Travel spending at its lowest since 9/11

Posted Monday, March 23, 2009 10:37 AM | Contributed by Jeff

Despite bargain air fares, cheaper hotels and theme park discounts, Americans and foreign visitors have cut U.S. travel spending to the lowest level since the terror attacks of 2001, new government and industry statistics show. The U.S. Department of Commerce reported this week that travel and tourism spending dropped in 2008, and plummeted at an annualized rate of 22% in the last three months of the year.

Read more from The LA Times.

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Monday, March 23, 2009 11:38 AM

And I heard the gas price is supposed to rise because of an increase in travel.... Yeah, right...

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Monday, March 23, 2009 11:46 AM

Basic math tells me if you lower your prices, you reduce your income.

Did they expect that rates were reduced by 20%, that 20% more people would spend to offset that amount? The truth is, at undiscounted rates, they'd probably have even fewer customers.

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Monday, March 23, 2009 1:38 PM

It would be interesting to know how much of the reduction in air and hotel spending was due to a decrease in business travel vs recreational travel. I think it's fair to say that all this recession talk has some corporations limiting their travel expenses, but is it really time yet to point to recreational travel as the cause?

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Monday, March 23, 2009 1:48 PM

The conference I went to last week in Vegas didn't sell out for the first time in three years. They were offering discounted conference fees right up to the event, and were offering to pay your third night at the Venetian. One of the focuses of the focus group I was in asked what it would take to make it more likely that people could spend to send people next year.

I caught a 6 o'clock news show too, with a round up of construction projects on hold, possible bankruptcy filings and general melt down. Walking through the Venetian's casino when I got there Tuesday night, half of the tables were closed. I've never seen that in the years I've been going there.

The one bartender I talked to at Palazzo said it was actually the business stuff that was helping to sustain Las Vegas Sands (owns Venetian, Palazzo and the convention center). Granted, I they always based much of their business on the conference and trade show biz, but the tourism piece has been hurting them, he said.

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Monday, March 23, 2009 1:56 PM

Huh, that's interesting. Thanks for sharing. That tells me that opportunity is knocking. It's time to determine where I'd like to travel...

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Monday, March 23, 2009 1:56 PM

Seems like business expenses that COULD be cut...have been (save for AIG and any others still pigging out at the trough - only now at taxpayers' expense instead of shareholders'). Personal travel, however, has always been pretty much optional. Sure, you have to take the kids to see grandma around the holidays, but the optional vacation trips are likely to go away when Mom's and Dad's employers are cutting "excess" employees and leaving the company short-staffed.

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Monday, March 23, 2009 2:02 PM

^^
I would agree with you Carrie.. I work for a large DoD IT company (almost 3B in Revenue) which HQs in DC and we have even seen cut in travel with my company. Especially travel thats Indirect billed (Over head).

Now direct billed travel (billed to govt/customer) has dropped a bit as well and thats due to the govt side not wanting to spend the money for their contractors to travel either, so travel ends up being removed from the RFPs when bidding time comes.

Even hotels around the DC area are offering during the week rates at discounted prices because the bulk of during the week hotel stays tend to be the business traveler.

I think by in large the corporate travel (which tends to carry the higher rates of stays) are indeed affecting this.

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Monday, March 23, 2009 2:41 PM

My wife would tell you that it's absolutely business travel that's hurting her this year. And of those that still have to travel, most agressively renegotiated their rates in the past few months. (biggies like Boeing, etc that do extended work at the base)

Then again, I'm not sure how much leisure travel comes through Dayton to begin with. ;)

But the hotels in our corner of the woods live and die on the contractors coming in and out of Wright-Patt. Well, maybe not live and die, but it's a large chunk of the market.

The point is, around here it's certainly the business travel that causing pain, not the leisure.

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Monday, March 23, 2009 4:06 PM

I was looking for a good rate for orlando

The days inn across from universal (behind parking deck)

has room for may 25 - april 3 for 24.00 a night

friday -saturday are more at 27.00 a night

gonna use my superbowl promotion ticket for park admission.

will not have to pay for parking as I can walk across the street

and save 15 dollars.

Last edited by kevin38, Monday, March 23, 2009 4:07 PM
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Monday, March 23, 2009 10:13 PM

I work for a University in California and I know that travel has been restricted for only the most important business needs. One of my meetings, that I had to travel for (along with several other campuses), used to be held about 11 times a year has been reduced to 3 times a year. The same holds true for other system wide meetings, either reduced or canned.

I figure that Vegas must be hurting for business pretty bad right now, MGM Grand (we stayed last March for our first trip to Vegas) keeps offering us a complementary 3 night stay...if it wasn't for the cost for travel, entertainment, gambling, etc. we would take advantage of it...

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Tuesday, March 24, 2009 10:20 AM

You also have to take inconsideration that Obamma is going to raise taxes thus cutting into the spedning habits of most Americans. Where is all this money going to come from that he is so spending so freely going to come from. The taxpayers.

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Tuesday, March 24, 2009 10:55 AM

You are completely full of crap and wrong. Your taxes just went down. Check your next paycheck. It got bigger.

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Tuesday, March 24, 2009 11:10 AM

Jeff is right. I just got this email at work: "We recently had a stimulus package tax update in hopes of helping with the situation of the economy. You will notice on this pay check that your federal withholding will be slightly less and your check will be slightly more. The reason for this is due to the tax update."

Last edited by Amnesiac, Tuesday, March 24, 2009 11:12 AM
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Tuesday, March 24, 2009 11:52 AM

If your taxes went up, you probably make more than $250k/yr. Chances are, if you make 1/4 million you can still afford the 89 bucks it takes to fly to Orlando. Hell, you may even be able to go first class.

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Tuesday, March 24, 2009 11:57 AM

I'm expecting that $250K line to come a bit lower as congress and the administration negotiate. The administration's revenue predictions are, to put it charitably, optimistic compared to the CBO's numbers. At least that much hasn't changed since the last administration. ;)

I'm also expecting to see some more phase-outs of deductions and credits, and to have those phase-outs start at lower income levels than they do now.

In the same vein, Michigan is considering moving from a flat tax to a graduated one. I expect that to happen as well.

Last edited by Brian Noble, Tuesday, March 24, 2009 11:58 AM
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Tuesday, March 24, 2009 2:50 PM

Temporarily, our paychecks may be larger because of the stimulus tax credit, but that's only good for 400 bucks. Sooner or later the bailouts will have to be paid for (of course, every good politician prefers later-- much later), but it's pretty naive to expect that the whole bill will be paid by collecting income tax from people making more than 250K.

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Tuesday, March 24, 2009 3:14 PM

It's not naive if you have the right information. People who make more have been paying a disproportionate amount of the tax burden for a very long time. That's why they bitch and moan the loudest. According to the feds, the top fifth of earners pay about 70% of all federal tax.

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Tuesday, March 24, 2009 3:17 PM

I often wonder (not really) why there was never this big of a stink raised about all the tax cuts under the prior administration. That's a metric assload of lost tax revenue, no?

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Tuesday, March 24, 2009 3:25 PM

Because it was rarely reported that the cuts really only benefited the top fifth (actually much less than that). I never understood it either. Positioning the tax cuts as a hero move that didn't benefit most people was stupid. It was the trickle-down theory that suggested high earners stimulate commerce down the economic class chain, but history has shown that never works.

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