TIA predicts 'moderate growth' in '08 travel

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Negative economic factors ranging from high consumer debt levels to subprime home mortgage troubles are not expected to significantly impact demand for leisure and business travel, according to the Travel Industry Association, which is projecting "moderate growth" over the next year.

"Consumers remain quite confident and interested in travel," said Suzanne Cook, the TIA's senior vice president of research. "We have seen some declines in consumer confidence but not much to worry about."

Overall, travel expenditures should be up close to 6% in 2007, Cook said. A 5.2% increase is projected for 2008.

Total travel spending, including domestic and inbound travel, is expected to reach $777 billion in 2008, compared with the $739 billion projected for 2007.

Cook provided the travel forecast for the rest of 2007 and 2008 during a conference call with the media from the TIA's annual Marketing Outlook Forum in Charlotte, N.C. More than 600 travel industry executives attended the two and half-day forum which focused on marketing and research data.

While the rising cost of fuel and other consumer goods is placing "more pressures on consumer spending," Cook said, economists attending the forum indicated that they "don't expect consumers to retrench or that the economy will go into a recession any time soon."

That's one reason the TIA is projecting "moderate growth in all travel segments this year and next," Cook said. By comparison, travel growth was viewed as "slow" over the past year-and-a-half.

"We are now forecasting travel volume will be up about one-and-a-half percent this year," as well as in 2008, Cook said.

The leisure segment, which has remained strong for several years, is once again expected to outpace business travel. "Leisure travel is up 19% since 2000, while business travel has been essentially flat," Cook said. "In fact, business travel in the U.S. peaked in 1997."

One factor keeping business travel from declining, Cook said, is the meetings and conventions segment.

While business travelers are relying on technology to connect with customers and clients, Cook said they nevertheless were traveling for meetings and educational events. The Outlook forum, for example, had a record attendance.

"We think people will travel [for meetings and conventions]," Cook said. "On the transient side, we think the difficulties of traveling, plus the new technology that [has created] other options to business travel have made it a harder environment in the business travel segment."

She added that the weak U.S. dollar relative to the euro has bolstered inbound travel from Europe. "However, we are still 11% below the level we were in 2000 in the overseas market," Cook said. Airlines and hotel are both posting solid gains, she said.

To contact reporter Michael Milligan, send e-mail to [email protected].

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