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Travel industry economics. (Travel Economics).

The National Perspective

2002 was an interesting year, albeit one with few surprises. Domestic leisure travel was predicted to increase as the economic downturn Downturn

The transition point between a rising, expanding economy to a falling, contracting one.


A decline in security prices or economic activity following a period of rising or stable prices or activity.
 and threats of terrorism kept Americans on U.S. soil for vacation. And indeed, the Travel Industry Association of America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name.  (TIA (1) (Telecommunications Industry Association, Arlington, VA, A membership organization founded in 1988 that sets telecommunications standards worldwide. It was originally an EIA working group that was spun off and merged with the U.S. ) reported a 2 percent increase in domestic leisure travel in 2002 over 2001. Domestic business travel, expected to falter because of the economy, did decline by 4 percent in 2002. Finally, international arrivals were expected to decrease because of the Sept. 11 terrorist attacks. Overseas arrivals to the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area.  for the first half of 2002 were down 17 percent, but no additional changes were foreseen fore·see  
tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees
To see or know beforehand: foresaw the rapid increase in unemployment.
 for the final half.

Forecasts for 2003 are promising. While recovery from 2001 is still slow, the TIA is expecting a 3 percent increase in U.S. domestic leisure travel in 2003. This increase is based on the attachment Americans have to travel, a pent-up pent-up
Not given expression; repressed: pent-up emotions.


not released; repressed:
 demand, and attractive pricing for consumers. According to according to
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

 the TIA, the United States is showing a heightened preference for domestic travel, including rural destinations; more people are traveling by car or RV; and more people are traveling with outdoor recreation activities, or history and culture, in mind.

Business travel isn't is·n't  

Contraction of is not.

isn't is not
isn't be
 expected to change much in 2003, with a forecasted increase of less than 1 percent nationwide. The economic downturn has forced businesses to analyze the need for trips and to cut back where they can. This behavior will continue into 2003.

Overall, however, many travel industry indicators show positive signs, as seen in Table 1. Most encouraging for the leisure travel industry is the continual increase in disposable income disposable income

Portion of an individual's income over which the recipient has complete discretion. To assess disposable income, it is necessary to determine total income, including not only wages and salaries, interest and dividend payments, and business profits, but also
. On the downside On the Downside is an EP by the San Diego, California band Counterfit, released by Alphabet Records in 2000. It was the band's first EP, recorded shortly after the members had relocated to San Diego from Fairfield County, Connecticut. , one unknown that does not show up in these figures is the lingering lin·ger  
v. lin·gered, lin·ger·ing, lin·gers

1. To be slow in leaving, especially out of reluctance; tarry. See Synonyms at stay1.

 threat of war. In general, war has a negative effect on both leisure and business travel.

The Montana Montana (mŏntăn`ə), Rocky Mt. state in the NW United States. It is bounded by North Dakota and South Dakota (E), Wyoming (S), Idaho (W), and the Canadian provinces of British Columbia, Alberta, and Saskatchewan (N).  Perspective

Preliminary estimates of nonresident non·res·i·dent  
1. Not living in a particular place: nonresident students who commute to classes.

 travel to Montana in 2002 show a 2 percent increase over 2001--to 9.77 million visitors or 4 million visitor groups (Figure 1). Nonresident travel mirrored the national increase of 2 percent.

Other signs of improvement in 2002 are in the visitation VISITATION. The act of examining into the affairs of a corporation.
     2. The power of visitation is applicable only to ecclesiastical and eleemosynary corporations. 1 Bl. Com. 480; 2 Kid on Corp. 174.
 numbers for both Glacier glacier, moving mass of ice that survives year to year, formed by the compacting of snow into névé and then into granular ice and set in motion outward and downward by the force of gravity and the stress of its accumulated mass.  and Yellowstone national parks Yellowstone National Park, 2,219,791 acres (899,015 hectares), the world's first national park (est. 1872), NW Wyo., extending into Montana and Idaho. It lies mainly on a broad plateau in the Rocky Mts., on the Continental Divide, c. . Even after the latest-ever opening of Going-to-the-Sun Road Going-to-the-Sun Road is the main parkway through the heart of Glacier National Park in Montana, USA. It was completed in 1932, and it is the only road that crosses the park, going over the Continental Divide at Logan Pass. , Glacier Park rebounded significantly, with a visitation increase of almost 13 percent over 2001. Yellowstone s Yellowstone, river, 671 mi (1,080 km) long, rising in NW Wyo., and flowing NE through Mont. to enter the Missouri River near the N.Dak. line; it drains c.70,400 sq mi (182,340 sq km). The Yellowstone receives the Bighorn, Powder, Tongue, and many smaller rivers.  visitation numbers increased as well, with a jump of slightly over 8 percent (Figure 2).

Montana airport deboardings for 2002 were slightly above 2001 levels, with less than a 1 percent increase (Figure 3). Montana should be pleased with any increase since most airports and airlines around the country showed declines in 2002. According to the TIA, the airline industry is still down 5 percent from 2001, indicating that air travel recovery has stalled stall 1  
1. A compartment for one domestic animal in a barn or shed.

a. A booth, cubicle, or stand used by a vendor, as at a market.

. The American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of  public took to the highways this past year and the numbers show it.

Finally, hotel/motel occupancy in Montana remained virtually the same in 2002 as in 2001 (Figure 4). However, compared to the mountain region, which experienced a 1 percent decrease in occupancy, Montana fared well. To highlight the differences, Montana reported a 2 percent increase in room availability, which generally correlates to a temporary dip in occupancy. The mountain region, on the other hand, experienced a 0.5 percent increase in room availability, but a 1 percent decrease in occupancy.

Travel Expenditures. Preliminary estimates show nonresident travel expenditures of $1.8 billion in Montana during 2002, up 2.3 percent from the previous year (Table 2). With the exception of 1996, when a slight decrease occurred, travel expenditures have grown steadily over the years.

Expenditure patterns of nonresident visitors to the state vary according to purpose of trip. Those whose primary purpose is vacation spend $ 130.58/day/group. Those visiting friends and relatives spend $100.79/day/group, while those simply passing through the state spend $79.01/day/group (Table 3).

* In 2001, total personal income paid by travel-related firms in Montana attributable to nonresident visitor spending totaled nearly $563 million, up 4.9 percent from 2000.

Travel-Generated Income. Personal income derived from the expenditures of nonresident visitors to Montana falls into two categories: employee compensation, which is wages and salary income paid to employees of businesses within the travel industry, and proprietors' income, which is the income of self-employed self-em·ployed
Earning one's livelihood directly from one's own trade or business rather than as an employee of another.

 workers in businesses serving travelers' needs (Table 4).

* On average, every dollar spent by nonresident travelers in Montana in 2001 generated 32.2 cents in wage and salary income for Montana residents. The national equivalent is 30.6 cents.

* Personal income generated by nonresident spending in Montana constituted 2.7 percent of Montana residents' total personal income in 2001, compared to 2.1 percent at the national level.

* During five of the past 10 years, travel-generated personal income showed a higher growth rate than that of total personal income in the state.

Travel-Generated Tax Revenue. Travel tax receipts consist of the federal, state, and local tax revenues attributable to nonresident travel spending in Montana. Because Montana does not have a sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. , the state and local tax receipts attributable to nonresident travelers are low compared to those of other states.

Montana does, however, have a statewide lodging Lodging or holiday accommodation is a type of accommodation. People who travel and stay away from home for more than a day need lodging mainly for sleeping. Other purposes are safety, shelter from cold and rain, having a place to store luggage and being able to take a  facility use tax of 4 percent on overnight accommodations. In addition, nonresident travelers contribute to the tax base by paying excise taxes excise taxes, governmental levies on specific goods produced and consumed inside a country. They differ from tariffs, which usually apply only to foreign-made goods, and from sales taxes, which typically apply to all commodities other than those specifically exempted.  such as those on gasoline gasoline or petrol, light, volatile mixture of hydrocarbons for use in the internal-combustion engine and as an organic solvent, obtained primarily by fractional distillation and "cracking" of petroleum, but also obtained from natural gas, by , and indirectly by supporting employment in industries that pay corporate taxes and whose workers pay income, property and other taxes.

Nonresident travel spending in Montana generated well over $346 million in revenue for federal, state, and local governments in 2001. This represents an increase of close to 9 percent over 1995 revenue (Table 5).

The Regional Perspective

Montana is divided into six travel regions for marketing purposes (Figure 5). During the summer of 2002, visitors to attractions within the six travel regions were surveyed about their travel behavior Travel behavior is the study of what people do over space, and how people use transport. The questions studied in travel behavior are broad, and are very much related to activity analysis and time use studies.  within that region.

As shown in Table 6, the behavior of visitors who spend time at attractions varies depending on the region they visit. The most striking difference is seen with first-time visitors. Russell Russell, English noble family. It first appeared prominently in the reign of Henry VIII when

John Russell, 1st earl of Bedford, 1486?–1555, rose to military and diplomatic importance.
 Country attractions have more first-time visitors--at 51 percent, while Yellowstone receives mostly repeat visitors (only 38 percent are new to the region). This study intercepted both nonresidents and residents of Montana who did not reside in that region. Proportionately pro·por·tion·ate  
Being in due proportion; proportional.

tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates
To make proportionate.
, Montana residents visited Missouri River Missouri River

River, central U.S. The longest tributary of the Mississippi River, it rises in the Rocky Mountains of southwestern Montana. It flows east to central North Dakota and south across South Dakota, forming sections of the South Dakota–Nebraska boundary, the
 Country and Russell Country at a higher rate than they did other regions. For example, in Missouri River Country, nonresidents represented 68 percent of the visitors to attractions, while residents represented 32 percent. At the other extreme, in Custer Country, nonresidents represented 95 percent of the visitors to attractions, while residents were only 5 percent of the visitation.

Other regional data shows that Billings, Bozeman Bozeman, city (1990 pop. 22,660), seat of Gallatin co., SW Mont.; inc. 1883. Named after John M. Bozeman, who led settlers here in 1864, it is the hub of a farming and ranching area; tourism and lumber are also important. The Big Sky ski area is just southwest. , and Kalispell Kalispell (kăl`ĭspĕl', –pĕl`), city (1990 pop. 11,917), seat of Flathead co., NW Mont., at the head of Flathead Lake near Glacier National Park; inc. 1892.  experienced increases in airport deboardings through November November: see month. , compared to 2001. Butte Butte, city, United States
Butte (byt), city (1990 pop. 33,336), seat of Silver Bow co., SW Mont.; inc. 1879. It is a trade, ranching, and industrial center.
, Missoula Missoula (mĭz`lə), city (1990 pop. 42,918), seat of Missoula co., W Mont., on the Clark Fork of the Columbia River; inc. 1889. , Helena, and Great Falls Great Falls, city (1990 pop. 55,097), seat of Cascade co., N central Mont., second largest city in the state, at the confluence of the Missouri and Sun rivers and near the falls that give the city its name; inc. 1888.  saw significant decreases compared to 2001 (Table 6).


Each year, the Institute for Tourism and Recreation Research surveys travel-business owners and land managers to get an industry perspective. This year, 191 business owners responded (16 percent outfitter/guide, 15 percent vacation home/condo/cabin, 13 percent B&B, 13 percent dude/guest ranch ranch, large farm devoted chiefly to raising and breeding cattle, horses, sheep, and goats. The cattle ranch was introduced from Latin America to Texas and the plains of the W United States and Canada. , 11 percent motel, 8 percent tours, 7 percent campground, 6 percent attraction/museum/ski area, 4 percent tourism promoter/advertiser, 4 percent government).

In 2002, 52 percent of the respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy.  reported an increase in visitation over 2001, while 18 percent said business was the same and 30 percent reported a drop in business. Increases were attributed to many aspects, but most respondents cited increased road travel in the post-Sept. 11 world; better marketing and management of their business; and a business that is still being discovered. Decreases were attributed to Sept. 11 and the economy, followed by the weather and business changes.

The outlook of travel industry businesses throughout the state is extremely positive. Seventy percent of the 191 respondents expect an increase in business in 2003, with an average of a 10 percent increase over 2002. Only 8 percent of respondents expect a decrease. Based on national and local business projections, and barring a war or further national economic downturns, the travel industry in Montana can be expected to see an increase of 2 to 5 percent in 2003.



Figure 4

Hotel Occupancy, Montana and Mountain Region, 1999-2002

        Montana  Mountain Region

1999     58.0         64.9
2000     59.0         65.5
2001     57.4         62.1
2002 *   57.6         60.9

Source: Smith Travel Research.

* forecast

Note: Table made from bar graph

Table 1

U.S. Economic Growth Expected

                         2001    2002 *    2003 *

Real GDP                0.30%   2.30%     3.20%
Consumer Price Index    2.80%   1.60%     2.80%
Travel Price Index      1.10%   0.50%     3.30%
Disposable Income       1.80%   4.50%     2.40%
Unemployment            4.80%   5.90%     6.00%
Corporate Profits     -10.00%  -2.30%    21.20%

Source: Travel Industry of America, 2002 TIA Marketing Outlook Forum.

* forecast

Table 2

Travel Expenditures in Montana, 1992-2002

      Expenditures     Percent Change
Year  Millions of $  from Previous Year

1992     $1,514               0%
1993     $1,550             8.8%
1994     $1,601             2.4%
1995     $1,622             1.3%
1996     $1,608            -0.8%
1997     $1,644             2.2%
1998     $1,716             4.4%
1999     $1,743             1.6%
2000     $1,750             0.4%
2001     $1,766             0.9%
2002     $1,806             2.3%

Source: Institute for Tourism and Recreation Research, The University of

Table 3

Expenditure Profiles--Summer Visitors

                          Friends &
                Vacation  Relatives  Pass-Through

Camping           $3.24     $1.21       $1.97
Hotel            $16.07     $9.99      $14.79
Gas              $25.80    $23.91      $28.28
Restaurant       $22.91    $19.02      $16.03
Grocery          $12.25     $8.56       $4.25
Retail           $29.16    $25.04       $8.86
Guide             $7.69     $2.12       $0.10
Auto              $8.37     $7.98       $2.96
Transportation    $0.10     $0.15           -
Entrance fees     $4.36     $2.16       $1.52
Services          $0.63     $0.65       $0.25

Total           $130.58   $100.79      $79.01
Sample Size       1,434       403         568

Source: Institute for Tourism and Recreation Research, The University of

Table 4

Travel Generated vs. Total Montana Personal Income, 1992-2001

      Travel-Generated  Total Personal   as % of Total
      Personal Income       Income      Personal Income
Year    (Thous. of $)   (Thous. of $)    (Thous. of $)

1992      $433,830       $14,075,520          3.1%
1993      $441,140       $15,178,490          2.9%
1994      $457,130       $15,499,030          2.9%
1995      $463,480       $16,296,840          2.8%
1996      $460,200       $16,992,480          2.7%
1997      $469,830       $17,726,290          2.7%
1998      $488,890       $18,941,950          2.6%
1999      $507,530       $19,287,170          2.6%
2000      $536,610       $20,336,880          2.6%
2001      $562,890       $21,283,050          2.7%

Percent change from previous year

      Travel-Generated  Total Personal   as % of Total
      Personal Income       Income      Personal Income
Year    (Thous. of $)   (Thous. of $)    (Thous. of $)

1992        9.5%             5.5%             3.7%
1993        1.7%             7.8%            -5.7%
1994        3.6%             2.1%             1.5%
1995        1.4%             5.1%            -3.6%
1996       -0.7%             4.3%            -4.8%
1997        2.1%             4.3%            -2.1%
1998        4.1%             6.9%            -2.6%
1999        3.8%             1.8%             2.0%
2000        5.7%             5.4%             0.3%
2001        4.9%             4.7%             0.2%

Source: Institute for Tourism and Recreation Research, The University of

Table 5

Travel-Generated Tax Revenue by Level of Government, 1995 and 2001

Level of Government             Revenue

2001 Tax Revenue
              Federal      $200,332,000
              State/Local  $146,359,000
              Total        $346,691,000

1995 Tax Revenue
              Federal      $183,925,000
              State/Local  $134,372,000
              Total        $318,297,000

Percent change, 1995-2001
              Federal             8.90%
              State/Local         8.90%

Source: Institute for Tourism and Recreation Research, The University of

Table 6

Visitor Profile Regional Comparisons

Summer 2002
Visitors at Attractions in Regions          Custer          Glacier

Primary Reason for Visiting MT
                 Vacation                      64%              69%
  Visit friends/relatives                      20%              20%
          Passing through                       9%               4%
                 Business                       4%               4%

Average nights in Montana                      5.3              7.5
Average nights in region                       2.8              5.3
1st time visitor to region                     47%              46%

Visited Parks During Trip
             Yellowstone                       46%              24%
                 Glacier                       15%              71%

Where do Visitors Come From?
                 Montana                        5%               8%
         Foreign Country                        4%               6%
            Other States                       91%              86%
                                          CA - 11%         WA - 16%
                                           WA - 9%         CA - 12%
                                           CO - 8%          OR - 7%

Airport Data  - 2002
  Deboarding % '02 vs '01           Billings +6.9%   Missoula -3.3%
       (Through November)                           Kalispell +2.4%

Nonresident Overnight Stays
  % within each region during                  14%              33%

Summer 2002
Visitors at Attractions in Regions     Gold West  Missouri River

Primary Reason for Visiting MT
                 Vacation                    59%             47%
  Visit friends/relatives                    28%             28%
          Passing through                     8%             14%
                 Business                     2%              3%

Average nights in Montana                    6.9             7.2
Average nights in region                     4.0             4.1
1st time visitor to region                   44%             44%

Visited Parks During Trip
             Yellowstone                     43%             13%
                 Glacier                     24%             30%

Where do Visitors Come From?
                 Montana                     18%             32%
         Foreign Country                      6%              5%
            Other States                     76%             63%
                                         WA- 17%        WA - 15%
                                        CA - 12%         MN - 9%
                                        CO - 16%         CA - 7%

Airport Data  - 2002
  Deboarding % '02 vs '01            Butte -5.8%
       (Through November)           Helena -3.0%

Nonresident Overnight Stays
  % within each region during                11%              2%

Summer 2002
Visitors at Attractions in Regions            Russell    Yellowstone

Primary Reason for Visiting MT
                 Vacation                         43%            73%
  Visit friends/relatives                         25%            13%
          Passing through                          8%             4%
                 Business                          6%             5%

Average nights in Montana                         7.5            6.5
Average nights in region                          4.0            4.5
1st time visitor to region                        51%            38%

Visited Parks During Trip
             Yellowstone                          30%            74%
                 Glacier                          45%            16%

Where do Visitors Come From?
                 Montana                          20%             9%
         Foreign Country                           6%             4%
            Other States                          74%            87%
                                             WA - 13%       CA - 15%
                                             CA - 12%      TX,WI and
                                              OR - 5%        OR - 5%

Airport Data  - 2002
  Deboarding % '02 vs '01           Great Falls -1.9%  Bozeman +5.2%
       (Through November)

Nonresident Overnight Stays
  % within each region during                      9%            30%

Sources: Institute for Tourism and Recreation Research, The University
of Montana-Missoula; Montana Aeronautics Division.

Norma Nickerson is director of The University of Montana-Missoula The University of Montana is a state university located in Missoula, Montana, USA. The school was founded in 1893. It is the largest campus in the five-campus University of Montana System.  Institute for Tourism and Recreation Research. Thale Dillon, formerly an economic analyst with ITRR ITRR Institute of Tourism and Recreation Research
ITRR Institutional Training Readiness Report
ITRR Information Technology Readiness Review (US Navy)
ITRR Internal Test Readiness Review
ITRR Information Technology Relationship Resource
, is currently a research associate at BBER BBER Bureau of Business and Economic Research
BBER Background Block Error Ratio
BBER Before Viterbi (TV broadcast measurements) 
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Title Annotation:Montana travel industry
Author:Nickerson, Norma; Dillon, Thale
Publication:Montana Business Quarterly
Geographic Code:1U8MT
Date:Mar 22, 2003
Previous Article:Montana avoids recession and terrorist attack impacts. (The Montana Outlook).
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