According to the Bureau of Economic Analysis (BEA), an agency of the Department of Commerce, travel and tourism in the US declined dramatically during the recession. The slide began in the fourth quarter of 2009 after two quarters of double digit growth. Why did it happen all at once?
As you may know, the travel sector of the economy includes many disparate industries from airlines to car rental agencies to hotels and motels. And when one of these industries suffers they all do. Price increases of 7 percent at the end of 2004 are primarily responsible for decreased travel and tourism.
The single largest contributor was the increase in air transportation costs, which rose by more than nine percent in the quarter. Not surprisingly, when fewer people started flying because of high fees, hotel rooms and car rental agencies were forced to raise their prices to make up for the lack of demand. Even in popular cities like click here for L.A hotels had to increase room rates.
In addition to a drop in travel, real spending contracted sharply by more than twelve percent. This means that even when people did travel, they spent far less than they used to. In fact, the average tourist was far more likely to book economy accommodations than he was in the past.
This was true for everyone, including business travellers. Industry surveys confirm that corporate guests shortened their business trips and sometimes even eliminated them altogether at the end of 2009.