EconSouth (Fourth Quarter 2008)
EconSouth (Fourth Quarter 2008)
The Southeastern Economy in 2009
Tourism Cruises Through Tough Times
Even in the midst of 2008's economic turmoil, tourism in the Southeast enjoyed a fairly good year relative to other sectors. Domestic tourists kept a low profile, but international travelers more than compensated for their absence, boosting tourism in the region throughout most of the year. Some signs of slowing in tourism activity appeared toward the end of the third quarter with increased reports of discounting and lower revenues.
Record-high fuel prices, an economy in recession, soaring airfares, and inflation had a significant impact on domestic tourism in the region. A weaker dollar that discouraged travel abroad encouraged some residents to vacation closer to home and attracted international travelers in higher numbers through most of 2008. Domestic airlines pared seats at some airports in the region, but international airlines added seats to gear up for the beginning of peak travel season in December.
International visitors prop up the industry
Through August, the number of overseas visitors to the United States had grown for the past two years, according to the International Trade Administration's Office of Travel and Tourism Industries. Comparing the first eight months of 2008 with the same period a year earlier, international tourism increased across the board, led by a 29 percent increase in visitors from China. During that period the total number of tourists from Asia (including China) rose only 1 percent, however, dragged down by a 5 percent drop in visitors from Japan, which accounts for more than 50 percent of the nation's Asian visitors.
In the first eight months of the year, the number of visitors from Western Europe rose 17.5 percent relative to the same period a year earlier, with the largest increases from Spain and Ireland (36 percent), followed by France and Italy (29 percent), the Netherlands (27 percent), and Switzerland (19 percent). For the same period, the number of visitors from Eastern Europe increased 15 percent.
Although travel to the United States in the final months of the year did not keep up this pace, bookings and travel from Europe to the United States were expected to remain strong through the end of 2008, according to two surveys from firms, one British and one German, that promote or sell travel services to the United States.
Florida is international tourist magnet
Hotels across the state enjoyed strong occupancy rates through August but also suffered a September swoon. Miami-Dade County hotels saw their first decline in per-room revenues in two years in September, according to Smith Travel Research, but reports noted a rebound in October. The tourism and recreation component of sales tax collections in Florida also showed year-over-year growth from February to July but a decline of 0.4 percent in August, according to the Florida Department of Revenue. In Jacksonville the annual occupancy rate through July was at 65 percent, 6 percent lower than in 2007. But the Visit Jacksonville sales department reported booking a record 200,000 room nights during the fiscal year that ended in September.
Cruise lines in Florida posted strong results through the third quarter of 2008. The North American cruise industry is important to Florida's economy, contributing more than $6 billion in direct spending and supporting more than 126,000 jobs and $5 billion in income in the state in 2007, according to a study commissioned by Cruise Lines International. The report also noted that Florida led the nation in both the number of passengers leaving on cruise ships from the state's ports and in the number of residents taking cruises.
Convention activity in Florida remained strong through most of 2008 as business travel held up in the face of an economic downturn.
Bugs, games, and pharaohs
The city also got a boost from the opening in June of the 23,000-square-foot Audubon Insectarium, built at a cost of $25 million. In its first two months the attraction welcomed more than 100,000 visitors, exceeding expectations. In its first year 350,000 visitors are predicted, and the attraction could have an annual economic impact of more than $54 million, according to the Audubon Nature Institute.
Convention activity in New Orleans remained relatively strong, but convention sites noted an increase in bookings of smaller meetings in the absence of larger conventions.
On the Mississippi Gulf Coast, gross gaming revenues declined 23 percent in September on a year-over-year basis following a January–August year-over-year decline of 11 percent. Hurricane-related closings at the coastal casinos in late August and early September, higher fuel prices, and generally slow economic conditions shrank casinos' September earnings (see the chart).
Atlanta played host to numerous conventions, and general tourism trends in the city remained strong in 2008. The city anticipates a significant boost from two exhibitions that opened in November: "Tutankhamun: The Golden King and the Great Pharaohs" at the Atlanta Civic Center (through May 2009) and "The First Emperor: China's Terracotta Army" at the High Museum (through mid-April 2009). Convention attendance and hotel occupancy held up through August before slowing somewhat, but the longer-term outlook for the city's convention activity is strong into 2010.
Tennessee also attracted tourists to popular drive-to attractions. The four state parks closest to Chattanooga reported marginal increases in campsite rentals through June. The Cherokee National Forest in East Tennessee also saw an increase through September in visitors and significant upticks in camp usage fees at some recreation areas. In Nashville, the Convention and Visitors Bureau reported booking 122,780 rooms in the third quarter, exceeding its goal of 93,500 rooms.
Contacts in Alabama reported strong tourism trends in the state through summer, noting gains in the number of "staycationers"—people who stay home or at local hotels and "vacation" at local attractions.
Looking ahead to 2009
Increased international marketing could attract more foreign visitors to the region. The Orlando/Orange County Convention and Visitors Bureau will launch a $1 million advertising campaign in Brazil and plans to double its spending, to $400,000, on promotions in Mexico. The visitors bureau and Visit Florida are also collaborating on a marketing effort in China, hiring a Chinese tourism development agency to attract Chinese tourists to Florida and Orlando. Promoters in Orlando, including the visitors bureau, are intensifying market efforts to attract medical tourists—international travelers seeking health care services.
More passenger seats and nonstop flights at Florida's airports should also bring in more visitors in 2009. Miami International Airport plans a 2 percent increase in the number of seats to Miami, and Orlando International Airport is adding nonstop flights from Brazil and Mexico City.
Cruise lines, a mainstay of the Southeast tourism industry, appear to have weathered the current financial crisis relatively well, and industry experts expect this segment to remain steady in the new year, though discounting is likely. In the next 15 months, five cruise lines will introduce their biggest ships ever at a combined estimated cost of $4.47 billion.
Increased discounting in hotel rates and cruise packages, which began late in the third quarter of 2008, will probably continue in 2009. The moderation in fuel prices toward the end of 2008 could spell a rebound for many of the region's drive-to attractions.