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Travel Spending Still on Decline, but Slowing

Drops in real spending on accommodations and transportation slow to single digit loss

Spending declines and discounting will likely continue, but the travel industry may finally be poised for a rebound. According to the Bureau of Economic Analysis Travel and Tourism Satellite Accounts report released Wednesday, real spending on overall travel and tourism dropped only 1.4 percent in the second quarter of 2009. This is a substantial deceleration from the 8.9 percent decline previously experienced between Jan and April 2009.

Real spending on accommodations (down 1.7 percent) and transportation (down 7.8 percent) categories accounted for most of the second quarter decline; however, that dip was significantly reduced in both categories when compared to Q1 2009 results, which were down 21.8 percent and 22.1 percent respectively. Air transportation was the only category of real spending to experience a gain at 0.8 percent, following a 21. 8 percent Q1 decline, marking the first increase the department saw in four consecutive quarters.

Travel and tourism prices also continued to dip at a reduced rate (3.5 percent), following a previous quarter decline of 10.6 percent. Pricing drops in accommodations slowed to a 6.8 percent decline after a loss of 15.1 percent in the first quarter.

The only area where sharp declines continued was in air transportation pricing. Despite the category’s noted uptick in real spending, rates dipped 28.9 percent, as airlines sought to gain passengers. This topped the first quarter decrease of 27.1 percent.