Holiday Travelers Welcome Back The Vacation

May 29, 2011
Originally published on May 29, 2011 11:42 am

This Memorial Day weekend is kicking off what promises to be the best vacation travel season since 2007.

"Workers are starting to regain enough confidence in their employment situation to ask for and actually use vacation time," John Challenger said in a written analysis. He's chief executive of Challenger, Gray & Christmas, Inc., an outplacement firm based in Chicago.

Over the past three summers, the travel and leisure sectors have been hurt by the surge in "staycations," the stay-at-home alternatives for people who couldn't afford destination vacations.

Once the recession took hold in 2008, millions of Americans had no choice but to look for fun in their own backyards because they had lost jobs or their work hours had been cut. In addition, many people who still had good jobs stayed home, too — fearful that they might be next in the unemployment line.

Today, the headlines about mass layoffs are gone. In fact, planned layoffs are now at the lowest level since the late 1990s. Challenger statistics show that for the first four months of 2011, employers announced 167,239 job cuts — down 24 percent from a year ago.

"Job security is the strongest it has been in several years, as corporate job cutting shrinks to pre-recession lows," Challenger said.

That change is helping bring back vacation planning. Here's one way to measure the rebound: The Air Transport Association, which represents major carriers, said that in the summer of 2007, domestic airlines carried about 218 million passengers. After the recession hit, that number of passengers fell to just 200 million in the summer of 2009. With 18 million fewer people getting on airplanes, the downturn rippled out to hotels, rental cars, restaurants and so on.

This year, the trade group estimates that during the June-August period, the number of passengers boarding planes will tick up to 206 million. The lodging industry also is reporting gains, with occupancy and room rates running roughly 5 percent higher than last year.

The uptick already is being felt this holiday weekend. AAA, the auto club, estimates that 34.9 million Americans will travel 50 miles or more over this Memorial Day weekend. That's the best figure since 2007, despite this year's sharp increases in both gasoline and plane tickets costs.

IBM found a different way to estimate travel plans. It used advanced computer analytics to look across the social media world — examining blog posts and tweets — to see if people were talking about canceling their Memorial Day plans because of inflation.

IBM said its analysis identified more than 11,500 individual references to travel and Memorial Day, and found that just 1.6 percent of this year's posts discussed canceling Memorial Day trips, versus 2.8 percent in 2010.

"Memorial Day travel experienced a gain of more than 14 percent in 2010, and this year we expect to add slightly to that gain, due to an increase in air travel and an improvement in the overall domestic economic picture," AAA President and CEO Robert L. Darbelnet said in a statement.

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LIANE HANSEN, Host:

Here to talk about the outlook for vacation spending is NPR's senior business editor Marilyn Geewax. Welcome back, Marilyn.

MARILYN GEEWAX: Hi, Liane.

HANSEN: The economy, and as we've talked about, has been so rough for several years. How much of an impact has that had on the summer vacation business?

GEEWAX: We've seen a surge in staycations in recent years. Those are for people who need to stay home because they can't afford a destination vacation. And once the recession took hold, a lot of Americans just didn't have any choice but to try to find fun in their own backyards. They'd lost a job, maybe their work hours were cut.

HANSEN: A lot of people who did have good jobs were just staying home because they were scared. They saw those big headlines about layoffs and they were afraid they could be next one in the unemployment line, so they didn't dare spend money on a frivolous trip.

HANSEN: Did these staycations really hurt the travel industry?

GEEWAX: Any significant reduction in travel is going to result in job layoffs and lower profits for those travel-related businesses.

HANSEN: What's the outlook for this summer? People planning to travel again?

GEEWAX: So basically what we're seeing is that all of the travel measures are showing the same thing: Summer vacations are going to make a modest comeback this year.

HANSEN: Well, what is it that's getting people moving again?

GEEWAX: The University of Michigan released its latest survey on consumer sentiment and it showed another uptick. So, of course, consumer confidence is below where it was before the recession. But still, the trend line is a good and anytime it ticks up that's a good sign for the vacation-related businesses.

HANSEN: But what about the price of gas and air fares? I mean I would think high prices would discourage travel?

GEEWAX: And I saw that IBM did something that was kind of interesting. It used its advanced computer analytics to look across social media, to see if people were talking about cancelling their Memorial Day plans because of inflation. And the company found that, compared with last year, actually more people say they are heading out for some fun this weekend - even if it is more expensive.

HANSEN: So will all of this help create jobs?

GEEWAX: Yes, the boost in travel this year already is generating jobs. Between February and April, the leisure and entertainment sectors reported that they had added about three-quarters of a million workers. So if we see gas prices ease a little, like they have been, it's possible that summer travel is going to turn out to be actually better than we're forecasting right now.

HANSEN: So where are you planning to vacation this summer?

GEEWAX: Liane, I am planning to head to that beach house to help you kick off your retirement.

(SOUNDBITE OF LAUGHTER)

HANSEN: NPR's Marilyn Geewax, it has been a pleasure doing business with you all this time.

GEEWAX: Thank you so much for all the help you've given me. And you're so welcome. I enjoy being with you. Transcript provided by NPR, Copyright NPR.