Industry Research

Will Tourism Lose 500,000 Jobs?!

Posted on August 26, 2009 by LCT Staff - Also by this author - About the author

WASHINGTON, D.C. — Employment related to the tourism industry fell 149,000 in the first quarter of 2009, according to the U.S. Department of Commerce. The number of people working in this sector declined to 8.35 million. This is the worst drop the travel and tourism industry has sustained since the terror attacks of September 11, 2001 brought the industry to a screeching halt. It's also the second greatest drop in employment for this sector on record.

The first quarter showed an accelerated rate of job loss experienced by the tourism industry, moving from a 4% decline to a 6.8% decline on an annualized basis. This deep and accelerating trend suggests that the travel industry is in worse shape than originally suspected. Back in February, the prevailing expectation was that 247,000 travel industry jobs would be lost this year, following the 240,000 that were shed in 2008.

If this year's trajectory plays out through the end of the fourth quarter, 581,000 jobs supported by the travel industry would be lost — more than double last year — says a statement from the Commerce Department. This would destroy an entire decade of job growth. A straight-line extrapolation may not be accurate, though, as there are signs of a recovery, albeit a slow one.

Yet, it will take time for a battered travel and tourism industry to feel the effects of a broader recovery.

The U.S. tourism industry has a lot of losses to make up for when consumers start opening their wallets. The Commerce Department puts the amount by which the industry shrank at 15.4% in the first quarter of 2009. At the same time, U.S. GDP fell at a rate of 4.6%. It's not surprising that the tourism industry would contract faster than the U.S. economy overall, given that it is comprised entirely of leisure and nonessential spending.

The early stages of a turn in economic conditions are most likely to be marked with caution, with tourism expenses taking time to come back. The strain that people have felt throughout the recession will not fade easily, and even as the unemployment situation changes, spending on luxury items such as recreational travel will not be an early priority.


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