Theme Park, Cruise Ship, Resort Operators Finishing Best Summer Since 9/11
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The summer travel season, which comes to a close this weekend for many Americans, was the busiest for companies that own theme parks, resorts, and cruise ships since the September 11 terrorist attacks.
Lodging occupancy levels will reach 69% from Memorial Day through Labor Day, the highest for that period since 2000, according to PricewaterhouseCoopers.
The American Automobile Association estimates 34.1 million Americans will travel 50 miles or more this three-day weekend, up 2.2% from last year.
Increased vacation demand “may mean that the soft patch in consumer spending wasn’t that soft a patch and that it won’t stay soft for long,” said Conference Board economist Ken Goldstein.
The rise in vacation spending is giving a boost to amusement-park operators Vivendi Universal SA and Walt Disney Co., cruise company Royal Caribbean Cruises Ltd., Starwood Hotels & Resorts Worldwide Inc., and Hilton Hotels Corp.
“People are continuing to spend on vacations at a greater rate than before,” said John Robertson, a regional economist at the Federal Reserve Bank of Atlanta. “We hear people talk about gas prices a lot, but to be honest we haven’t been able to cite anything that shows a detrimental impact on tourism.”
The Commerce Department said Monday that spending rose during July, up 0.8% after a 0.2% drop in June that was the first in 10 months. The New York-based Conference Board reported Tuesday that its index of consumer confidence fell to 98.2 in August from 105.7 in July. Still, its three-month tally was the strongest since the April-June period of 2002.
Occupancy at American hotels increased 2.9% from June to August, compared with a year ago, while average daily room rates rose 4.3%, according to Smith Travel Research in Henderson, Tenn. The biggest gainers in June were Oahu Island, Hawaii, up 21%, San Francisco-San Mateo, Calif., up 13%, New Orleans, La., up 12%, and Miami-Hialeah, Fla., up 11%.
“Summer leisure travel has been very strong” especially in markets like Hawaii, said the chief executive of Hilton, Stephen Bollenbach, on a July 28 conference call with investors. Hilton’s shares gained 15% since mid-March.
Miami-based Royal Caribbean, the world’s no. 2 cruise company, said late last month that second-quarter earnings more than doubled on higher trip prices and increased bookings. The company’s net yield, a measure of revenue per available berth, rose 12% from the year-earlier period, and its stock price has risen 19% in 2004.
Shares of Miami-based Carnival Corp., the world’s largest cruise operator, have risen 15% this year.
Passenger volumes at Orlando International Airport increased 18% in June and are up the same amount year-to-date. That would be the biggest annual rise since 1987.
Domestic and international vacationers are lining up at the nation’s theme parks. Attendance and revenue have risen at least 10% so far this year at Universal Studios’ parks on both coasts, said Wyman Roberts, chief marketing officer. July was the strongest month ever for Universal in Orlando.
“Consumer confidence is most highly correlated with what we actually see in the business,” Mr. Roberts said. “No matter what the headlines say, you know whether your company is under pressure or not or whether your job is at risk or not. I trust the consumer to have a good handle on that.”
Vivendi Universal’s shares have risen 4.9% this year.
At Walt Disney World, attendance surged 20% in the quarter ended June 30.
“The past three years have not been kind to travel and tourism,” said the president of Walt Disney’s parks and resorts unit, James Rasulo. Now, “people are saying, ‘I’ve been wanting to go on this vacation and I’m not going to let the price of gasoline keep me from going.”‘
Disney shares have declined 3.8% this year. The company last year made about three-quarters of its revenue from businesses other than its theme parks.
Snapshots of Americans on vacation suggest confidence levels will stay lofty as they head back to work and school.
“The economy’s pretty good,” said Floyd Epps,48,standing in the shade of a kiosk at Universal Studios in Orlando. “With 9-11, with the war and everything else, if you’re really worried about all of that, you’re in bad shape.”
People “tend to overreact” to news about the economy, he said. “Look at the oil situation. Gas prices are down from where they were,” said Mr. Epps, who drove his family down to Orlando from his home in Bel Air, Md.
The week of May 24, regular-grade gasoline reached a record national average of $2.064 a gallon, according to the Department of Energy. Last week it fell to $1.884.
Monday’s Commerce Department report showed wages and salaries rose 0.4% in July. They’re up 4.4% over the past 12 months.
Higher income enabled Boston resident Tom Whalen, 45, to take his first vacation in two years: an eight-day trip to the San Francisco Bay area. The furniture-store manager’s annual salary has risen to $90,000 from $52,000 in less than three years.
“I’m in a good spot,” Mr. Whalen said, sitting in front of the water on Fisherman’s Wharf in San Francisco. “I’ve been waiting to do this.”
Waiting for dinner at a San Francisco cabaret, a 24-year-old bakery manager from Boise, Idaho, Teula Huttanus, said she was taking her first extended vacation in at least two years after getting a promotion that added $5,000 to her annual pay. Her 28-year-old sister, Temsha, had just returned from a 10-day honeymoon in Seattle and nearby San Juan Island, Wash. She and her husband waited two years to take it.
“We have been sensible,” the older Ms. Huttanus said. “We paid down the debt. We have safe and secure jobs.”