Good morning. I am Dr. Suzanne Cook, senior vice president of research and technology for the Travel Industry Association of America (TIA). TIA, as many of you know, is the leading umbrella travel association for more than 2,000 travel-related organizations in the U.S. TIA�s membership includes all 56 state and territorial tourism offices, more than 300 convention and visitor bureaus and hundreds of other travel businesses, such as hotels, airlines, cruise companies and attractions. Our primary mission is to promote and facilitate increased travel to and within the United States. 
 

We are pleased to present this annual forecast, which has become decidedly more positive in the past few weeks. There are a number of reasons for our optimism.  First, the swift outcome in the Middle East has helped quell consumers� concerns. After four months of decline, the highly respected and followed Conference Board Consumer Confidence Index and the University of Michigan�s Consumer Sentiment Index both increased significantly in April. The strength of these measures led the Conference Board to conclude that this may very well signal

Suzanne D. Cook, Ph.D. Senior Vice President of Research and Technology Travel Industry Association of America

Second, most economists from Federal Reserve Chairman Allen Greenspan on down believe that the economy will continue to strengthen as the year progresses, to reach a growth rate of approximately 4.5 percent by the fourth quarter of the year. An advancing economic recovery will further stimulate gains in Consumer Confidence and visa versa �all good news for discretionary activities such as travel.

Third, gasoline prices are on the decline. Sandra Hughes will tell you more about this a bit later. Airlines fares and hotel rates also remain depressed, providing additional stimulus to consumer travel demand.

Fourth, while TIA�s most recent Traveler Sentiment Index conducted in early April during the height of the war declined slightly, it was clear that the War itself had very little impact on Americans� attitudes about travel. The decline was due primarily to travelers� perceptions that they have less time to travel these days, not surprising in these times of having to work harder and longer as companies seek to increase worker productivity. In contrast, general consumer interest in travel, as well as consumer perceptions about the affordability of travel, continue to be strong and positive. Further, consumers� rating of the safety of travel continues to improve and is now at its highest level since we began to measure this back in the fourth quarter of 2001.

And, finally, consumer intentions to take leisure trips are strong, as reflected in both our annual Summer Travel Intentions Survey and in three special surveys we have conducted since March to assess the impact of the War and also the threat of SARS on travel.

Our third War Impact Survey, conducted in early May, found 83 percent of American travelers planning to take at least one leisure trip this spring and summer. 28 percent say they will travel more this year, as compared to only 9 percent who expect to travel less.  And it was clear that whatever deterrents there are now to travel stem much more often from consumer concerns about the U.S. economic situation rather than the concerns about the situation in Iraq or about SARS. 

Despite all the bad news about our industry, U.S. leisure travel has held up remarkably well over the past two years. Last summer, leisure travel was up about 2 percent, just as we had predicted at this press conference last May. This summer we forecast that leisure travel will continue to be strong, increasing 2.5 percent during the months of June, July and August to total 275.4 million person-trips. We expect growth to gain momentum as the summer progresses.

But while continuing to travel, Americans have made some rather dramatic shifts in their travel preferences � we described it last year as getting back to basics. We have witnessed Americans shifting even more of their trips than usual to the highways, to closer-to-home and more rural destinations, and to travel motivated by a desire to connect with family and friends, while shifting their travel choices away from air travel and trips to major cities and travel destinations. 

While we expect these trends to remain strong this summer, they may not be as exaggerated as we saw last year, reflecting Americans� gradual return to their more traditional travel patterns. The elevated preferences for trips to attend family reunions or visit friends and relatives, and travel by car and to destinations closer to home that we reported last summer have now dropped back to more normal levels, making room perhaps for growth in other types of travel.

Between our first survey in March and our third survey in May, consumer interest in such types of travel as visit to casinos, longer trips of 7 nights or more, large city and major tourist attraction destinations, and travel by air have all improved. The exception is traveling outside the U.S., for which negative perceptions continue to very much outweigh positive ones � reflecting SARS no doubt, a growing concern among Americans. While we don�t expect that this will impact domestic travel this summer, it will continue to depress travel to and from Asia in particular.

We expect to see the beginnings of a comeback for airline travel this summer, led by the leisure consumer. Air travel should be up about 1 percent this summer. While air travel will remain significantly below 2000 levels, a move into positive numbers would be a welcomed development.

Auto travel, however, will continue to be stronger than air, up more than 2 percent. And RV travel is also likely to remain very strong this summer. The Recreation Vehicle Industry Association reports that 71 percent of RV owners plan to travel more by RV this spring and summer than they did last year. RV shipments are up nearly 8 percent through March and RV rentals are expected to rise 24 percent this year, according to RVIA.

It�s quite clear that consumers still favor that all American road trip. 70 percent of those planning to travel his summer, for example, told us that they plan to take a drive along a scenic road. Just last Saturday, May 10th, the industry celebrated SeeAmerica Day and we launched our new SeeAmerica�s Byways program, in partnership with the U.S.  department of Transportation � to promote great drives throughout America celebrating scenic, cultural and historic attractions � perfect for this time. 

After scenic drives, beaches and lakes remain second in popularity as a planned summer leisure travel activity, followed by visiting friends and relatives, trips to large cities and urban areas, small towns and rural areas, visits to national/state parks and visits to historical sites.

Hotels should do better this summer after also suffering earlier this year. Room demand will rise about 2 percent, according to Smith Travel Research. And, we will begin to see a rebound in some of those markets most negatively affected over the past two years �such as big city markets and upscale properties. 

Even though Americans are intending to begin using airlines and hotels somewhat more than they did last summer, they will remain very cautious about how they spend their leisure time and money. They are planning to spend an average of about 8 nights away from home on their longest trip this summer, about what they planned last year. I should note, however, that this is for their longest trip. When you add in all those other short, more spontaneous leisure trips that we know Americans take in great number, the average duration of a leisure trip this summer is likely to be just under 4 nights.

And, spending per trip is also likely to be stable with last year, with leisure travelers intending to spend nearly $1,100 on their longest leisure trip this summer.

Regarding destinations, our annual �Wish List� � those destinations American travelers say they would most like to visit if they can go anywhere - is similar to those we have seen before. Topping the list are Florida and California, both at 35 percent and both up slightly in preference over last year. New York State comes in third at 16 percent, down a bit from last year when we feel that Americans� interest in New York City in particular was elevated by curiosity and empathy in the wake of September 11th. Texas, Nevada and Arizona are in fourth, fifth and sixth place and all show slight increases in preference. Rounding out the top 10 list are Hawaii, Colorado, Washington, DC and Tennessee.

And finally, our most recent surveys also suggest that the late booking trends we have seen developing over the past few years are continuing. 41 percent of all travelers said that while they do plan leisure travel this summer, they have not yet started planning or booking their trips. Among those who have not yet started to plan or book, two-third say they have not yet decided when to go, and 42 percent have not yet decided where to go.  This suggests that travel destinations and companies still have the opportunity to influence the decisions of millions of Americans about summer travel.

So, that�s the story for leisure travel. We are also somewhat more optimistic about U.S.  business travel, which has been in decline since before 9/11. By the end of 2002, for example, business travel was down nearly 9 percent from 2000 levels. Recovery is, of course, being challenged by tighter travel policies and the increasing use of technology to replace travel. We think those trends will continue. But, several new surveys, such as one recently released by the Business Travel Coalition, suggest that companies may be relaxing some of their travel restrictions. If the economy continues to strengthen, as now expected, business should pick up, along with business confidence and profits, providing the need for corporate executives to get back on the road � and in the air. The timing and extent of this improvement is still unclear but we expect business travel to be up about 1 percent this summer, and to strengthen further in the later half of the year. 

Nearly 40 percent of business trips in this country are taken by air and two-thirds involve use of hotel accommodations, so a recovery in business travel is essential to the health of the airline and hotel industries.

In summary, we expect to see more Americans traveling this summer � for leisure and for business. Leisure travel should be quite strong, and while still affected by the trends of the last few years, should begin to return to more traditional patterns. The one exception is travel outside the United States, which is still likely to be significantly depressed. The growth in auto travel will exceed that of air but we expect to see the long awaited recovery in air travel begin in earnest in the next few months. Americans, however, continue to be cautious and very late in their travel planning, providing opportunities for travel marketers to still influence travelers� choices.

We also believe that business travel, which has suffered the most, along with air travel, since 9/11, is now in the process of bottoming out and should begin a slow recovery starting this summer. We forecast that business travel will rise nearly 1 percent, along with airline travel during the summer months of this year. 

So, that�s what we see. To give you another prospective and to talk more specifically about the start of the summer travel season, Memorial Day, I�d like to invite my friend and colleague, Sandra Hughes from AAA, to take over from here. Sandra�..