Share this story
Close X
Switch to Desktop Site

Travel industry finding it hard to escape economic slump

The prolonged economic slump refuses to take a vacation. Now, even the tourism industry is feeling the pinch.

From Disneyland on the West Coast to the Big Apple, tourism officials report that business is down so far this summer, the peak of the tourist season. Industry analysts blame both the recession and the strong US dollar for the slowdown.

About these ads

''The recession is eating into the travel business,'' says Nancy Edwards, a researcher at the US Travel Data Service, a nonprofit organization funded by the travel industry. Originally the organization was estimating that travel would be up slightly from last year's levels, but now it looks as if the traveling public is not packing its bags as much as anticipated, she says.

The drop-off in travelers is particularly noticeable among foreigners. Don Wynegar, director of research at the US Travel Service, part of the US Department of Commerce, estimates foreign visitors to the United States will be down about 3 percent this summer. European visitors will decline by 5 percent, but Japanese tourism will increase by 3 percent.

The steepest drop will be in visitors from Mexico, where the peso has been devalued 45 percent since February, making visits to the US more costly. Mexican tourism, estimates Mr. Wynegar, will be down 10 to 15 percent this year. Edward Tavlin, a senior vice-president with the Miami branch of Prescott, Ball & Turben , a brokerage house, says the number of Latin American visitors to south Florida is also down. ''We're not getting South Americans because of the Falkland Islands affair and the strength of the dollar,'' he comments.

The decline in visitors from south of the border has been particularly noticeable at Disneyland in Anaheim, Calif., where 200,000 visitors from Mexico annually frolic with Mickey Mouse. Al Flores, a spokesman, says overall attendence at Disneyland is off about 6.5 percent for the first nine months. But , he adds: ''Other parks are down in excess of 10 percent. I don't know of anyone with better attendance.''

In fact, securities analysts covering the theme-park industry report that attendance is down so far this summer.

''Even though it's a little early to tell, it looks like attendance is off for most theme parks by 8 to 10 percent,'' says Daniel Lee, an analyst with Drexel Burnham Lambert Inc., another brokerage house.

At Six Flags Great Adventure amusement park in New Jersey, the decline is even worse, approaching 15 percent, says Glenn Vallach, public relations manager. The park was badly hurt in the beginning of the summer by five consecutive weekends of rain. ''When you expect 35,000 to 40,000 people, and only 2,000 show up, it's a little tough, Mr. Vallach says. Even with fair weather in July, he says, the park hasn't had the big attendance days it has been looking for. Even with the decline in attendance, however, the park has no intention of cutting back on staff, he adds.

About these ads

Hotels are also feeling the slowdown. Nationally, hotel occupancy rates are down 3 to 4 percent from a year ago, says John Lesure, director of research, development, and education at Laventhol & Horwath, an accounting firm. In May, however, occupancy fell even further. ''May is a key month,'' Mr. Lesure says, ''since it contains the Memorial Day holiday.''

In an effort to boost occupancy this summer, Holiday Inns Inc., the country's largest hotel chain operator, has placed coupons worth $10 apiece in seven national magazines. ''By making vacations more affordable,'' these coupons have attracted some new lodgers, according to Tina Blackshare, a spokeswoman for the chain. Ms. Blackshare says the hotel's reservations for June were up 2 to 8 percent over the same weeks last year.

New York City has also tried to appeal to the budget-conscious traveler this summer. According to Jack McBean, who is with the New York Convention & Visitors Bureau, New York has been promoting a ''summer-budget vacation'' package, highlighting free things to do. Incoming tourists can obtain copies of folders called ''Summer Big Apple Freebies'' and ''20 Free Things to do in New York City.'' Still, he admits, the city is expecting fewer visitors than usual. Hotel occupancy is falling, and was down about 4 percent in May, according to Pannell Kerr, Forster Company, an accounting firm.

Although motorists should have no trouble finding gasoline this season, the US Travel Data Service says more vacationers intend to fly. The airlines report that summer traffic is not far behind last year's numbers. ''We think we're going to have a good summer,'' says Chuck Novack, a spokesman for United Airlines. United's traffic was up 14 percent in June, and Mr. Novack reports bookings look good for the rest of the summer. United's load factor is now up to between 60 and 65 percent, and yields are rising somewhat since fares are climbing again, he says.

But at Trans World Airlines, which counts on international travel, a spokeswoman says the slump in international visitors to the US has hurt. Domestically, June traffic was up 3 percent, but internationally it was down 0.5 percent, which was unexpected. TWA is expecting a slight increase in traffic in July - then a slight downturn again in August.

At Eastern Airlines, Paula Musto, a spokeswoman, says the airline's flights south are pretty full. However, the low $99 fare to Miami, brings a low yield, she notes. ''You can't make money on a $99 fare,'' she says, ''unless you strap people to the belly of the plane.''

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.