U.S. travel expected to cost more this summer
By Kristin Roberts
NEW YORK, May 10 (Reuters) - As the temperature rises, travel prices in the United States are expected to follow this summer, inching higher than last year's levels and in some cases climbing faster than inflation.
The major hotels, airlines and car rental outfits are expecting record numbers of travelers this season, pushing demand, and in turn their prices, higher.
"Overall, these factors combine to produce a healthy U.S. travel picture," said Jason Ader, a senior analyst with investment bank Bear, Stearns & Co.
"It's going to be a record travel season," he told Reuters. "The economy's strong. Customers, consumers feel good. The stock market's up. And the prices we're seeing are as high as they've been since we've been keeping records, and that's since the 50s."
Ader said he expected about 205 million more person-trips this year over last, referring to a measure of the number of trips taken, not the number of people taking trips. He said almost half of those trips would involve a hotel stay.
Because of that higher volume, travelers will pay more to get to vacation spots, whether arriving in a plane or a rental car. And once there, hotel rooms will cost more than they did in the summer of 1998, says a report from consulting group Pricewaterhouse Coopers and Bear, Stearns.
The average daily price tag on a hotel room in the United States will rise 3.9 percent to $81.77 from $78.67, the report said, noting that the increase is above the inflation rate as measured by the Consumer Price Index.
The CPI rose 2.1 percent in March, excluding data from the volatile food and energy sectors. Economists polled by Reuters pegged the CPI to rise 2 percent in the second and third quarters, which include the summer months.
"Of all types of U.S. hotels, 'midprice with food and beverage' properties will see the smallest average daily rate increase at 3.4 percent," said Bjorn Hanson, of Pricewaterhouse Coopers' leisure group. Those hotels include Best Western, Doubletree Club, Ramada and Holiday Inn, he noted.
Plane tickets on the major North American airlines will continue to cost more, with fares jumping 10 percent by year-end, the report said. In March, airline fares rose 4.7 percent, according to U.S. Labor Department statistics.
Northwest Airlines Corp. <NWAC.O> said it saw strong summer volume mostly on its North American flights, with most travelers taking leisure, not business, trips. "We're seeing strong demand for the product and people seem to be in a traveling mood," Jon Austin, a Northwest spokesman, said.
AMR Corp. <AMR.N>, parent of American Airlines, said its summer 1999 bookings would match or perhaps exceed last year's, with Europe leading the way among other popular seasonal destinations in North America.
"What we have facing us is another very busy summer travel season," Tim Smith, an AMR spokesman, said. "Last year was a record in many many areas of our network and we certainly see things on a par with that again this summer season."
The higher prices are not turning vacationers away from air travel. "Given the strong economy, and if all other factors are constant, travelers will most likely take to the domestic skies in record numbers despite higher costs to the wallet," Dexter Wood, a Pricewaterhouse Coopers consultant, said.
That may be because of the recent rise in gasoline prices, making long road trips more costly. Still, car rental companies are expecting more leisure rentals this summer compared with last, and are pushing prices up accordingly.
Budget Rent a Car Corp., a unit of Budget Group Inc.<BD.N>, expects rentals to jump 5 percent over last summer, staying steady from June to August in all North American regions. Pricewaterhouse Cooper's study said rental rates could jump 12 percent in some cities.
The industry is "prepared and excited," Bear, Stearns' Ader said.
"The companies I spoke to are prepared for strong summer traffic season and then a moment to breathe during the third quarter," he said. "As the fourth quarter gears up, they'll prepare for what's going to be the strongest travel season ever and that's millennium travel." |
