Report forecasts 2 percent drop in tourism this year

Falling gasoline prices and a determined attitude by prospective vacationers may help soften what otherwise could be a dismal year for the tourist industry in 2009.

In their annual outlook newsletter, the University of Montana’s Institute for Tourism and Recreation Research forecast a 2 percent decline in nonresident travel in Montana this year.

“With unemployment on the rise, an uncertain economic recovery and virtually a global recession, travel to Montana and elsewhere will not grow in 2009 and will likely decline,” Norma Nickerson and Melissa Bruns-Dubois report.

The two cite a number of sources in addition to the Institute’s own figures. Real disposable income and real consumer spending are expected to decline nationwide this year by 0.3 percent, one tourism professional said, and the Travel Industry of America forecasts a 1.7 percent decrease in total domestic person-trips in 2009. The lodging industry also predicts a 1 percent decline in rooms sold this year.

On the other hand, gasoline prices have dropped below $2 per gallon “which is always a good sign for the travel industry,” they note, and a survey by Travel Horizons indicates U.S. adults will stick to their travel plans and “are not willing to sacrifice their vacation time.”

The credit crisis and recession began after last year’s summer tourist season ended, so comparing tourism numbers from 2008 with 2007 will not be the same as comparing 2008 with 2009, but the Institute’s annual report contains some interesting conclusions — particularly regarding gasoline prices.

“It is now possible to say that the current consumer tolerance on gasoline prices in regard to travel behavior is around $4 a gallon,” Nickerson and Bruns-Dubois said.

The highest average gasoline price ever recorded in Montana was $4.21 per gallon in July 2008, a 36 percent increase from July 2007. Nationwide, the average price was $4.11. Through August, consumers reduced gas purchases by 5 percent nationwide.

“On vacations, they stayed closer to home, stayed longer in one spot with fewer side trips, and spent less on retail so they could fill up their gas tank,” the report said. “Some even stayed home.”

Nonresident travel in Montana declined about 3.7 percent from 2007 to 2008. Smith Travel Research reported a 2.3 percent decline in rooms sold in Montana last year, compared to a 3.4 percent decrease in the Mountain West region and a 0.9 percent decrease nationwide.

While data on international travel to Montana does not exist, “it is clear from hoteliers, retailers, attractions and parks that Canadian travel to Montana was its highest in years, and visitors from overseas grew as well,” the report said.

Canadian visits to the U.S. increased 14 percent, likely the result of a strong Canadian loonie for the first three quarters of 2008. The Flathead saw a strong Canadian presence last year.

Montana airports reported positive numbers for deboardings last year, and Glacier Park International Airport reported the highest increase at 5.1 percent. But both Glacier Park and Yellowstone national parks reported a 0.7 percent decline in visits.

The Institute conducted a mid-summer survey of nonresidents visiting Montana to see how high gasoline prices affected spending behavior. Comparing July 2005 with July 2008, average daily spending decreased by 15 percent, with significant decreases in retail sales, vehicle rentals, guiding services and entrance fees.

The Institute also reported that average length of stay decreased by nearly a day, the number of visitors in the $100,000 to $120,000 income range increased by 10 percent, and the number of first-time visitors increased from 26 percent of the total in 2005 to 44 percent in 2008.

The change from 2007 to 2008 caught tourism researchers by surprise.

“Last year, ITRR predicted Montana would experience a 2 to 3 percent increase in nonresident travel,” Nickerson and Bruns-Dubois said. “How quickly things can change and how unknown the future can be. Instead of a 3 percent increase, there was a nearly 4 percent decrease.”