Even while economic activity continues to increase slowly, according to the most recent issue of U.S. Travel Outlook, the latest employment report from the Bureau of Labor Statistics is disappointing. The 96,000 new jobs in August dropped unemployment to 8.1 percent, with strong private sector job gains, but August also marked the 43rd consecutive month of unemployment over 8 percent, the longest stretch since record keeping began in 1948.
Despite overall lackluster employment data, the U.S. travel industry continues to outperform the overall economy in terms of job growth says David Heuther of the U.S. Travel Association. Since recovery began in March 2010, the travel industry has added 291,000 jobs, including 7,000 in August. Total travel employment is at 7.6 million, the highest since November 2008. In North Carolina, tourism directly employs nearly 200,000 persons, and directly and indirectly supports more than 370,000 jobs, or 9 percent of all payroll employment in the state.
Consumer spending is posting positive numbers as of recently. According to Gallup, consumer discretionary spending is at a near four-year high, and in July, consumers boosted their spending by the greatest amount in five months (U.S. Commerce Dept.) According to MMGY, the average amount spent on vacations over the last 12 months has grown 15 percent over the last two years. Economists note that these increases in consumer spending are needed to continue to stimulate the overall economy, because consumer confidence is relatively low. The Bloomberg Consumer Comfort Index is at an eight month low and recently reported a fifth consecutive week with a reading associated with severe economic discontent.
Travel intentions going into the fall and winter are mostly positive, though not as high as last spring into summer, according to the Traveler Sentiment Index. Increases in affordability of travel and personal finances relating to travel are the leading reasons for the differences. Gasoline prices are also still of concern, as they begin to rise again after dropping somewhat in the early summer. As of Sept. 9, the price of a gallon of unleaded regular gasoline nationally was the highest since April, according to AAA’s Daily Fuel Gauge Report.
Lodging industry growth may have hit somewhat of a peak according to STR’s vice president of client services, Brad Garner. “The recovery is over for demand. It’s not going to keep growing at eight percent, nine percent, 10 percent, no matter what market you’re in,” said Garner recently. However, ADR should continue to grow, as it still has room to make up. For July 2012, demand was up only 1 percent nationally while ADR was up nearly 4 percent. Similarly, in North Carolina demand was up 1.3 percent and ADR increased 2.9 percent. There is still cautious optimism for the U.S. hotel industry. STR forecasts 2013 to post fairly flat occupancy growth, but nearly 5 percent growth in room rates.
International travel to the U.S. continues to grow and is on pace for a record-setting year for inbound tourism spending according to the U.S. Dept. of Commerce. International visitors spent an estimated $82 billion during the first half of the year, an increase of 11 percent. Preliminary first quarter spending data for North Carolina’s international visitors show that spending is also up about 7 percent. Brand USA announced a successful start to its U.K. campaign that was launched in early May. Preliminary results indicate a strong increase in the intent to travel to the U.S. (+14 percent) since the launch.
Concern about the General Services Administration’s recalculation of the federal per diem has been somewhat alleviated following the announcement that the current rates will stay frozen for the fiscal year. The U.S. Travel Association had estimated a loss of $885 million in travel revenue if the per diem had been lowered. The U.S. Travel Association, the American Hotel and Lodging Association and other groups strongly lobbied GSA to maintain current rates.