Summertime Blues Hit States

By: - August 29, 2008 12:00 am

Michael and Fern Merle-Jones had every reason to be nervous this summer. The couple run a small wedding company on the blissful Hawaiian island of Kauai, marrying couples at beaches, waterfalls, gardens and a lush fern grotto. For a little extra, they’ll release butterflies.

Their wedding business was down about 25 percent this summer because of a steep decline in travel between the mainland U.S. and Hawaii, which depends on tourists more than any state. “It’s our lifeblood,” says Michael Merle-Jones. “This summer, there’s been a lot of uncertainty.”

A summer-long travel slump, brought on by high air fares and gasoline prices and a slowing economy, has pounded Hawaii, but also could nick the economies of other states where tourism is a leading industry; tourism is the first, second or third largest employer in 29 states.

With school starting in many places this month and the summer travel season nearing an end, state tourism officials and industry analysts are hoping for at least mixed results. But few of them dispute that the summer of 2008 will be one of the worst of the decade.

The hotel industry’s occupancy rate – the percentage of rooms that are full – has declined nationally for six straight months, and analysts say they expect the trend to continue when July and August numbers are available. The trade group representing the nation’s airlines predicts a 1.3 percent drop in passengers this summer compared to last.

AAA says fewer people traveled over the busy Memorial Day and Fourth of July weekends than in 2007. John Townsend, AAA spokesperson, says the Labor Day numbers are expected to be down almost 1 percent from last year. He says it’s the first time this decade that travel across all three summer holidays has declined.

The National Park Service says that the number of visitors to national parks declined 4 percent in July over last year.

The superintendent of Mount Rushmore, Gerard Baker, doesn’t need statistics to confirm that visitation fell 18 percent in July. He says he could tell simply by eyeballing the smaller crowds gathering around the state flags that line the entrance to the monument’s visitor center.

Other travel and tourism officials share similar anecdotes from the summer: fewer gamblers at the casinos in Las Vegas and Atlantic City, shorter hours at the new Hard Rock theme park in Myrtle Beach and a falloff in renters of cottages at Michigan’s Upper Peninsula.

Hawaii’s predicament has reached a crisis level for the state government. The number of tourists visiting the islands dropped 14.2 percent in June compared to last year, prompting the state Council on Revenues to recently slash in half its growth forecast for the year. The council predicted the state would lose another $46.4 million in revenue. Gov. Linda Lingle (R) already ordered a 4 percent across-the-board spending cut in June and may be forced to consider deeper cuts if the current trend continues the rest of the year.

“It’s going to remain a challenge,” Lingle said, noting that airlines have reduced flights to save money. “It’s all about getting more seats into the state and then filling those seats. You need the seats before you can convince people to come here.”

The only way to get to Hawaii is by air or cruise ship, so the run up in fuel prices has made the islands especially vulnerable. Air travel from California, which makes up a fourth of Hawaii’s market, fell 21.5 percent in June. Travel from the East Coast dropped 17 percent compared to the same month last year. The Hawaii Legislature approved spending $5 million as an emergency step to stimulate tourism, but some hotel executives are pushing for increased state involvement heading into the fall season.

“There’s a sense of, ‘What can we do to move the needle forward?'” said Rex Johnson, executive director of the Hawaii Tourism Authority. The state agency attracted record attendance to its annual tourism conference Aug. 7-8 because of the worry over the travel slump.

Though Americans’ are taking fewer leisure trips this summer, it’s not as if they have stopped taking vacations altogether. Instead, they are changing their trip behavior to save money: staying fewer days, choosing destinations closer to home, buying fewer souvenirs and sleeping and eating at cheaper hotels and restaurants.

“Travel is very much a part of our culture. It’s not like we’re going to stop doing that,” said Liping Cai of the Purdue University Tourism and Hospitality Research Center. “This summer is about choices.”

State tourism officials and their advertising agencies have attempted to adapt to the shift in travel patterns by appealing to residents and people living in states a few hours away to spend their down time in the same region. Missouri Gov. Matt Blunt (R) took his family in an RV on a ” Show-Me Tour ” of 12 tourist stops in May to coax residents “to explore the many opportunities within arm’s reach, right here in Missouri.”

Each state has tried to outdo the other with a clever advertising slogan aimed at local and regional tourists. Florida came up with “Been There, Haven’t Done That.” Michigan is emphasizing its natural and cultural resources in its ” Pure Michigan” campaign. Ohio wants its residents and those a few hours away to spend the night at its attractions because the state is “Too Much Fun for Just One Day.”

Use of the blended word “staycation,” referring to a vacation that takes place either at or near home, has exploded this year. Wal-Mart has even applied for the trademark rights to the word as part of a campaign to sell products to enjoy “the special moments of summer in your own backyard.”

Arkansas tourism director Joe David Rice, who heads the National Council of State Tourism Directors board, said the emphasis on in-state vacations was “more of a coincidence than a planned effort. We’re all rolling with the punches. A lot of us have been creative in reminding people there are things in their own backyard they have yet to see.”

Creative Illinois officials are offering a $50 American Express gift card to anyone who books a three-day trip there. Hotels in Maryland’s largest city, Baltimore, are throwing in a third night free to guests who pay for two nights. Several national hotel chains are handing out gasoline cards for frequent stays.

The efforts to cater to people staying near home are paying off in some states. Idaho tourism administrator Karen Bullard said the number of vacationers was up 7 percent in June over the same month last year, largely because of the local Idaho market and visitors from nearby Washington state.

Richard Behr, managing director of the Arizona Grand Resort in Phoenix, said in-state summer traffic has jumped from 35 percent in 2005 to 53 percent so far this summer. “Staycationers” have helped save Florida’s slumping summer tourist season as airlines have slashed seats. The Liberty Bell in Philadelphia displayed its crack to 15 percent more guests in June than a year ago.

Alan Dubberley, deputy director of the Wyoming tourism division, expressed optimism that Wyoming would not be affected as much as a state like Hawaii because most of its visitors drive there. “The general feeling is still positive here,” he said.

But a few days after Dubberley was interviewed, the managers of Cheyenne Frontier Days, which bills itself as the world’s largest outdoor rodeo, reported that attendance was off 5.2 percent from last year. They blamed it on the high price of gasoline.

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Stephen Fehr

Stephen Fehr is a senior officer with Pew’s government performance portfolio. He is a lead writer on many of the products generated by the portfolio, specializing in state and local fiscal health.