Editor’s note: This is a preview of a breakout session to be held during the inaugural Hotel Data Conference in August (see below for more conference information, or by visiting www.HotelDataConference.com presented by Magnuson Hotels.
BOULDER, Colorado--Recently, the U.S. Bureau of Economic Analysis (BEA) released its estimates of travel-and-tourism-related spending for the first quarter of 2009. In 2000 inflation controlled dollars, total spending on travel and tourism declined by an annualized rate of 5.9 percent relative to the previous quarter. This quarter-to-quarter drop of total spending occurred despite a 10.9-percent decline in the overall price of tourism goods and services.
In the six tourism-spending components monitored by the BEA, the steepest quarterly decline was in the traveler accommodations component, which experienced an 18.6 percent decline of spending despite a 15.1 percent decrease of the traveler accommodations price index. For the accommodations sector, this is the second consecutive quarter to show a pattern of discounted rates failing to generate sufficient demand to offset a decline in spending. These results continue to show that the accommodations and transportation sectors more readily lose ground in terms of price and spend relative to tourism related shopping, recreation and entertainment, and food and beverage.
To drive this point home further, it’s helpful to look at a broader historical snapshot of the tourism spending and price data maintained by the BEA. Going back to the first quarter of 1998, one can see real spending on travel and tourism has grown by about 13.5 percent in year 2000 inflation adjusted dollars. Unfortunately, the lodging industry hasn’t shared in this growth in proportion to its share of total tourism-related spending. During the past 10 years, the accomodations component of total travel spending has, on average, accounted for about 17.3 percent of tourism spending, ranging from a recent high of 18.4 percent to a low of 16.6 percent (see Figure 6). In contrast, the lodging industry’s share of real growth in total travel spending since the first quarter of 1998 is only 15.3 percent (see Figure 7). Transportation spending is the only other component of spend to show this disparity, with a not-to-be-emulated airline industry showing the largest gap between share of spending versus share of growth (16.9 percent versus 7.2 percent).
In summary, the data suggests the lodging and transportation sectors give up share of wallet more readily than other tourism related sectors. This trend is readily evident in the recent collapse of the price indices for traveler’s accommodations and transportation compared to the relative stability seen in the price indices for food and beverage, recreation and entertainment, and shopping (see Figure 8).
Consumer travel trends at the Hotel Data Conference
Given precipitous declines of total travel spending and the enormous complexity of our current operating environment, it has, perhaps, never been more important for the lodging industry to have a grounded understanding of consumer leisure and business travel trends. This understanding needs to be informed by solid consumer research and hard economic data. As the above analysis would suggest, the pitfalls of operating in the absence of this understanding are significant. In light of this need, at the upcoming Hotel Data Conference, we’ll be sharing results from detailed primary research on consumer travel trends as they specifically and actionably relate to real world hotel data and broader behavioral and economic trends.
About the Hotel Data Conference
Editor’s note: In preparation for the upcoming Hotel Data Conference, session coordinators and moderators are writing weekly articles about their topics for HotelNewsNow.com.
The Hotel Data Conference presented by Magnuson Hotels will be held August 4-5 at the Renaissance Nashville Hotel in Nashville, Tennessee. The conference will cover many topics such as: U.S. hotel industry forecasts from STR, PKF Consulting, and PricewaterhouseCoopers; revenue-management techniques during a recession; consumer business and leisure travel; hotel demand and industry cycle; and STR data overviews, including top markets, customer segments, chain scale, pipeline and hotel operation statistics.
Speakers and panelists at the conference include: Mark Lomanno, president of STR; Scott Berman, the U.S. industry leader of the Hospitality and Leisure Consulting Group of PricewaterhouseCoopers L.L.P.; Brian Ferguson, vice president of supply strategy and analysis for Expedia, Inc.; Kate Henriksen, senior vice president of investment and portfolio management at RLJ; Robert Morse, senior director of corporate revenue management for White Lodging; Webster O’Brien, vice president of SH&E; Gary Portuesi, vice president of lodging account development for American Express; Mark Woodworth, executive vice president of PKF Consulting; Maria Simos, CEO of e-forecasting.com; Dr. Evangelos Otto Simos, strategist and chief economist at e-forecasting.com; Nate Fristoe, director of RRC Associates; Robert Bowers, Jr., senior vice president of operations for STR; Vail Brown, vice president of global sales and marketing for STR; Brad Garner, vice president of operations and client relations for STR; Duane Vinson, vice president of content management for STR. Moderators include Jeff Higley, vice president of digital media and communications for STR and Lana Yoshii, vice president of new product development for STR.