07/07/2011
What a difference a year makes
The region's tourism sector continues to improve—nowhere more so than along the Alabama Gulf Coast, especially when we consider where we were last year on Independence Day:
The Mobile Press-Register's report from the Alabama coast on July 4, 2010, contained this passage:
"The sun shone, the sand glistened and the water was pleasant Sunday at Dauphin Island's public beach. There was only one thing missing from this otherwise perfect 4th of July: People.
"On the 76th day of the ongoing oil spill disaster, only a couple dozen visitors were at the beach at 1:30 p.m. on what is usually one of the busiest days of the summer."
The Associated Press coverage from the Alabama coast on July 4, 2011, contained this report:
"State officials are expecting a big week for tourism along Alabama's coast. … Promoters say almost all of the 17,000 condominiums and hotels in southern Baldwin County are full through the Fourth of July.
"The area's 2,500 camp sites also are occupied, and many guests are staying through next weekend."
More broadly, our contacts in the leisure and hospitality sector throughout the region continue to convey positive reports. From Miami Beach to Dollywood, tourist activity is up. As noted above, beachgoers are visiting the coasts. Attendance at festivals in Tennessee and New Orleans is well up from year-ago levels. The Federal Reserve's last Beige Book report from the Atlanta District noted that:
"Tourism activity improved further throughout the District. Occupancy and room rates were boosted by increases in both business and leisure travel. Convention and cruise bookings have increased as well. Overall, contacts in the travel industry remained optimistic."
The bottom line? People are taking vacations and spending at healthy levels.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
July 7, 2011 in Alabama, Beige Book, Gulf Coast, Oil Spill, Southeast, Tourism | Permalink
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04/26/2011
Beige Book: Southeast economy improved through March; but what about April?
On April 13, the Sixth District's most recent Beige Book was released. The opening paragraph, which summarizes the entire report, said, "Sixth District business contacts described economic activity as advancing modestly from mid-February through March. Retailers cited that consumer spending improved while auto dealers reported strong sales growth. Tourism activity remained positive as occupancy rates and air travel mostly increased. Residential brokers and builders indicated that sales growth of new and existing homes were mixed, but generally remained weak, while commercial contractors mentioned improving conditions as development increased slightly. District manufacturers experienced increasing levels of new orders and production. Transportation firms noted modest advances in shipments and tonnage. Banking contacts reported soft but improving loan demand. Labor markets continued to recover at a gradual pace. Cost pressures grew for most District firms, but the ability to pass through price increases continued to vary by industry."
The report discusses economic activity that took place from mid-February through March, but the official release date lagged by a couple of weeks. In a time when data and information are so easily available, this type of lag can make the information seem dated. The Atlanta Fed is continuously gathering information via meetings with our Regional Economic Information Network contacts. Recently, we held two advisory council meetings, which gave us more insight into their particular sectors. On April 12 our Trade and Transportation Advisory Council met in Atlanta, and on April 14 our Travel and Tourism Advisory Council met in Miami. What follows is some of the anecdotal information collected from these meetings.
Trade and transportation
Demand is up for almost all industries in the transportation sector, especially for those involved in export activity. The trucking industry is seeing a return to pricing power but is challenged with finding qualified drivers and mechanics and faces a shortage of drivers amid new regulations. Increases in the cost of fuel are challenging all modes of transportation, but fuel surcharges remain intact. Intermodal volume is benefiting from increased fuel costs as customers move certain types of goods from truck to rail. Inventories remain very low and inventory turns are high; slow steaming in maritime shipments is creating floating inventories. All industries reported increases in capital expenditures for replacement and new equipment, information technology, and infrastructure and buildings. Hiring is taking place at some level in most industries, and wage pressures are just beginning to surface in parts of the sector. Events in Japan have not caused major disruptions but lags in shipments of certain goods and equipment have been reported.
Travel and tourism
Activity is up in almost all industries of the sector. Occupancy, room rates, and cruise and convention bookings are increasing. A modest level of pricing power has returned; however, increasing fuel and commodity costs are challenging all segments of the sector. Restaurant activity is mixed, and price increases are being passed through. Capital expenditure is increasing in most of the sector, and the overall tone was one of optimism with a cautious eye toward rising commodity costs. The areas and locations adversely affected by last year's BP oil spill have regained business, and many are back to normal levels.
Based on these meetings, it appears that the Sixth District's economy is still moving in a positive direction.
By Shalini Patel, a senior economic analyst in the research department, Sarah Arteaga, a senior REIN analyst, and Lon Lazzeri, a REIN director
April 26, 2011 in Beige Book, Tourism, Trade, Transportation, Travel | Permalink
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10/21/2010
Tourism's outlook brightens
For those in the tourism industry, conditions are improving, and contacts in the District are optimistic about the future. The members of the travel and tourism advisory council, who meet twice a year at the Federal Reserve Bank of Atlanta's Miami Branch, reported last week that for their industry, recovery was well on its way and that the outlook has brightened.
Hotel occupancy rates in some of the larger destinations in the Southeast have improved compared with last year (see the chart), although 2009 was a tough year for hotels. Contacts have noticed that not only has business travel increased recently but also that group travel bookings are on the rise, giving way to higher expectations for 2011.
A major source of tourism growth has come from abroad. International visitors to the United States, especially to the Southeast, have increased significantly. The table below shows passenger traffic at some of the major airports in the District. According to the Federal Aviation Administration, of the 30 busiest airports in the United States, Atlanta ranks number one, and the airports in Orlando, Miami, and Fort Lauderdale, Fla., are also on the list.
Meanwhile, contacts noted that domestic travelers are still looking for deals and discounts. Members on the advisory council employed in the cruise line industry reported that while demand still exists for cruises, it is for less exotic and less distant cruises. In addition, passengers are not spending onboard as much as they did before the recession began. Similarly, contacts in the restaurant business also noted that spending at restaurants has downshifted. Not only are clients going out to restaurants less often, but when they do go out, they're buying less expensive meals at lower-cost restaurants.
One of the biggest hurdles for the Southeastern tourism industry was and continues to be the BP oil spill. Members of the advisory council confirmed that the effect of the oil spill on their business was substantial; however, the challenge lying ahead is travelers' perception of the Gulf Coast. A risk factor for the tourism industry is long-term damage to the Gulf Coast brand as a fishing, recreation, and tourism destination.
Despite the challenges facing the tourism industry, the outlook remains bright. As one member of the council put it, "People still want to take their vacations, even if that means cutting back elsewhere."
By Sandra Kollen, a senior analyst in the Atlanta Fed's research department
October 21, 2010 in Southeast, Tourism | Permalink
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08/04/2010
Is the worst over for Gulf Coast tourism?
There has been a clear shift among our contacts in the Gulf Coast leisure and hospitality sector since the oil stopped flowing in mid-July. Cautious optimism has replaced outright pessimism. That said, most realize that the damage done by cancellations and fewer visitors may not be undone in 2010. However, fears that long-term damage to the Gulf Coast "brand" of clear water and white sandy beaches beyond the current year have subsided somewhat.
Assessing the economic impact on tourism-related businesses is a challenge. We have received anecdotal accounts of reduced hiring of seasonal workers by hotels and property managers, but this reduction is unlikely to be reflected in data through June. Reports of cancellations from our contacts in the region did not begin in earnest until after Memorial Day. In addition, hotels appear to be faring better than rental properties such as beach houses and condos, so the overall impact on accommodation-related employment may not be as great as feared. Clean-up workers, oil company employees, media, and National Guardsmen appear to have stepped in to fill some of the vacancies created by potential Gulf Coast vacationers changing their plans because of the spill. Of course, it is fair to assume that vacationing families spend more on hotel amenities and pump more into the local economy through retail purchases, recreational outings, and dining out than do workers employed to deal with the spill. For that reason we expect to see the greatest impact on recreation jobs as well as food services because of the decline in recreational fishing excursions and fewer visitors patronizing eating and drinking establishments.
On July 20, the U.S. Bureau of Labor Statistics released state and local employment data for June and revised data for May. Based on the total number of people employed in arts, entertainment, recreation, accommodation, and food services in Gulf Coast metro areas (excluding New Orleans) we estimate there were roughly 105,000 tourism-related workers along the affected areas (see the chart). This number is up slightly compared with June of last year and is in line with the average for June over the past decade. We do not see any large swings in the monthly data, but as we noted above, most cancellations came in after Memorial Day and accommodation jobs appear to be the least vulnerable.
Perhaps vacationers who put off travelling to the Gulf Coast may choose to take a fall vacation this year once they are assured that the coast is clear—figuratively and literally—but a recent survey suggests challenges lie ahead for the Gulf Coast's leisure and hospitality businesses. The State of the American Traveler survey conducted by Destination Analysts Inc. showed 26 percent of respondents said they were less likely to travel to the region over the next 12 months.
By Amy Ellingson, a research analyst at the Atlanta FedAugust 4, 2010 in Employment, Gulf Coast, Oil Spill, Tourism, Travel | Permalink
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07/07/2010
The Gulf oil spill: Measuring the impact on tourism
In the weeks following the Gulf oil spill, we counted the number of people employed in sectors most vulnerable to a decline in vacationers. In a macroblog posting back in May, we looked at Bureau of Economic Analysis data and developed a conservative estimate of roughly 123,000 workers, based on the total number of individuals employed in arts, entertainment, and recreation as well as accommodation and food services for Gulf Coast metro areas from western Louisiana to Panama City. Since then, we have been patiently waiting for official employment data from the Bureau of Labor Statistics on state and local employment. On July 20, we will see revised data for May and the first release of data for June.
To further help us understand the impact on tourism, we have also been talking to our contacts in the region as well as tuning into what travel industry experts have been reporting. Last week, Hotel News Now reported on how late-spring and early-summer bookings held up better than expected in most places, but advance reservations were declining significantly for Gulf Coast hotels. Our business contacts in the area also report similar experiences. Part of the decline in vacationers is being offset by an increase in bookings by officials and crews that are migrating to the Gulf to plan and assist in the cleanup. Those reports lead us to believe that the employment impact in the tourism-related sectors of the economy may not be readily seen for some time.
We will continue to watch this important industry as well as the entire region as the oil spill continues.
By Michael Chriszt, an assistant vice president in the Atlanta Fed's research department
July 7, 2010 in Employment, Oil Spill, Southeast, Tourism | Permalink
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