Index Shows Positive Signs For Travel Business

The Travel Business Roundtable/World Travel and Tourism Council Index of Leading Economic Indicators increased by a modest 0.4 percent in October, after an 8.4 percent drop in September, suggesting that a rebound in travel may come sooner than many had expected.

Despite the catastrophic events of the previous month, five of the nine indicators that make up the index increased in October. However, seven of the indicators are substantially below the levels they were at during October of 2000. Consumer confidence, as tracked by the Conference Board, understandably was 40 percent lower than it had been a year earlier and 12.1 percent lower than the previous month. Still, remarkable strength could be seen in hotel and motel revenue, which Smith Travel Research tracked as increasing by 8.2 percent, and in travel agency sales, which the Airlines Reporting Corp. said increased by 7.6 percent over September.

Other areas that showed improvement in October were hotel and motel occupancies, which Smith Travel Research said rose 2.9 percent; retail sales at eating and drinking establishments, which the Department of Commerce and the Bureau of Census said grew 1.4 percent; and personal consumption expenditures for travel and related items, which the Bureau of Economic Analysis said inched up by 0.1 percent.

Other declines in October came from an 8 percent drop in the daily rental car price, as provided by a major car rental company; a 5.3 percent decrease in revenue passenger miles, as measured by the Air Transport Association; and a 3 percent reduction in travel and tourism employment recorded by the Bureau of Labor Statistics.

Dr. James Howell, the economist who created and maintains the index, noted that the loss of 53,000 jobs in October alone should not be minimized, but said that the rather sharp advance in ARC sales, even in the face of overall capacity reductions, provides a positive portent.

TBR chairman Jonathan Tisch, chairman and CEO of Loews Hotels, responded quickly to the tragic events and mobilized fellow CEOs to work with the Bush Administration and Congress on ways to revitalize the industry and get people traveling again. "We believe this would be accomplished by temporary measures, including restoration of the business meal and entertainment tax deduction to 100 percent, restoration of a spousal travel deduction and personal travel tax credits."