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Leisure Economy Staggers With Rising Fuel Costs

June 17, 2008

By Rick Alm, The Kansas City Star, Mo.

Jun. 17–The nation’s leisure economy is staggering under the burden of rising fuel costs. How far it might fall remains to be seen.

An unscientific sampling of disparate indicators offers scant optimism for a soft landing:

–More than 82 percent of Americans plan to stay home July 4, an increase from 77 percent that stayed home last year, according to a survey by Travelzoo.com.

The same survey found 60 percent think it is more trouble to find an affordable plane ticket for Fourth of July travel than to host a barbecue party.

–Another Midwest recreational boat manufacturing plant bit the dust last week. The Southern Illinoisan reported Friday that Nautic Global Group will suspend operations in August at its Godfrey Marine and Rinker Boat Co. plant in Benton, Ill.

–US Air is cutting its flights to Las Vegas in half.

“This is a major capacity reduction, which is slated to begin Sept. 3,” said Wachovia Capital Markets senior analyst Brian McGill in a note to investors. “Plans call for a reduction of 60 flights initially, which will grow to a total of 67 by year-end.”

Any decline in air traffic to Las Vegas is bad news for almost every casino company’s bottom line, but especially those spending billions in Las Vegas on ever grander mega-resorts.

The city’s movers and shakers are certainly confronted with the question whether the city may already be overbuilt.

“It has been estimated there could be a 20 percent rise in (airline) ticket prices to all tourist destinations, including Las Vegas, beginning in the fall,” McGill said.

“With nearly 11,500 hotel rooms coming online beginning in December, the Las Vegas Strip needs an additional 2.8 million visitors a year. It is conceivable the airline reduction could approach 3 million visitors a year, if not more. This could mean a nearly 6 million visitor deficit.”

“In almost all cases in the past, a significant increase in room capacity was matched with a major increase in airline seats into Las Vegas.

“With the current outlook, this appears that it will not be the case in 2009.”

–Global Insight and D.K. Shifflet & Associates are forecasting a modest upturn in overall travel this year, but slippage in 2009.

Leisure travel will grow 0.8 percent in the second quarter, while business travel is expected to contract by 0.8 percent.

The companies said better-than-expected economic growth in the first half of 2008 is the primary driver of “this continued, albeit small, expansion.”

The companies’ U.S. Travel Insights report concludes: “Despite robust fourth quarter performance in both leisure and business travel, we expect full year 2008 trips to reach 2.005 billion, an 0.3 percent increase over 2007.

“Unfortunately, 2009 looks to be more challenging as both leisure and business are expected to backslide. The slowing economy and lingering influence of rising oil prices will finally take their toll. Total trips will decline by 0.4 percent, to 1.996 billion.

“Leisure travel will see its first decline since 2003.”

Planners elect officers

Kansas City officers for the local chapter of Meeting Professionals International were recently installed.

This year’s president is Vickie Brawley and president-elect is Michelle Lizak.

Four vice presidents are Shari Hockenbery, education and programs; Sally Bennett, membership and certification; Karen Hoch, communications; and Lorie Scott, finance.

The chapter also awarded its Presidential Appreciation Award to Inge Hafkemeyer.

Vista Productions, Sprint and Phil Allemang of CAM Inc. were recognized for employer and supplier awards. Hockenbery, of the Francis Family Foundation, was named Planner of the Year.

Founded in 1981, the chapter has more than 250 area members engaged in the meetings and events industry.

To reach Rick Alm, call 816-234-4785 or send e-mail to ralm@kcstar.com.

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Copyright (c) 2008, The Kansas City Star, Mo.

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