Contacts:
James Caldwell
V.P. Sales & Marketing
703.536.0933
jcaldwell@dksa.com
Kenneth McGill
Managing Dir, Travel & Tourism Group, Global Insight
610.490.2644
ken.mcgill@globalinsight.com
Jim Dorsey
Global Insight Media Relations
781.301.9069
jim.dorsey@globalinsight.com
About Global Insight
Global Insight, Inc. (http://www.globalinsight.com/) is a privately held company that brought together the two most respected economic information companies in the world, DRI and WEFA. Global Insight provides the most comprehensive economic and financial information available on countries, regions and industries, using a unique combination of expertise, models, data and software within a common analytical framework to support planning and decision-making. Through the world's first same-day analysis and risk assessment service, Global Insight provides immediate insightful analysis of market conditions and key events around the world, covering economic, political, and operational factors. The company has over 3,800 clients in industry, finance, and government with revenues in excess of $105 million, over 675 employees and 25 offices in 14 countries covering North and South America, Europe, Africa, the Middle East, and Asia.
About D.K. Shifflet & Associates
D.K. Shifflet & Associates Ltd. is the leading U.S. consumer travel research firm. DKSA is located in McLean, VA and for over 25 years has provided the industry's most complete consumer based travel data on U.S. citizens and their travel worldwide. DKSA's DIRECTIONS® Travel Intelligence SystemSM collects detailed travel data from over 60,000 households for each and every month of the year. The DKSA TRAVEL PERFORMANCE/MonitorSM captures visitor and guest satisfaction and value ratings, and benchmarks performance for all major hotel chains, airlines, rental cars, cruise lines and destination cities. These metrics have become the industry standards.
DKSA is known for "Excellence in Travel Intelligence®"
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