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Travelers react to sagging economy

Airlines expect planes to be full during holidays, partly because they've cut capacity. Resorts may have trouble attracting tourists.

October 25, 2008|The Associated Press

ATLANTA — Minneapolis business manager Roque Rossetti plans to make his annual trip home to Sao Paulo, Brazil, for Christmas. He said the sagging economy gave him no second thoughts about paying $1,200 for the ticket.

"If I wait longer, I'd probably pay more, and I might not end up going," Rossetti said. But, he added, "I'm secure. I don't have kids or a wife. My house is paid for."

Several airlines have said that advance bookings show their planes are expected to be as full as or fuller than a year ago over the late fall and winter holidays -- largely because they have taken so many seats out of the air, a decision that was made when fuel prices were soaring. In fact, travelers who have not booked flights for the holidays could find it more difficult and expensive than usual to find the flights they want.

Because of the capacity cuts, fuller planes do not mean more people will be flying. It also may be tougher for ski resorts and sunny vacation destinations to keep their numbers up, although some are offering promotions to lure holiday travelers who may be hesitant to open their wallets.

"I think the consumer now has a lot of things on their mind," said Arne Haak, chief financial officer of discount carrier AirTran Airways. "They're concerned about the economy, they're concerned about the election, but I think they have already made the decision about what they are going to do over Thanksgiving and Christmas."

Haak said the airline -- a unit of Orlando, Fla.-based AirTran Holdings Inc. -- had not seen a slowdown in bookings over the holidays. "In fact, Christmas looks very, very good," he said.

The picture is similar at Atlanta-based Delta Air Lines Inc., an executive said.

"I think it might be the newness of the information," Ed Bastian, Delta's chief financial officer, said of travelers' response to the economic crisis.

He said most consumers were still trying to figure out what the crisis meant to them. Bastian said Delta's domestic advance bookings for the holidays showed stronger occupancy rates on a year-over-year basis and were in line with the carrier's expectations, although he noted that capacity cuts might be playing a role in that.

At American Airlines, a unit of Fort Worth, Texas-based AMR Corp., the occupancy rate based on advance bookings for the fourth quarter is down about 2 percentage points year over year, Chief Financial Officer Tom Horton said. That's "not outside of the norm you might see varying from year to year, but remember we are taking capacity out of the system," he said.

The fourth quarter, which includes the holidays, is traditionally a slow period for airlines. Although he would not offer specifics for the holiday season itself, Horton suggested that the carrier was not expecting a big drop-off in sales during the time period.

"I don't see anything unique to the holiday period right now," Horton said.

A big change may be that, with the economy suffering, people are looking for better deals.

Esmeralda Perez, a spokeswoman for the Puerto Rico Hotel & Tourism Assn., said travelers appeared to be waiting to book their vacations until closer to the holidays.

The island's hotels and resorts are being more aggressive with promotions and packages than in past years to lure last-minute guests, she said. The government-sponsored Puerto Rico Tourism Co. has doubled its advertising and marketing spending as well.

Perez said the election in November might be adding to the broader economic uncertainty. She said hotels had seen a surge of holiday bookings after past elections.

Ski.com, which books vacations at 80 resorts in the Western U.S., Canada, Europe and South America, has seen sales slip compared with last year, a spokesman said.

Vail Resorts Inc. Chief Executive Rob Katz said the number of Colorado season passes sold was down 8.4% as of September. Advance lodging bookings through central reservations were down 17.7% in room nights compared with the same period last year.

Recently, the company announced a slate of new promotions, including offering a free night to guests who book a five-night stay or more on dates around Thanksgiving, Christmas, New Year's and other major holidays.

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