25 March 2008

Impact of recession changing US travel trends

With the dollar continuing to weaken and the economy in a slump, more Americans are altering often long-standing vacation plans.

Two recent nationwide surveys agree: Americans are taking a hard look at vacation costs.

More than two-thirds of respondents to the most recent survey by Ypartnership, co-authored with the Travel Industry Association, said they had downsized their trips in some way during the past six months because of personal financial concerns.

And a survey just completed by AIG Travel Guard found that 47% of travelers polled plan to downscale their vacations to save money.

But while Americans may be cautious about how much they spend on vacations this year, they're not about to give them up.

"Trading down, not out: That's what we're saying," said Peter Yesawich, CEO of Ypartnership, "In the next few months we will see a transformation of vacations, not cancellations."

That means that increasingly value-conscious consumers are likely to seek cheaper transportation, lodging, entertainment and recreation. Some will take shorter trips.

According to the Ypartnership survey, 29% who are downsizing said they had taken fewer trips. Sixteen percent selected less expensive lodging, 12% stayed away fewer nights, 11% drove a shorter distance to their vacation destination, and 7% changed destinations. A tiny percentage reported bringing fewer people along on vacations.

AIG Travel Guard's new Travel Beat survey says more than two thirds of the 300 polled said they wouldn't reduce the number of leisure trips they take in 2008; slightly more than half said they wouldn't cut back on the quality.

But 22% said they would eat in less expensive restaurants, and a slightly lower number said they would stick closer to home; another 16% said they would choose less expensive hotels than in the past.

Some segments of the travel industry are benefiting by the recession. More travelers are turning towards often less expensive tour travel, for example.

"Our tour business is going through the roof," said Brad Anderson, co-president of America's Vacations Center in California, which specializes in escorted tours and cruises. Bookings of Contiki tours, for travelers ages 18-35, is "exploding," he added.

Orbitz, another online booking agency, says more than one third of those polled in its quarterly Traveler Update Report are renting smaller cars because of current fuel costs.

Report by David Wilkening