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On many levels, the U.S. travel industry seems to be moving along at full speed. Rates are up, hotels are filled and travel has seemingly become engrained in the American ethos. But that perception belies the truth.
In constant dollars, room rates are not as strong as they were in 2000 and America is seeing a declining percentage of travelers coming here to vacation. So while statistics and predictions make it seem like the hotel industry is at an all time high, keeping expectations in check should be the rule of the day.

   That being said, it looks like next year will see continued gains in regards to people traveling and spending while away from home. According to a survey conducted by the Travel Industry Association, travel spending by domestic and international visitors in 2008 is forecast to increase 5.2 percent, to $778.2 billion, up from projected full-year 2007 travel spending of $740 billion, which would be a 5.7 percent increase over 2006.
   Domestic leisure trips are expected to continue an upward trend of modest growth in 2008, climbing 2 percent to 1.6 billion trips. Domestic leisure trips are expected to finish 2007 up 2.5 percent over last year.
   Dr. Suzanne Cook, SVP of Research for the Travel Industry said that these days it’s all about leisure travel. She said leisure travel is up 19 percent since 2000 while business travel remained flat. In fact, the level of business travel actually peaked a decade ago.
   Leisure travel is the real muscle in the hotel business, said Cook, and barring any major unforeseen circumstances, it will continue to act as a buoy for the entire sector. “Even though we are seeing some stresses in U.S. economy such as declining house values and high debt levels, consumers remain quite confident and interested in travel. There is more pressure on consumer spending but the consumer is not expected to entrench.”
   Cook said travel behaviors should not change until gas prices pass $3.50, a scenario that is becoming more of a reality as oil creeps up to the $100 per barrel mark. She said she doesn’t expect to see wholesale cancellations of trips, but would anticipate people taking shorter trips that are closer to home. “People value vacations and leisure travel and will do so regardless,” said Cook, adding that historical heritage tours and outdoor recreation are slowing.
   And what about the sub prime lending crisis affecting travel? Peter Yesawich, Chairman and CEO, Ypartnership (formerly YPB&R) believes that it will not substantially affect the travel business because “data will reveal that the higher concentration of people who have been adversely affected in sub prime market, will be among those no travel households.”
   “Those that do travel have typically higher income, which is a predictor of travel behavior. I personally think impact on travel business will be less than people think intuitively,” said Yesawich.
   Travel for business in 2008 is expected to remain stable, increasing by 0.4 percent, registering nearly 502 million trips. This slight increase will offset a projected decline of 1.7 percent in business travel for 2007, compared with a year ago.
   International travel (including visitors from Canada and Mexico) to the United States is expected to rise 3.7 percent in 2008 to 55.6 million visitors, following a projected 5.1 percent increase for 2007.
   However, the year-over-year data masks an 11 percent decline in overseas visitors to the U.S. from 2000 – 2007. Overseas travelers, primarily from Western Europe and Japan, represent the United States’ top inbound visitors and spend the most money. Although overseas travel is expected to increase slightly in 2007, it has yet to surpass the 2000 level, despite the weak dollar making the U.S. a travel bargain.
   Additionally, hoteliers should also pay attention to what airlines are up to. Since 9/11 they’ve been drastically cutting back on capacity and have no way to quickly beef up capacity with new planes. With aircraft suppliers Boeing and Airbus full up on orders for years to come building planes for foreign markets, the domestic travel scenario will get worse for domestic travel.
   Cook said they are running record load factors at nearly 90 percent and the cost of a ticket is expected to climb.

Glenn Haussman, Hotel Interactive's Editor In Chief, has been specializing in the hospitality industry for more than 10 years. He often speaks at lodging industry events, is quoted frequently as an expert source by newspapers and is an adjunct professor at New York University.