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May 14, 2001

Hard times, gas prices could take air out of tourism's tires

WEST LAFAYETTE, Ind. – Tourism, often touted as a recession-proof industry, could face hard times in the short term because of economic slowdown and high gas prices, say two Purdue University professors.

"Long term, tourism is recession-proof, but in the shorter term some segments of the industry come out winners, while others are losers," says Alastair M. Morrison, professor of hospitality and tourism management.

"High gas prices hurt destinations in the rubber-tire market," he says. "This means not just car travel but also coaches and buses that must pass along higher fuel costs to their customers."

Liping A. Cai, associate professor of hospitality and tourism management, says transportation makes up 33 percent of the family travel budget, the largest single item. Lodging is second at 29 percent, food 22 percent and recreation (tickets and admission fees) 16 percent.

On the tourism business side of the equation, the economic impact of tourism in Indiana generates nearly $6 billion in visitor spending each year.

Nationally, travelers spent $582 billion in 2000, according to the Travel Industry Association of America. Tourism employed 7.7 million people and generated $93 billion in tax revenues for government agencies.

Morrison says that during the energy crisis in the early '70s, people stayed closer to home and made more shorter trips.

The losers: "Theme parks, such as Disney World and Six Flags, got hammered in the energy crisis," Morrison says. "Their growth now has leveled off anyway, so they could be hurt even worse this time around."

The travel bottom line is that when times get hard, "people tend to postpone vacations, travel less and choose a different mode of transportation," Morrison says.

Also negatively affected is Indiana's fledgling rural tourism industry that Purdue's Tourism & Hospitality Research Center has supported with visitor profiles, economic impact research and marketing planning.

Indiana's tourism likely will be hurt this year because most of the visitors travel to destinations by car, Morrison and Cai say. Also, Indiana ranks in the bottom 10 states in terms of state funding on tourism marketing, while tourism marketing spending in the surrounding states is high.

One of the center's studies at Indiana Beach showed how the tourism market changes according to the general economic circumstances. "In good times, Indiana Beach visitors tend to be nearby blue-collar families," Cai says. "In bad times, there are more doctors, lawyers and professionals from farther away."

Cai says that generally when there are negatives to travel, people spend more time searching for information and good deals. The World Wide Web accentuates this tendency.

"There is a time and energy expenditure here that can deter travel," Cai says. "With the Internet, this factor is not as significant as it was in the past, but it still has an important effect on seniors.

"Leisure travel is an opportunity to get away from daily life decisions. Decision making causes stress, and if people are worried about the costs of travel, they are liable to avoid making decisions altogether and just stay home and put more under the mattress for bad times."

Morrison says another tourism trend in hard times is the increase in hybrid trips – tacking personal travel or visiting friends onto business trips.

The travel-sector winners in hard times?

Air travel will generally increase, Cai says. "If gas prices are $2 a gallon, that $289 airfare from Indianapolis to New York starts to look pretty good."

"International travel to the United States is robust and growing," Morrison says. The United States receives the second most international travel in the world, trailing only France.

International travel is typically planned further ahead, and its clientele is a different demographic, older and less family-oriented than typical domestic travelers. Travel to Europe this summer will be hurt by fears of foot-and-mouth disease, Morrison says.

Another bad-times winner is the tour and cruise industry, Morrison and Cai say. Tours and cruises are perceived to be – and are – good values and tend to be booked many months in advance.

For the astute traveler, bad times can present good opportunities, says Morrison. "If you do the research, there are more bargains at both hotels and attractions. While in normal times the demand is too high in peak times to get reduced prices, in bad times even the peak season isn't a peak."

Top 10 recommendations to beat the gas price hike of 2001

Purdue's Tourism & Hospitality Research Center offers the following tips to help make the most of travelers' vacation, and gasoline, dollars:

1. Get lost in your own backyard. Consider places close to home and take shorter, more frequent trips. See the Indiana Division's Web page for ideas: http://www.enjoyindiana.com.

2. Clock it carefully. Check your trip mileage using services like mapquest.com and others to find the shortest route to your destination.

3. Lose the car. Try another mode of transportation; maybe you've always wanted to take a rail trip, or it might cost less to fly.

4. Get more value for your travel dollar. Remember the value offered by vacation packages such as cruises.

5. Last minute is not last place. Check out last-minute travel deals on the Web.

6. Explore your world. Take that trip overseas that you've dreamed about forever.

7. Join the club. Consider joining a vacation travel club for bargains.

8. Your van always wanted to hit the tracks. Some trains will transport your car and save you the gas.

9. You'll never walk alone. Carpool with friends or relatives who are heading in the same direction; stay with friends and relatives en route when you can.

10. Home is where the car is. Leave the car in the garage, break out the popcorn, and watch a great travel video of your destination.

Sources: Alastair M. Morrison, (765) 494-7905, alastair@cfs.purdue.edu Liping A. Cai,

Writer: J. Michael Lillich, (765) 494-2077, mlillich@purdue.edu

Purdue News Service: (765) 494-2096; purduenews@purdue.edu

NOTE TO JOURNALISTS: At the end of this news release is a sidebar, "Top 10 recommendations to beat the gas price hike of 2001."


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