Posted by: Five Star Travel & Cruises | June 22, 2011

Government says growth in travel spending slowed

In today’s update we have travel spending gradually growing at a slow rate and the government thinks airlines are partly to blame. The surge in fuel prices causes the airlines to raise their prices to balance everything out but people don’t want to pay a lot of money to travel. The full story with all the stats is below with the associated press reporting.

DALLAS (AP) – The federal government says spending on travel grew more slowly – and actually fell for air travel – in the first quarter, and it suggests that higher airfares are partly to blame.

The Commerce Department said Tuesday that overall spending on travel and tourism grew 0.6 percent in the first quarter, down from a gain of 2.6 percent in the last three months of 2010.

Spending on air travel dropped 9.9 percent in the quarter after rising 3.4 percent in the fourth quarter of 2010, the department said. It noted that passengers faced a 21.4 percent increase in air-travel prices during the first quarter.

The decline in spending on air travel was partly offset by a 12.9 percent increase in spending on hotels and other accommodations as room rates fell but occupancy rose.

“The slowdown in real spending on tourism reflected a downturn in both domestic and international passenger air transportation as passengers faced higher ticket prices,” the department said.

The general price for travel and tourism rose 9.8 percent due to higher gasoline and air-travel costs.

Airlines have raised fares about a half dozen times in 2011 to offset higher jet fuel prices. They have, however, undercut those price increases with a steady stream of sales to keep planes running near capacity. On Tuesday Southwest started a new round of discounting that was quickly matched by some other airlines.

Tourism-related employment rose 2 percent in the first quarter, faster than overall U.S. employment growth of 1.3 percent.

Article by The Associated Press

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