Consumers travel spending expected to decrease in 2007

The travel industry has enjoyed a solid year so far and is projected to do well for the foreseeable future, but a joint study by the Travel Industry Association and AAA has indicated that the pace of growth will soon begin to slow. Travel spending is expected to dip to 5.3% of total spending in 2007, compared with 7.5% in 2006, as the economy downshifts and as consumers become more cautious, said Suzanne Cook, senior vice president of Research for the TIA.

The TIA and AAA noted that the U.S. gross domestic product, which is expected to grow 3.4% in 2006, is projected to grow just 2.2% in 2007.

Disposable income, meanwhile, is forecast to remain the same. Hotel occupancy also is expected to remain the same.

A recent PricewaterhouseCoopers report predicted that the national hotel occupancy average would be 64.3% next year; it is 64.2% this year, so far.

But the travel industry is nevertheless doing well.

Domestic travel rose about 2.3% during the first half of the year. Leisure travel was up 3.5%, while business travel was down about 1%.  Overseas international travel so far is up 6%.

Cook said that travel expenditures by domestic and international consumers were projected to total $702.5 billion this year and $739.6 billion next year.

Sandra Hughes, vice president of AAA Travel, said that new passport regulations requiring airline passengers returning from the Caribbean by air to have a valid passport to re-enter the U.S. could spur U.S. travelers to take more overseas trips, particularly to the U.K., Italy and France, which are the most popular international destinations for Americans.

About 27% of Americans currently have passports, Hughes said, compared with 41% of AAA members.

Hughes said AAAs international tour bookings so far this year were up 14.9% and its international air bookings were up 13%.

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