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BUSINESS TRAVEL OUTPACING LEISURE 3% TO 4% OVERALL GROWTH SEEN FOR '95

By Published on .

ALEXANDRIA, Va.-The domestic travel industry is flying higher this year, with smaller gains projected for 1995.

"The outlook is generally good," said Suzanne Cook, executive director of the U.S. Travel Data Center, at the center's recent annual Travel Outlook Forum in Alexandria, Va.

For this year, the center estimates residents will make 1.1 billion person trips in the U.S., (one person traveling more than 100 miles), a 5% increase from 1993. Growth should slow to 3% or 4% in 1995.

"For advertising-I'd be very bullish. This is the first good year for travel since 1990," said James Cammisa Jr., editor and publisher of Travel Industry Indicators, a Miami-based newsletter.

"After the recession, people bought homes and home furnishings in 1992 and 1993 and travel lagged behind. 1994 is the year travel began getting its fair share and more," said Mr. Cammisa, who did not attend the conference.

The Travel Data Center projects business travel will grow slightly faster than leisure travel in 1995 and 1994, reversing a trend from the previous two years.

Sluggish growth in international travel could lead the U.S. industry to seek more federal dollars for joint public/private-sector tourism efforts. The U.S. government only spent $12.6 million on international ads and promotions in 1993, 24th in the world, according to the World Tourism Organization.

One indicator of increased attention is a White House tourism summit planned for 1995.

"Looking at what other countries do [in tourism] and what we do is pathetic," said Horst Schulze, president-chief operating office of the Ritz-Carlton Hotel Co. International tourism "brings in dollars and tax dollars from non-citizens. Wouldn't it be wise to support it very strongly? The priority should be much higher. It's not given much notice."

International travelers to the U.S. will increase only 1% to 46.2 million in 1995, the U.S. Travel & Tourism Administration said. U.S. resident travel abroad will increase 5% to a record 50 million next year, with 7% growth projected for this year.

"This is not a favorable development. We're losing share in the world market," said Ms. Cook of the U.S. Travel Data Center.

Canadian travel to the U.S. was projected to be off by 18% for 1994 and 1995 combined due to Canada's sluggish economy, unfavorable exchange rate, and stepped-up domestic tourism efforts. The decline is being offset by increases in traffic from Asia, Europe and South America.

Airlines and hotels are expected to post improved results for 1994 and 1995. But those gains probably won't be enough to translate into more dollars for advertising by U.S. airlines, hoping for slim profits this year after losing $12 billion over the last four years.

"The hotel category has a lot of optimism. New gaming activity is increasing hotel advertising," Mr. Cammisa said. "Airlines ... are under tremendous pressure to reduce cost."

Airline prices are projected to decline 3.3% in 1994 due to the impact of low-cost carriers, according to the Air Transport Association of America, Washington. Domestic travel will fare better than international travel in 1994, posting 4.5% and 2.9% gains respectively in revenue passenger miles (one passenger flying one mile).

Hotels are rebounding strongly from a decade of overbuilding. The segment is seeing increased demand, occupancies, room rates, revenues and profits, a significant improvement over $16 billion in losses from 1985 to 1992. Occupancies will grow to 67.5% in 1995, up from 65.3% in 1994, reports Smith Travel Research, Gallatin, Tenn. Average room rates will be $66.03 in 1995, up from $63.37 in 1994.

"The higher the price product, the higher the demand," said Mark Lomanno, executive director at Smith. "Many view [the luxury hotel] segment by its price/value. The difference in price is not [significant enough] to trade down."

Strong state tourism budgets have helped California, Illinois, Hawaii, Nevada and Rhode Island post increases.

But overall state tourism dollars seem to be tied more to politics than economic realities, said Madigan Pratt, president of his own consultancy in Darien, Conn.

State spending on tourism ads declined to an average of $2.2 million in 1993, from $2.5 million in 1989, Mr. Pratt said.

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