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24 Aug, 2009

US Global Image Up, But Tourism Slump Continues

Although a recent Pew Research Centre poll found that the election of President Barack Obama has improved the global image of the United States, there is no evidence that it is translating into increased business for the country’s travel & tourism industry.

Statistics released by the U.S. Commerce Department for the first quarter of 2009 show that U.S. tourism is facing “the most difficult environment since 9/11,” largely due to the economic downturn.

Says the Department’s latest statistical report, “Total tourism-related employment decreased by 149,000 during the first quarter, settling at 8.35 million. This is the second largest quarterly drop on record and the worst since the fourth quarter of 2001. Job losses continued to accelerate, slipping from -4.0% to -6.8% (annualized) for the quarter.”

It adds, “If the industry continues to eliminate jobs at the present rate, this would translate into a loss of 581,000 industry-supported jobs for the year and would effectively erase over a decade’s worth of job growth in the industry.”

According to the report, “Total tourism-related spending figures suggest that the U.S. tourism industry shrank by 15.4% during the first quarter; by comparison, current-dollar U.S. GDP contracted at the rate of 4.6% during the same period. Direct tourism employment, a narrower measure that excludes jobs indirectly related to the industry, fell by 99,000 during the quarter. Direct employment slipped to 5.7 million, a four-year low, after the biggest quarterly loss since the fourth quarter of 2001.”

It added, “The traveller accommodations sector cut 45,000 jobs during the quarter, reducing employment in the sector to a decade-low 1.3 million. If trends continue, the sector could slash 12.5% of its work- force during 2009, cutting 170,000 jobs. This would break the previous record for annual job losses, set in 2002, when the sector dropped 49,000 jobs.

“The transportation sector jettisoned 26,000 jobs during the quarter; the sector has lost 63,000 jobs since the first quarter of 2008. Even with current employment levels at a decade-low 1.1 million, employment in the sector could lose an additional 74,000 jobs by year’s end if layoffs continue at the present rate.”

Direct employment in the recreation, shopping, and entertainment sector decreased by 15,000 during the quarter; the sector has dropped 37,000 jobs since the first quarter of 2008 and presently employs 1.2 million people, the report says.

This slump is filtering down into U.S. hotel industry performance.

According to data from the consultancy company Smith Travel Research, the U.S. hotel industry’s revenue per available room dropped 18.7% to US$53.87% for the first half of 2009 in year-over-year measurements.

In year-over-year measurements, the industry’s occupancy dropped 10.9% to 54.6% and average daily rate fell 8.7% to US$98.66, the report said. In the second quarter of 2009, occupancy fell 10.9% to 57.8%, ADR dropped 9.7% to US$97.37, and RevPAR decreased 19.5% to US$56.25.

Bobby Bowers, senior vice president of operations at STR, was quoted as saying, “The first half of 2009 was, without question, one of the most challenging the U.S. lodging industry has experienced. RevPAR fell nearly 19% — by far the largest first-half decline ever recorded by Smith Travel Research.

“While there is some evidence that industry performance has bottomed, hotel operators will continue to face harsh operating conditions—particularly from a pricing perspective—in the second half. STR is currently forecasting a total industry RevPAR decline of about 17% for full-year 2009.”

The data showed that in the first half of 2009, none of the Top 25 Markets reported increases in any of the three key measurements. Washington, D.C., experienced the smallest decreases in all three metrics among the markets: Occupancy fell 3.9% to 66.8%, ADR decreased 2.2% to US$154.34, and RevPAR dropped 6.0% to US$103.16.

Detroit reported the largest occupancy decrease, falling 16.9% to 46.7%, followed by Phoenix, Arizona, with a 15.2% decline to 57.0%.

Three markets, excluding Washington, D.C., reported ADR decreases of less than 5%: Nashville, Tennessee (-4.8% to US$91.72); New Orleans, (-4.8% to US$120.58); and Houston (-4.0% to US$96.26). New York, New York, posted the largest ADR decrease for the first half of the year, dropping 24.4% to US$198.55, followed by Phoenix (-15.4% to US$119.80) and San Francisco/San Mateo, California (-15.0% to US$130.94).

Thirteen of the Top 25 Markets experienced RevPAR decreases of more than 20% for the first half of the year. New York led the declines with a 32.5% decrease to US$144.18. Two other markets posted decreases of more than 25%: Phoenix (-28.3% to US$68.23) and Chicago (-27.3% to US$59.42).

Meanwhile, the U.S. Customs and Border Protection has announced that its international registered traveler program, known as Global Entry, has been expanded from seven to the top 20 U.S. airports for international arrivals.

Global entry allows for the expedited clearance of pre-approved, low-risk travellers into the United States, including returning U.S. citizens. The program uses fingerprint biometric technology to verify a registered member who then enter the U.S. use automated kiosks without undergoing a person-to-person. The average time for Global Entry processing is claimed to be 40 seconds.

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