Travel Industry Optimistic For 2005 | TIA Reports

2nd Nov 2004

After years of little travel volume growth combined with significantly lower travel spending, this is the year of recovery the travel industry has been waiting for. It’s the first year since 2000 that all travel industry sectors are showing increases in demand, with some finally exceeding 2000 levels. But some sectors remain troubled by weak revenues.
Attendees at the Travel Industry Association of America’s (TIA’s) 30th annual Marketing Outlook Forum in Phoenix/Scottsdale, Arizona also have reasons to be optimistic for 2005 and beyond. According to TIA’s Annual Travel Forecast, overall traveler spending by domestic and international visitors in the U.S. is forecast to increase 6.9 percent by year end to nearly $593 billion up from $555 billion in 2003. An additional 5.3 percent increase in 2005 will bring expenditures to well beyond the $600 billion mark to $624 billion.

Two of the hardest-hit segments in the travel industry, domestic business travel and international inbound travel, will both see their first increases since before September 11, 2001. U.S. residents will take nearly 144 million business trips by the end of the year, an increase of 4 percent over 2003. In 2005, business travel will increase 3.6 percent to nearly 149 million trips. “It’s clearly good news that business travel is showing the beginnings of recovery this year and will continue in 2005,” TIA’s Suzanne Cook, senior vice president, Research & Technology said. “The gains have been driven primarily by a stronger economy and fewer travel restrictions by corporate America.” Cook also explained that the greatest unknown for future business travel is the impact of technological alternatives to business trips.

Improved business travel is also fueling renewed strength in demand for both air travel and hotel rooms. The Air Transport Association forecasts a 5 percent increase in air passengers by year end. Smith Travel Research predicts a 4 percent gain in room demand this year.

After falling steadily for three years, international arrivals to the U.S. are forecast to rise 7.5 percent this year and nearly 5 percent in 2005. This translates into more than 43 million international arrivals by the end of this year and almost 46 million in 2005. However, these numbers remain well below the record high of 51 million in 2000. International traveler spending in the U.S. is projected to increase 11.2 percent by year end, to nearly $72 billion and increase nearly 8 percent in 2005 to over $77 billion. Once again, these spending levels are well below the $82 billion spent by international visitors in 2000.

Domestic leisure travel has slowly but steadily increased over the years, despite the aftermath of September 11, 2001, the lagging economy, the war in Iraq, and high gas prices. TIA forecasts leisure travel volume will grow 2.9 percent this year up from a 1.9 percent increase in 2003. It will increase once again in 2005 by nearly 2 percent.


“The bright spot has remained domestic leisure travel,” Cook said. “While some recent shifts in consumer preferences such as a desire to travel closer to home remain valid, Americans are now returning to their more traditional habits. For example, some of the increases in air travel are attributable to domestic leisure trips.”

Cook added that this is the first time in several recent Forums where every speaker has expressed optimism about the travel economy, a welcome and refreshing change. She also observed that both speakers and delegates attending the Forum in 2004 were planning for the future rather than focusing on the recent past.


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