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Increase in U.S. Travel Means Business Growth for Travel Industry

Published onOct 15, 2013
Increase in U.S. Travel Means Business Growth for Travel Industry

Labor Day of 2013 marked the most traveling U.S. citizens have done on any September Breaks since the 2008 financial crisis, according to AAA. The formula for this success is based on falling unemployment, better consumer finances, rising house prices, and faster economic growth. In 2008, 45.1 million people took a break away from home. This number dropped to 31.3 million in 2009. This year, AAA expected 34.1 million people to take a trip of 50 miles or more. This rise has important implications for travel businesses.

It is not only private travel that is expected to increase, but also business travel. U.S. business travel spending is expected to rise 5.1% in 2013 to $258.2 billion, according to the Global Business Travel Association. The group says a stronger economy, consumer confidence, and corporate profits are fueling the boost, despite recent federal budget cuts. Business travel reached bottom in 2009, but experienced another decline in the fourth quarter of 2012 because of uncertainty over the U.S. presidential election and turmoil in Europe.

Though the 34.1 million travelers AAA projects for this year does not compare to the 45.1 million of 2008, businesses in the travel industry have taken the rise as positive sign to continue expanding. Marriott, for example, has begun construction on a new $300 million JW Marriott hotel in Austin Texas. Developers also broke ground a Westin over the summer in Austin and a $350 million Fairmont. Average occupancy in hotels went up to 69.2 percent in August, two percent higher than it was in 2012. These hotels’ big investments mark a confidence in the continued rise of travel.

Airlines were hit particularly hard by the 2008 economic crisis. As anyone who travels even occasionally knows, this led to a number cuts to the quality of flights. This means that no matter who you are, success for airlines can mean a better travel experience for you personally. Some airlines have accepted the drop in quality as a necessary reality, including United, which Forbes highlighted in an article for being ranked last in “Airline Quality.” This overall drop in quality also led to biting parodies of the new treatment travelers had come to expect from airlines, such as this one by MadTV.

The good news for everyone is that Delta Air Lines and US Airways recently announced that they foresaw solid continued growth in business travel over the coming months. Profits at both airlines beat expectations, but admittedly this was largely because of cost-cutting and drops in fuel prices. Delta reported a net income of $685 million. A stark contrast to the $168 million loss for the same period last year.

Airlines are also expanding. In May, Delta unveiled its new $1.4 billion international terminal at New York’s JFK Airport. And back in April, American Airlines announced their plan to expand LAX.

Of course airline travel and hotel sales going up is a good sign for online booking companies such as Priceline, Expedia, and TripAdvisor. ComScore estimates that U.S. online travel sites grew 11% in August, the highest growth rate since January 2013.

No matter if you are a private traveler, a business traveler, or an investor in the business of travel, the knowledge that travel is finally back on the rise is good to know. Now click over to one of the many travel booking websites and get your vacation plans in order!

* John Hodnette is a second year law student at Wake Forest University School of Law. He holds a Bachelor of Arts in English, with a minor in Philosophy, from Auburn University. Upon graduation, he intends to practice in the Chicago area.

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