WASHINGTON — Domestic business travel could be on a rebound by summer.
Slammed by the fears of terrorism after the 9/11 attacks and a weak economy that still hasn’t fully recovered, retailers scaled back travel to trade shows and markets last year.
But the domestic travel business could be slowly turning around this year, despite softness in several economic sectors, according to trade associations and analysts.
“Travel was clearly tanking in the last few years,” said a spokeswoman at the Travel Industry Association of America. “We do feel it has hit rock bottom in terms of a business travel downturn and we expect to see a slight turnaround this summer.”
She noted, however, that any recovery would be on top of years of negative growth.
More than 60 percent of convention and visitors bureaus reported that sales leads and definite bookings remained stable or increased in the first quarter of 2003 compared with the same period in 2002, according to a survey of chief executive officers by the International Association of Convention & Visitor Bureaus.
The IACVB said current economic conditions far outweighed all other factors, including the Iraq war, effects of terrorism, gasoline prices, reduced air flights and SARS in impacting business.
“Trade shows in a tough economy are more of an option than a requirement,” said Daniel Butler, vice president of operations at the National Retail Federation. “If budgets are restricted, one of the first things a company cuts back on is trade shows because executives know they can go again next year.”
Butler said retailers have been conservative during the past nine months, especially for spring.
“They are really thinking through their return on investments across the board, including travel,” he said.
But Butler said domestic business travel is much more normal than it was in the weeks and months following 9/11. “It’s returning more to normal, but at the same time, with the economy, you have business travelers who are much more cognizant of expenses and if expenses are too high, they are opting not to travel,” he added.
Retailers are scrutinizing expenses as a “natural outflow of tough top-line sales,” said Peter McGrath, president of purchasing at J.C. Penney Co. McGrath said the biggest effect on travel in the past year has been the spread of SARS, although he is starting to see a light at the end of the tunnel, with the World Health Organization declaring last week that the disease was under control.
“Our product teams and trend teams are traveling at normal levels [domestically],” McGrath said. “It has not affected show attendance.”
From the standpoint of tough business conditions, McGrath said it is fiscally responsible to make sure every trip is essential, which “is an outgrowth of a tough U.S. economy.”
He said Penney’s looks at the number of domestic trips and who takes them. The general merchandise managers in every division make the decisions on who attends shows.
“Show attendance and shopping the market and being in stores are critical functions of a buyer’s responsibilities,” he said. “You can become short-sighted if you don’t give buyers proper access to the market.”
McGrath said the company has not cut out any trade shows, adding that buyers are also shopping New York and Los Angeles markets on a regular basis.
“I reduced the number of shows I attend because they weren’t good, not because of travel concerns,” said Wendy Red, fashion director at Up Against the Wall, a chain of junior sportswear stores based in Washington, D.C.
Red said she has added another market in Los Angeles to her itinerary, though she is also skipping shows when they are too close together.
She conceded the economy makes her look a little harder at expenses.
“When business is not good, the first thing you cut is expenses and one of the biggest expenses is travel,” Red said. “We’ve paid attention to that for sure.”
Red said chilly, rainy spring weather slowed down her business in late April and May, but she is positive about a quick bounce back.
However, the travel industry picture is still mixed at best, according to the travel association, which said domestic air revenue passenger miles declined nearly 2 percent in April compared with April 2002.
In 2000, the most recent data available, about 1 in 5 (17 percent or 34.2 million) U.S. adults traveled for business, according to the TIA. About 10 percent of business trips are taken to attend a convention or seminar.
In 2000, the South Atlantic was the most popular region of destination for business travelers, receiving 24 percent of business travel, according to the TIA’s 2001 market overview. The Pacific and “East North Central” regions each accounted for 16 percent of all business travelers, while the “West South Central” had 14 percent of business travelers and the mid-Atlantic had 10 percent.
California ranked number one overall in 2000 in terms of total spending by domestic and international travelers, earning more than $78 billion in expenditures, while Florida earned $59.8 billion and New York earned $39.2 billion, according to the TIA.
“Corporations have really cut back on business travel and participation in major business shows,” said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. “Companies are still watching their bottom lines and people are starting to wonder when this will snap back.”
Kyser said convention business in Los Angeles has also been down because of several factors, including the economic downturn and competition from new convention centers in other counties.
“You have a bunch of forces,” said Kyser. “The Sept. 11 attacks made people leery about flying, but on top of that you have a weak economy, war [in] Iraq and SARS. It’s a witches’ brew out there.”
Convention attendance in Las Vegas, which hosts 35 of the 200 largest trade shows, was up 14 percent through March, according to Kevin Bagger, director of research at the Las Vegas Convention & Visitors Authority. In the first quarter, 2.1 million people attended conventions in Las Vegas.
Despite these increases, Bagger said Las Vegas had an overall decline in convention attendance in March because of the economy and war anxieties.
In March, total visitation to Las Vegas, including pleasure, was down 7.4 percent, he said. Convention attendance alone was down 13.7 percent compared with March 2002, but a strong surge in January offset March’s decline, according to Bagger.