PRESS RELEASE

For Immediate Release

The October TBR/WTTC Index Of Leading Economic Indicators Stabilized At 124.7 -A Modest 0.4 Percent Increase Above The September Low

WASHINGTON, D.C. - December 18, 2001 - In one of the first few positive signs the travel and tourism industry has seen since September 11, the Travel Business Roundtable/World Travel and Tourism Council (TBR/WTTC) Index of Leading Economic Indicators increased at a modest and seasonally adjusted rate of 0.4 percent. This should be judged as a welcome sign, indicating perhaps that the severe drop-off experienced in this important industry did not continue to deteriorate in October following the significant decline in September 2001 as a result of the terrorist attacks.

As there has been considerable debate over how long the aftermath of the September 11th events will last, the October data suggests that parts of the industry may be headed in the right direction. Shown in the table below are the key business cycle turning point dates for the TBR/WTTC Index and the U.S. Index of Leading Economic Indicators for the 2001-2002 recession.

Peak Likely Trough

TBR/WTTC Index Sep. 00 Sep. 01
U.S. Index Jan. 00 Mar. 01

Percent Decline From Peak to Trough for the 2001-2002 National Recession:

TBR/WTTC Index -11.3%
U.S. Index -1.6

The disparity between these rates of decline shows clearly three important behavioral characteristics of the travel and tourism industry and the economy as a whole. These are:

	First, the much greater swing in the TBR/WTTC Index is often seen in industries that are growing rapidly and whose output/sales are significantly affected by the sharp variations reflective of business and household confidence. Rapid industry growth seems to always be accompanied by a certain amount of instability over time.
	Second, approximately three fourths of the 11.3 percent decline in the TBR/WTTC Index may be accounted for by the 8.4 percent fall in the month of September alone.
	Finally, the relatively modest fall in the U.S. Index reflects the fact that the 2001-2002 national recession has, at least thus far, not been particularly severe. Indeed, since March, the U.S. Index has actually increased in five of the seven months at a seasonally adjusted annual rate of increase of 1.4 percent. Not surprisingly, the most severe adverse consequences of the recession have been concentrated in specific industries--for instance, the telecommunications and information management sectors--and, as a result of the traumatic consequences of the September 11th attack--the travel and tourism industry. Concurrent with predictions that national growth will begin to return next year, we can expect that these industries will continue to experience the upward pull of the economy’s growth acceleration, but will, nonetheless, continue to lag.

The Details

With specific regard to the TBR/WTTC Index, there is an interesting pattern in the performance across the nine individual indicators.

Overall, five indicators increased, and four declined. At the same time, it should be noted that the current levels of seven of the nine indicators in the Index remain significantly below their levels for the same period one year ago-a clear sign that the industry continues to experience a serious cyclical and structural dislocation. The most striking decline was in the consumer confidence variable. The October 2001 confidence figure was nearly 40 percent lower than a year ago.

As previously stated, the 0.4 percent increase in October was the result of rather significant, and partially offsetting changes within the nine individual sectors. In the short table below, the actual changes are detailed.

Actual changes in the individual sectors are as follows:

Personal consumption expenditures for travel and related items +0.1%
Retail sales at eating and drinking establishments +1.4
Hotel/motel occupancy +2.9
ARC (total travel agent) sales +7.6
Hotel/motel revenue +8.2
Travel and Tourism employment -3.0%
ATA Revenue Passenger Miles -5.3
Rental car price per day -8.0
Consumer confidence -12.1

"The relative magnitude of some of the changes can be misleading", notes Dr. James Howell, Economist and President of the Boston-based Howell Group. "The 12.1 percent decline in consumer confidence is a rate of change in an index number--representing a composite of the views of 2,500 persons in a regular monthly reporting panel. The decline in travel and tourism employment must be put in its perspective. While it would seem quite small, it is not -- 53,000 jobs (on a seasonally adjusted basis) were lost in the month of October alone. In addition, it should be noted that while Hotel/Motel Occupancy is up from its disastrous September, it is still well below where it was from last October."

Dr. Howell adds that the rather sharp advance in ARC sales is important, as it reflects airline ticket bookings--a positive sign that a portion of airline travel is coming back, though it should be noted that the airlines have reduced the number of flights by 15 to 25 percent.

Without question, the travel and tourism industry continues to experience serious economic and financial adjustment, and it remains to be seen just how long it will take before conditions return to anything that approaches normal. To a significant extent, this will depend on the future course of consumer confidence.

To help restore the confidence in traveling, TBR continues its efforts to work with elected officials on ways to revitalize the industry. "The best way to help the industry, its 18 million employees and the economy in general, is to get people traveling again," notes Jonathan Tisch, Chairman and CEO of Loews Hotels and Chairman of the Travel Business Roundtable. "We believe this would be accomplished by temporary measures, including restoration of the business meal and entertainment tax deduction to 100 percent, restoration of a spousal travel deduction, and personal travel tax credits."

The Travel Business Roundtable is a CEO-based organization representing all sectors of the travel and tourism industry. In addition to the major airlines, car rental companies, travel management agencies, hotel chains, TBR’s membership roster also includes companies such as The Coca-Cola Company, USA Today, the Taubman Company, and the International Council of Shopping Centers, demonstrating the broad scope and diversity the industry represents. In 2000, travel and tourism was the nation’s third largest retail industry and second largest employer with more than 18 million Americans employed directly or indirectly in travel and tourism.

Several new members have also joined in the past month, including JetBlue, Fairmont Hotels, and Northstar Media Group.

Reflecting of the important global aspects of the travel industry TBR has formed a strategic affiliation with The World Travel & Tourism Council (WTTC) -- the global business leaders' forum for Travel & Tourism. Its members are chief executives from all sectors of industry, including accommodation, catering, entertainment, recreation, transportation and other travel-related services.

Founded in April 1990, WTTC policies are set and implemented by a Member Executive Committee, a President and a small staff in London, with representative offices in North & South America, Asia/Pacific and Europe.

CONTACT:
Debra Kelman
212-794-DKPR (3577)
dkelman@dkpr.com

EDITOR’S NOTE. Additional information on TBR is available at www.tbr.org. In addition, Dr. James Howell is available for further insight into the TBR Index and the specific data.

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