Summer travel busier, costlier

By Keith L. Alexander
Washington Post

When leisure travel starts to pick up, few folks notice more than business travelers. And even before the start of the the 2004 summer vacation season, frequent fliers say they are having a harder time finding cheap airline seats and hotel rooms.

Adam Benado, who flies between Washington and Los Angeles every six weeks or so, says hotels are reducing the number of deals. The Internet rate at his favorite hotel, the Radisson at Los Angeles International Airport, has increased, he says, to about $89 a night, up from $69.

Just weeks away from the start of summer, these are some of the signs that the travel industry is on the verge of its biggest travel period since the Sept. 11 terrorist attacks. Or, as Benado put it, "The post-September 11 days of cheap travel with plenty of availability are rapidly coming to an apparent end."

Perhaps so. The Air Transport Association, the airlines' trade group, is projecting that 65 million passengers a month will board a plane this summer. That would be a total of 195 million and a 12 percent increase from last summer's 58 million passengers a month, or a total of 174 million for the summer.

But it's not just vacationers. A recent survey by the National Business Travel Association of 220 business travel managers found that 54 percent said they expect the number of business trips this year to match the number of trips taken in 2000, one of the strongest recent periods for the industry.

That's good news for at least some airlines, especially the low-cost carriers — among them Southwest, Air Tran, JetBlue and the new startup, Dulles-based Independence Air — that continue to expand while the large legacy carriers wrestle with cutting costs in an effort to return to profitability.

Henri Courpron, president and chief executive of Airbus North America, said recently that during the past six weeks the Herndon, Va.-based aircraft manufacturer has heard from many airlines, particularly rapidly expanding low-cost carriers, which were making inquiries about future aircraft orders such as for Airbus' smaller A320 or A319s, single-aisle jets.

"We've noticed people being more optimistic and at least contemplating taking actions with respect to taking orders, adding capacity or replacing old planes with new planes with a greater sense of urgency that we haven't seen in a while," Courpron said.

Ben Baldanza, head of marketing for US Airways, said booking levels are up about 2 percent this period versus a year ago. "Volume is good. It's just the prices are under pressure," he said.

Last month, the top 10 U.S. airlines filled an average of 79.8 percent of their seats, according to a recent report by analyst Ray Neidl of Blaylock & Partners. That's up 6.6 percent from April 2003.

But while the airlines try to eke out profits during this peak period, other travel-related companies say they are benefiting from the increase in demand.

Marriott Corp. is expecting room revenue in its North American properties to increase between 6 percent and 8 percent this year compared with last year, said spokesman Tom Marder. He also said Marriott's international properties are expected to see about 10 percent revenue growth.

Room demand is so strong that the chain has been able to raise rates in Washington, Los Angeles and New York this spring. Marder, who declined to specify how much the rates went up, said it would be another year before the chain is able to raise rates company-wide.

Unlike last year around this time, Marder said, "customers are not just looking (for rooms), they're booking."

At the Los Angeles airport Radisson, director of operations Glen Garcia says the uptick in traffic is what has allowed the hotel to raise its rates. Whenever occupancy rises above 80 percent, he said, the rates go up — for instance, during the summer peak season. "You can afford to raise the rates then," he said. His property will lower its $89 rate when occupancy drops.

Bjorn Hanson, head of the hospitality group at Pricewaterhouse-Coopers, said the hotel industry is looking at its strongest period since the summer of 2000. Hanson said average hotel room occupancies beginning Memorial Day weekend are at 69.2 percent — up from 67.1 percent in the same period last year.

Hanson said travel is picking up in large part to the strengthening economy. Also, consumers will do more traveling this summer in reaction to the harsh, long winter in much of the Northeast, he said.

Hanson expects hotels to increase their rates about 2 percent this summer over 2003 prices. In fact, Hanson expects the industry's profits to be "slightly" higher than last year's $16.2 billion.

The hotels aren't the only ones bringing in the business. Car-rental companies are seeing an increase in bookings as well, despite higher gasoline prices.

Correction: A previous version of this story included incorrect figures for airline passenger traffic for this year and last.