How I Didn't Spend My Summer Vacation

This summer, Terry Crump is staying put. She's just returned from a weekend jaunt to Disneyland, three hours down the road, with her family. But the slumping economy and mounting layoffs in California have her nervous about more travel until she sees how well her Crump's Custom Clothing store in Fresno fares. "If it's a good month for the store, maybe we'll go somewhere," she says.

The nation's travel agents can be excused for that twinge they just felt in their collective gut. A slowly recovering U.S. economy and two years of pent-up demand had many agents expecting Americans to flood the roads and airports on summer holidays this year.

No dice. Would-be travelers who are still struggling with personal finances, worrying about layoffs, and plain jumpy about the economy have innkeepers and others in the travel biz downsizing expectations. "The sharp upturn that we were expecting just isn't happening," says Brian Robb, vice-president of marketing for Carlson Travel Network, the nation's second-largest travel agent.

STILL SIMMERING. Sure, there are some hot spots. Americans are still flocking to the beaches and theme parks of Florida, says Hilton Hotels Senior Vice-President Michael A. Ribero. U.S. bookings at his 250-hotel chain are up 20% for the early summer. And more travelers want to feed the slots in Vegas and weather the 100-degree days in Phoenix and Palm Springs--thanks in part to heavy advertising and low room rates.

But on the whole, says Ribero, many people are still sitting out the action, awaiting what he calls "the next neutron bomb from the airline industry."

That would be an old-fashioned price war. Fare cuts made last summer a robust if money-losing exercise for the tourism industry, as recession-weary travelers bought half-price tickets and then watched hoteliers and car-rental agencies rush to slash rates. This year, the airlines are playing it safer. Discounts, slimmer than last year, are set to expire on June 30. They have been enough to boost Delta Air Lines Inc. bookings by 18% for the Memorial Day weekend and to give American Airlines Inc. a 22% increase in the packages to Hawaii and Florida it booked through the first four months of this year.

But bookings for later in the year are downright skimpy. "People call up, listen for the fare, then say they'll check back later," says Richard Marks, president of MDC Travel in Washington, D.C. That tentativeness will help hold growth in hotel bookings to a mere 3% this summer, predicts industry consultants PKF Consulting, and will keep Hawaii in the doldrums. Crushed between California's economic woes and Asia's recession, hotel occupancies in the Pineapple State are running at 73%. That's 9% lower than in 1990, despite a $2 drop in the average room rate. Tourists this summer will be up by a scant 1%, according to the Hawaii Visitor's Bureau. Many of the state's toniest resorts are slashing rates again this summer.

The travel industry is courting customers with bargains. Princess Cruises Inc. has filled nearly all of its six ships traveling round-trip from Vancouver via Alaska--with two-for-one fare offers. A strengthened dollar will prompt more travel to Europe, predicts the American Society of Travel Agents, uhich polled 200 of its members and found Britain, France, and Italy the hottest spots.

HOMEBODIES. But many other travelers who might have jetted to Hawaii or the Bahamas are loading up the kids and driving to Aunt Millie's house instead. Bookings at travel agencies run by the American Automobile Assn. are up by 5%, with expected car travel increasing by 8% from 1992. Indeed, drivers crowded Yosemite National Park in early May, forcing rangers to turn away tourists.

Some travelers are just as likely to avoid the hassle--and the cost--and stay home altogether. Bill and Wendy Selnick refinanced their home near Salt Lake City, but used the proceeds to pay down bills rather than pay for a trip they had wanted to take to the Northwest.

A number of travel experts say airlines will resist further price cuts. Others don't buy it. "We're going to see another price war," predicts Barney F. Kogen, chief executive of Houston-based UltrAir, who predicts cash-poor carriers like Northwest and America West will trigger a 30% to 40% cut in fares. Those are numbers that make it hard to stay content barbecuing in the backyard.

Before it's here, it's on the Bloomberg Terminal.