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US travel spending sinks sharply

March 23, 2009 | Online Travel

Spending on travel and tourism declined last year for the first time since the Sept. 11, 2001, terrorist attacks, the Commerce Department said, as Americans canceled vacations, a strong dollar kept foreigners away and businesses slashed travel budgets.

Spending fell at a 22% annualized rate in the October through December quarter, compared with the prior three-month period. The decline was the sharpest since the government’s quarterly records began in 2001, topping the 19% drop after the terrorist attacks that year.

As a result, the trillion-dollar industry—a major employer in the U.S.—is reeling, and struggling to lure people back with deep discounts and special packages. For their part, Americans are sharply scaling back vacation plans, canceling trips outright or trading down to cheaper options.

“Everybody seems to be in a panic mode, afraid to spend money,” said Carol Beazley, who along with her husband, Jim, runs the Beazley House, an 11-room bed and breakfast in Napa, Calif. She notes there are fewer takers for extra services at the century-old mansion, such as massages, $200 balloon rides and the Napa Valley wine train.

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