Q&A: Staying Home This Summer

No one should be surprised that Americans aren't too interested in traveling abroad this year. In fact, a recent Travel Industry Association survey showed that a full 70 percent had no plans to go overseas this summer. But the poor economy is also affecting domestic travel plans. This year's vacations will be shorter and destinations will be closer.

As a result, airlines are changing their strategies, too. There will be fewer flights, it will be harder to find cheap seats and passengers will experience fewer frills. NEWSWEEK's B. J. Sigesmund spoke with Forrester Research's Henry Hartveldt, a travel industry expert, about trends and tips for travelers, whether you're crossing a sea--or just headed to the next state. Excerpts:

NEWSWEEK: The travel industry remains in a very precarious position. What's the general picture currently?

Henry Hartveldt: Right now, it's all about the economy. The Iraqi conflict--barring any further terrorism or geopolitical issues--is over and done with. But unless we see a strong pickup in the economy and unemployment improves, people are going to be very value-focused.

What are the expectations for this summer?

We're seeing mixed signals. Some people are more optimistic than others. We continue to have airlines in or teetering on bankruptcy. We haven't had any airlines pull out of many markets, nor have any airlines of note shut down. But if people feel that their jobs are at risk, they're not going to fly, they're going to drive. They're not going to go to a glamorous place. They'll trim their vacations, too. Instead of staying a week, they'll stay just a few days.

Because of the lingering effects of the war, the economy and now SARS, many Americans are planning to stay in the States this summer.

This will be the summer of See America First. New York's gonna do well, so will the Northeast. The fact that we're at a Code Yellow will help a great deal. Beach resorts will do well--places like Virginia Beach, Myrtle Beach, Savannah, Hawaii. San Francisco and L.A. always do well in the summer. Kids always want to go see Mickey Mouse.

Some American cities have started up summertime festivals designed to appeal to travelers.

Yes, places like Aspen and Colorado have a lot of activities. Obviously, cities like Chicago have huge numbers of festivals almost every weekend that appeal to different folks. Sporting events are big draws, even events like [the] gay pride [parade] at the end of June are big for cities like San Francisco and New York. People want a reason to go someplace.

But aren't a lot of those designed just to be weekend trips?

Yes, and that's a trend. These days it's weekends first, vacations of four to seven days second. People feel they can't or don't want to get away for too long. A lot of folks still go home to see parents and grandparents over the summer, too.

Some people are still going to Europe, right?

Absolutely. There are going to be great bargains, assuming that the dollar's in relatively good shape and there's no outbreak of terrorism. But it will be a much smaller group of travelers going to Europe than in the past. You'll see them go to destinations that are American-friendly, such as Ireland and the U.K., Germany, Scandinavia, Italy and Switzerland.

You didn't mention France.

France will see a big fall off in American tourists this year, though some will still go. France is still a beautiful country. Let the politicians think in a small-minded way. There's nothing like Paris at sunset in the summer.

The outbreak of SARS has obviously had a huge effect, too.

Asia will see a massive decline. The sad thing is that while SARS is a serious issue, destinations like Japan remain relatively untouched by the disease. Americans have a terrible sense of geography. They think you can see Tel Aviv from the Eiffel Tower and they think Tokyo is right next door to Bangkok, when in fact they're nearly as far apart as New York and California.

Where else might people consider if they wanted to go abroad?

Mexico and Mexican resorts will do well and assuming that the political situation remains the same, Latin America will see an uptick because the current exchange rate is strong. Destinations like Brazil, Argentina and Chile are great bargains and are beautiful. They're also relatively free of some of the ills of the big bad world.

Let's talk some about ticket prices. Do the financial troubles in the airline industry help or hurt consumers?

It's a mix of both. The financial problems at the airlines means they've become more efficient, but it also means they're re-evaluating every bit of the way they do business, from the routes they serve to the airplanes that operate on them to the number of people they have available to check you in. It's all being reexamined. The experience that the airlines deliver today tends to be on a downward curve. No one is focusing on improving the product, they're focused on taking costs out.

Consumers have become very savvy when it comes to travel, too.

Consumers talk to one another, they take advantage of e-mail. Our research shows that $41 billion of travel spending in 2002 was due to word-of-mouth influence. "I'm going here, I stayed here, I flew them, they're really good, you should think about this," and so on. The travel industry is waking up to the fact that consumers are networked. There are lots of ways for consumers to stretch their dollars.

What are some of those tricks?

Instead of staying at a four- or five-star hotel, they'll stay at a three-star hotel. Or they'll take advantage of sites like hotwire.com and priceline.com, or the deals on sites like hotels.com that have deeply discounted hotel rates and allow them to upgrade the quality of hotel by forfeiting certain conveniences. They'll pay in advance, or use bidfortravel.com, which allows you to bid on a room. Sites like those are terrific ways to take advantage of the Internet and some of the low pricing that's out there.

Of course, the industry continues to be hurt by people using the Internet to buy last-minute tickets.

It's a trend of deep concern. It has ruined yield-management models that have been developed over the past 10 years, and it's forcing the industry to reexamine how it sells its product and the restrictions associated with that.

Consumers are paying in some ways, too. There are fewer cheap seats available.

Airlines are making increased use of smaller, regional jets, with just 35 to 70 seats. There are fewer discount seats on these airlines. So there may be some really attractive pricing, in terms of the stuff that gets advertised in online banners or newspaper ads, but the number of seats available at those fares may be limited. If you see a good deal, don't wait. Buy it. Airlines use very sophisticated yield-management technology. Remember, you're not the only one who's seeing those ads.