Summer travel may increase

CHICAGO, ILL.
June 1, 2010 9:26am

With the pace of downsizing and the price of gasoline on the decline as the summer vacation season gets underway, the nation’s workers may be more willing and able to use additional paid leave this summer, according to Challenger, Gray & Christmas Inc., a Chicago, ill.-based outplacement firm.

Increased travel this summer will boost consumer spending in tourist destinations, such as California, which will lead to increased hiring among hotels, restaurants, shops and amusement venues.

“The travel industry and all of the related beneficiaries will not see a return to pre-recession boom times, but it will be a significant improvement over the last couple of years. It is important to remember that many Americans are still unemployed and are likely to postpone most travel plans until they regain employment,” says John Challenger, chief executive officer of Challenger, Gray & Christmas, Inc.

“Where we will see the change this year is among the employed who, despite their job status, were hesitant to take paid leave during the recession for fear that it would further erode their already fragile job security,” he says. “This year, while employers have been slow to ramp up hiring, they have clearly shifted from a strategy focused on downsizing to one emphasizing retention. In this environment, it is much easier to put in for vacation days.”

Good news, indeed, for California, where tourism pumped $97.6 billion into the state’s economy in 2008, according to the California Travel & Tourism Commission. During 2008, travel spending in California directly supported 924,000 jobs with earnings of $30.6 billion, the commission says.

Challenger data show a dramatic decline in job cuts. Through the first quarter, employers announced plans to cut 181,183 jobs, 69 percent fewer than the 578,510 layoffs announced in the first quarter of 2009. The first-quarter total was the lowest Q1 total since 2000. The declining pace of downsizing continued in April, as monthly job cuts dropped to 38,326, the lowest since July 2006.

“Last summer, workers were in job-protection mode. Those who didn’t have enough work to keep them busy were doing whatever they could to appear busy. The threat of downsizing never really disappears, but job security is in a much better place this year,” says Mr. Challenger. “Some employers may, in fact, encourage workers to use vacation time to decompress. The temporary and very mild impact on workplace productivity caused by vacationing staff is more than offset by a rested workforce that is likely to be more productive over the long term and probably more loyal, as well.”

Helping to spur overworked employees’ travel plans are falling gas prices at a time when they typically increase.

Further evidence that Americans are ready to spend more on summer travel comes from travel website TripAdvisor.com, whose 2010 family travel survey found that 92 percent of travelers with children plan to take at least one family vacation this year, up from 88 percent in 2009. Meanwhile, 28 percent of travelers with children expect to spend more on family trips in the coming 12 months than they did in the past 12 months, with 22 percent expecting to spend between $3,000 and $5,000 and another 19 percent expecting to spend $5,000 to $8,000.

These spending levels will undoubtedly help the local economies that serve as tourist destinations. Employment within tourism-related industries is already reaping the benefits. The latest data from the Bureau of Labor Statistics show that employment in the leisure and hospitality industry grew by a non-seasonally adjusted 581,000 in March and April, including 403,500 in the accommodation and food services sector.

“We may continue to see job growth throughout the summer, if some employers underestimated the number of seasonal hires they will need,” says Mr. Challenger. “The areas that could see the biggest hiring boom are destinations favored by driving vacationers. Seasonal job seekers who are willing to go where the jobs are could find ample opportunities.”