A Business article on May 23 included incorrect figures for airline passenger traffic for this year and last. The industry expects 65 million passengers a month for the summer, for a total of 195 million. That would be 12 percent more than last year's 58 million per summer month. (Published 5/26/04)
When leisure travel starts to pick up, few folks notice more than business travelers. And even before we hit the 2004 summer vacation season, frequent fliers say they are having a harder time finding cheap airline seats and locating hotel rooms.
Alexandria frequent flier Charles Witt says business- and first-class cabins on both domestic and international flights "are jampacked, and getting tickets is tough."
Adam Benado of Dupont Circle, who flies between Washington and Los Angeles every six weeks or so, says hotels are reducing the number of deals. The Internet rate at his favorite hotel, the Radisson at Los Angeles International Airport, has increased, he says, to about $89 a night, up from $69.
Just weeks away from the official start of summer, these are some of the signs that the travel industry is on the verge of its biggest travel period since the Sept. 11, 2001, terrorist attacks. Or, as Benado put it, "The post-September 11 days of cheap travel with plenty of availability are rapidly coming to an apparent end."
Perhaps so. The Air Transport Association, the airlines' trade group, is projecting 65 million passengers will board a plane this summer, a 12 percent increase from last summer's 58 million.
But it's not just vacationers. A recent survey by the National Business Travel Association of 220 business travel managers found that 54 percent said they expect the number of business trips this year to match the number of trips taken in 2000, one of the strongest recent periods for the industry.
That's good news for at least some airlines, especially the low-cost carriers -- among them Southwest, Air Tran, JetBlue and even those of the new start-up, Dulles-based Independence Air -- that continue to expand while the large legacy carriers wrestle with cutting costs in an effort to return to profitability.
Henri Courpron, president and chief executive of Herndon-based Airbus North America, said recently that during the past six weeks the aircraft manufacturer has heard from many airlines, particularly rapidly expanding low-cost carriers, which were making inquiries about future aircraft orders such as for Airbus's smaller A320 or A319s, single-aisle jets.
"We've noticed people being more optimistic and at least contemplating taking actions with respect to taking orders, adding capacity or replacing old planes with new planes with a greater sense of urgency that we haven't seen in a while," Courpron said.
Ben Baldanza, head of marketing for US Airways, said booking levels are up about 2 percent this period versus a year ago. "Volume is good. It's just the prices are under pressure," he said.
Last month, the nation's top 10 airlines filled an average of 79.8 percent of their seats, according to a recent report by analyst Ray Neidl of Blaylock & Partners. That's up 6.6 percent from April 2003.
That's not the only thing that's up, though. To help ease their losses, several airlines, including Continental, Delta and Northwest, have raised their fares as much as $20 each way to cover higher fuel costs. Even Southwest executives said they were considering fare increases.
But while the airlines try to eke out profits during this peak period, other travel-related companies say they are benefiting from the increase in demand.
Marriott Corp. is expecting room revenue in its North American properties to increase between 6 and 8 percent this year compared with last year, said spokesman Tom Marder. Marriott's international properties, he added, are expected to see about 10 percent revenue growth.
Room demand is so strong that the hotel chain has been able to raise room rates at its properties in Washington, Los Angeles and New York this spring. Marder declined to elaborate on how much the rates have increased. He said it would be another year before the hotel chain is able to raise room rates company-wide.
Unlike last year around this time, Marder said, "customers are not just looking [for rooms], they're booking."
At Adam Benado's favorite Radisson, Glen Garcia, the Los Angeles property's director of operations, says that the uptick in traffic is what has allowed the hotel to up its rates. Whenever occupancy rises above 80 percent, he said, the rates go up -- for instance, during the summer peak season. "You can afford to raise the rates then," he said. His property will lower its $89 rate back down when occupancy drops.
Bjorn Hanson, head of the hospitality group at PricewaterhouseCoopers, said the hotel industry is looking at its strongest period since the summer of 2000. Hanson said average hotel room occupancies beginning Memorial Day weekend are at 69.2 percent, up from 67.1 percent in the same period last year.
Hanson said travel is picking up in large part to the strengthening economy. Also, consumers will do more traveling this summer in reaction to the recent harsh, long winter that plagued much of the Northeast, he said.
Hanson anticipates hotels to increase their rates about 2 percent this summer over 2003 prices. In fact, Hansen expects the industry's profits to be "slightly" higher than last year's $16.2 billion.
"It's going to be a good summer for the hotels," he said.
The hotels aren't the only ones bringing in the business. Car-rental companies are seeing an increase in bookings as well, despite higher gasoline prices.
Hertz spokesman Richard Broome said the car-rental chain was seeing "double-digit" reservation growth.
Cendant Car Rental Group, owner of Avis and Budget car rentals, said bookings for the Memorial Day weekend are up 10 percent over last year's holiday.
"This is a great kickoff and a strong start to what looks like a solid season," said Cendant spokeswoman Susan McGowan.
She added that the higher gas prices usually do not affect whether a traveler rents a car, just how long he keeps it during a trip.