U.S. travel and tourism economy in slow recovery

A federal economic report released Tuesday (June 21) showing a decline in first quarter 2011 spending on travel and tourism provides insight into enplanement trends at Arkansas’ top three airports and struggles by the state’s tourism sector to rebound from a downturn that began in early 2009.

According to a U.S. Bureau of Economic analysis, real spending on travel and tourism increased at an annual rate of 0.6% in the first quarter of 2011, down from a 4.6% gain in the first quarter of 2010 and down from a revised 2.6% gain in the fourth quarter of 2010.

Total tourism-related spending showed a clear gain over the previous two years, but still lags behind 2008.
1Q 2011: $1.156 trillion
1Q 2010: $1.074 trillion
1Q 2009: $1.039 trillion
1Q 2008: $1.207 trillion

Tourism industry growth lagged behind overall U.S. growth. Real gross domestic product (GDP) increased 1.8% in the first quarter, after increasing 3.1% in the fourth quarter.

“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 BEA noted in the report. “Overall growth in prices for travel and tourism goods and services accelerated; increasing 9.8 percent in the first quarter of 2011 following a 1.7 percent (revised) increase in the fourth quarter of 2010. The acceleration in prices for travel and tourism goods and services reflect strong price increases in gasoline and passenger air transportation.”

ARKANSAS ENPLANEMENTS
The air passenger downturn is evident at the Fort Smith Regional Airport, Little Rock National Airport and the Northwest Arkansas Regional Airport (XNA).

For the first four months of 2011, Little Rock enplanements total 321,556, down 6.87% compared to the 2010 period. In 2010, the airport had 1.129 million enplanements, down 3.8% compared to 2009, and down 5.3% from 2008.

At XNA, enplanements have proven consistently erratic — up in January, down in February, up in March, down in April and up in May. However, enplanements for the first five months of 2011 total 226,222, up 3.9% over the 2010 period. During 2010, XNA had 570,625 enplanements, up 5.49% over 2009.

In Fort Smith, year-to-date, enplanements total 32,308, up a scant 0.24% compared to the 2010 period. Year-to-date enplanements were up 6.7% at the end of the first quarter of 2011. Enplanements at the airport totaled 86,129 during 2010, up 9.81% over 2009 — an increase that ended two consecutive years of enplanement declines at the airport.

LODGING, EMPLOYMENT TRENDS
The BEA reported that the downturn in air traffic was partially offset by a 12.9% increase in hotel/lodging spending in the first quarter. Spending in the sector was up 8.5% in the first quarter of 2010 and was up 5.8% in the fourth quarter.

“Prices for traveler accommodations decreased 3.2 percent in the first quarter after decreasing 8.2 percent in the fourth quarter. Group rates, negotiated in prior quarters, continued to suppress overall traveler accommodations prices,” noted the BEA report.

Direct tourism-related employment (5.4 million jobs) increased 2% in the first quarter of 2011, an improvement over the 0.7% decline in the first quarter of 2010 and up over the revised 1.6% in the fourth quarter of 2010. All industries saw increases in employment except recreation and entertainment which dipped 0.5%. Overall U.S. employment increased 1.3% in the first quarter.

Total tourism-related employment improved over 2010, but is down compared to 2009 and 2008.
1Q 2011: 7.604 million
1Q 2010: 7.474 million
1Q 2009: 7.811 million
1Q 2008: 8.489 million

ARKANSAS RESULTS
Arkansas tourism employment and tax collection trends somewhat mirror the national results.

The state’s tourism sector — Leisure & Hospitality jobs — fell to 103,200 jobs in May compared to a revised 103,400 in April. The sector employed 98,000 in May 2010. The sector began to see employment gains in September 2010 following 13 consecutive months in which sector employment was below 100,000.

For the first 3 months of 2011, the state’s tourism tax collections total $2.355 million, up 1.34% compared to the 2010 period. However, for Arkansas’ 9-month month in its fiscal year, collections are $8.196 million, up 3.1% compared to the comparable period 2009-2010. The fiscal year ends June 30, 2011.

Collections of the 2% state tourism tax have been off the 2007 and 2008 levels.
2010: $11.492 million
2009: $11.378 million
2008: $12.005 million
2007: $11.571 million