Airlines, hotels face bleak holidays

Despite airfares and hotel rates that are among the lowest in over a decade, more recession-battered travelers will forgo the airports, hit the freeways and stay with family and friends to save money during the upcoming holiday season.

This Thanksgiving, the number of passengers traveling by air nationwide will be down 4% from last year, according to a report released Monday by the Air Transport Assn., a trade group that represents the nation’s leading airlines.

The group attributes the drop to declining demand despite air fares that, according to its report, are at the lowest levels since 1998.


“It is increasingly apparent that the economic head winds facing the airlines and their customers are anything but behind us,” association President James C. May said in a statement.

The trade group’s forecast is based on recent traffic demands, capacity and economic trends for all scheduled traffic on all U.S. passenger airlines.

Meanwhile, a survey by the Automobile Club of Southern California found that 30% of Southern California travelers planned to take a road trip instead of an airline flight during the holiday season. Almost 40% planned to stay with friends or family instead of paying for a hotel.

Less than 10% planned to redeem loyalty program points for a free or discounted flight, and 5% planned to fly coach rather than business or first class to save money.

According to the Auto Club, 46% of those surveyed said they planned to spend the same amount on holiday travel as they did last year, while 36% planned to spend less. Only 18% planned to spend more.

The survey of more than 700 Auto Club members and nonmembers will be released later this week.

The economic downturn has hit the travel industry particularly hard.

By the end of this year, airlines worldwide are expected to lose $11 billion in revenue, according to industry officials. To ride out the storm, airlines have canceled some flights and parked some planes, resulting in the steepest cut in capacity since 1942.

Times are also tough for the hotel industry. Occupancy rates have dropped for the last two years, resting at an average of 52% nationwide by the end of October, according to Smith Travel Research Inc.

Hotel revenue per available room also has declined for the last five consecutive quarters, the research firm reported.

Adam Weissenberg, an analyst and consultant on tourism and hospitality for Deloitte & Touche, said the reports show that travelers are still worried about the unemployment rate and the overall economy.

But he was optimistic that the news for those industries would soon improve.

“We are getting close to the bottom, and things are getting less worse,” he said.