Bargains push travel industry's rebound
By Monee Fields-White and Liz Enochs
Bloomberg News Service
ABBOTTSTOWN, Pa. — Mary Dolheimer and David Smith reached a compromise last month that may help the U.S. economy: they decided to take their first family vacation in two years.
The Abbottstown, Pa., couple plan to spend $2,000 for a week on North Carolina's Outer Banks with their six children.
It took some coaxing, said Dolheimer, 36, who found the rental property by shopping on the Internet.
Although Smith, 48, a construction foreman, wanted to reduce the family's debt, "the kids and I just wore him down," said Dolheimer, in charge of media relations at Gettysburg College. By sharing the rental cost with friends, the couple will have some of their $3,000 tax refund left over to pay off credit cards.
The family's determination to travel helps explain why the number of U.S. consumers planning vacations may be rebounding from recession and the attacks on Sept. 11. Online travel services such as Expedia Inc. report a surge in traffic, Walt Disney Co. is reopening hotels and low fares have boosted sales at Carnival Corp. and other cruise lines.
"What we have here are some extraordinarily attractive travel bargains and packages, and people are taking advantage of them," said William Sullivan, senior economist at Morgan Stanley Dean Witter & Co. in Jersey City, N.J. "That's a welcome development for the U.S. economic outlook."
Spending on travel and tourism accounted for about 4.5 percent of U.S. gross domestic product from 1997 though 2000, the World Travel & Tourism Council says. That dropped to 4.38 percent last year.
While spending on leisure travel is likely to rise this year, business travel will probably fall, limiting the contribution to 4.34 percent.
Discounts may spur individual travel. Holiday Inn, operated by Six Continents PLC, is offering $10 vouchers for gasoline and 50 percent off a second night's lodging. Carnival, the largest cruise line, reduced prices to attract vacationers and boost profits in the first quarter.
Almost 45 percent of U.S. households said in April they planned to take a vacation in the next six months, according to the Conference Board, a New York-based research group. While that's down from about 46 percent in April 2000 and 2001, it's up from 44 percent in December of last year and a two-decade low of 43 percent in February 2001, just before the recession began.
The share of consumers planning air travel posted the third-consecutive increase.
Travel questions are asked every other month.
The number of leisure trips will grow 6 percent after declining 5 percent in 2001, according to an industry survey sponsored by Orbitz LLC, an online travel site, other travel companies and USA Today.
First-quarter bookings through Expedia, a unit of USA Networks Inc., rose 64 percent to $1.1 billion from a year earlier, the company said.
While the terrorist attacks with hijacked passenger jets dealt a blow to travel for many American consumers and businesses, the tragedy had the opposite effect on some families.
Arlin and Stephanie Schmidt, back in New York from a week's vacation in St. Thomas, Virgin Islands, say they'll spend about $25,000 on vacations this year, up from about $20,000 in 2001.
Sept. 11 "encouraged us to not hold back too much," said Arlin, a 45-year-old vice president for Career Education Corp., which owns technical and cooking schools.
The couple plan a golfing trip in June to Colorado Springs, staying at the Broadmoor Hotel & Resort, where rooms start at $450 a night.
Cruise lines expect travel to improve. The number of North Americans taking cruises rose 0.4 percent last year, the worst since 1995, after a 17 percent gain in 2000, according to the Cruise Lines International Association.
The group expects the number to grow about 7 percent this year.
Travel enthusiasts Tom and Linda Moleski plan to spend about $5,000 on a summer cruise and a Thanksgiving trip on Carnival's Holland America Cruise Lines.
"Traveling is our opium," said Tom, a 54-year-old optometrist in Grand Rapids, Mich.
Walt Disney will reopen its 1,008-room French Quarter hotel in Lake Buena Vista, Fla., on May 31 after a six-month closure. The media and entertainment company already has done so with its 2,048-room Riverside Hotel, also part of Walt Disney World.
Additionally, Disney has hired more than 200 reservation agents in the past two months to handle calls to its theme parks and resorts, said spokeswoman Rena Callahan. "We are seeing excellent signs," Callahan said.
UAL Corp.'s United Airlines and some other carriers have recalled furloughed workers and added flights to their summer schedules to meet rising demand.
Gasoline prices that have risen 27 percent this year won't deter travelers who prefer the romance of the highway.
Jennifer Bianchi, a 23-year-old waitress, and fiance Ruben Rodriguez, 25, who works at an aerospace company, expect to spend about $9,500 and find sponsors for a prenuptial drive around the country starting July 4. They plan to visit 49 U.S. states before their wedding, set for Jan. 11, 2003, in Las Vegas.
"It makes it a little harder to save," said Bianchi, who has mapped out the trip with colored thumbtacks and dental floss at her San Diego home.
They're going to state No. 50, Hawai'i, for their honeymoon.
