The Subprime Summer Vacation
Last summer, Kevin Leibel globetrotted to
As families across the country plan their vacations, many are downsizing out of concern over the economy, spooked by talk of a recession, the weak value of the dollar overseas and home foreclosures. Add to that air-travel delays and the rising cost of gas, and some travelers are holding off planning, in hopes of nabbing cheap deals at the last minute.
Some resorts and tour operators are responding with discounts and other incentives to try to fill rooms. Close-to-home destinations like suburban water parks and regional resort towns say they're bracing for a spike in business as Americans look for fun things to do that don't require much travel.
At online travel agency Travelocity, researchers say they've noticed that Americans are booking shorter trips for the summer, especially for destinations overseas. The overall average length of a trip has fallen more than 5% for an overseas vacation booked on the Web site. AIG Travel Guard, a company that sells travel insurance, found in a recent survey that almost half of respondents planned to alter their vacations this year to save money. Twenty-two percent said they'd eat in less-expensive restaurants, and 17% said they'd stay closer to home.
This summer, resorts selling well are generally all-inclusives that emphasize competitive pricing and value, or those at the top end of the market that cater to the wealthiest travelers, says Donna Michaels, senior director of product development for World Travel Holdings, a distributor of cruise and vacation packages.
Atlantis, the giant Bahamian resort known for its massive water slides, dolphin excursions and shark lagoons, usually stays busy during the summer as families flock there when kids are out of school. This year, bookings are expected to be about the same as last year, says Lauren Snyder, executive vice president of global communications for Kerzner International, the resort's parent company, but they're coming in more at the last-minute. Instead of a nine-week to 12-week booking window, for example, a growing number aren't committing until four to six weeks in advance.
This summer's crunch comes after the travel industry had seen strong growth over the past couple of years, having rebounded after a significant post-9/11 slump. Hotel room rates have risen consistently since 2003, a sign of healthy travel demand. A record 212.8 million people flew last summer. But some in the travel industry aren't feeling as optimistic about coming seasons.
During a recent Southwest Airlines earnings conference call, the company's chief executive warned of a "threat of a travel recession." Although airfares have been historically low the past few years, they're expected to rise this summer in part because of fuel-cost increases. Capacity will be cut on some airlines' routes. Hotwire, a discount travel Web site that also tracks airfare trends, says average fares on many routes rose as much as 40% during spring break and the pattern will likely continue for summer.
Industry concerns are filtering overseas. With the value of the dollar against the euro near a record low, some European hotels in cities such as
During the first quarter of this year, WorldHotels saw a 15% drop in business from Americans at their European hotels. Aside from the value of the dollar, "the American economy has really shaken people," says Tom Griffiths, the company's vice president of the
In the past few months, Suzanne Heslin, an office manager from
Travel agents such as Jeanne Reuter, who works for a Carlson Wagonlit in Bayside,
Not everyone is concerned. Cruise companies such as Carnival say their bookings for the summer are ahead of last year's already, as travelers look for ways to lock in prices and gravitating to all-inclusive resorts and cruises, where meals are paid for ahead of time. Cruise companies and analysts say new business also is coming from people who have scrapped plans to visit
Local attractions, like Great Wolf Lodge, a chain of indoor water park resorts that has properties all over the country, also anticipate a busy summer. John Emery, Great Wolf's CEO, says although he's noticed a slight drop in bookings in the upper Midwest near cities such as
Demand is picking up at some
For Americans, however, many are cutting back in smaller ways, even staying close to home. Betty Hunter rents out her two-bedroom beachfront condo with a balcony along
"I think everybody is shopping around," says the retiree who lives in
Some summer rentals areas are becoming more competitive. Celia Chen, director of housing economics for Moody's Economy.com, an economic consulting firm, says markets that are a close drive to major cities, like the
Many travelers are still waiting to find the best deals. That's what Deana St. John is doing as she plans her weeklong vacation. Since the economy has faltered, her business as an executive recruiter for nonprofits has slowed. "I probably spend a couple hours a day reading the emails that come in from the travel companies," the
Ms. St. John has seen some bargains on small luxury ships that sail the