Travel expenditures, 2005–2011: spending slows during recent recession

Expenditures on travel for pleasure declined sharply in response to the recent recession, and had not yet fully recovered by 2011. In 2008, the first full year of the recent recession, consumers reported expenditures that were almost 3.5 percent lower than those reported in 2007. Reported expenditures declined another 9.8 percent in 2009, the year the recession officially ended.¹ Although expenditures increased modestly (2.1 percent) in 2010, and more robustly (5.5 percent) in 2011, they were still lower than their 2007 peak. (See Table 1.)

Travel expenditures are important to the average consumer, and to the economy as a whole. For consumers reporting them, expenditures on travel for pleasure averaged $4,700 in 2011.² This is 22 percent more than the average consumer unit ³ spent on food at home that year ($3,838), and well over half of what the typical renter spent on housing that year ($8,548).⁴ At the same time, the leisure and hospitality industry accounted for about 10 percent of total employment each year between 2004 and 2011.⁵

As noted, the U.S. economy experienced a deep recession during this period, from which it has been slow to recover.⁶ In a period of high unemployment, it is reasonable to expect that many people who either become unemployed, or anticipate the prospect, will reduce their nonbusiness travel. If so, given the importance of leisure and hospitality in the U.S. economy, this reduction in travel spending could cause further economic contraction. Therefore, it is important to understand how consumer spending on nonbusiness travel changed both during and after the recession. To do so, this report examines data from the 2005 through 2011 Consumer Expenditure (CE) Quarterly Interview Surveys, which collected detailed information on travel expenditures from consumers across the United States.

How much consumers spent on travel. Starting at $1,293 in 2005, total travel expenditures peaked at $1,462 in 2007, then fell to a low of $1,273 in 2009. Although they rose again, to $1,372 in 2011, they were still down 6 percent from their peak. (See Table 1.) It is intriguing to note that the major components of travel expenditures—food and alcoholic beverages, transportation, lodging, and fees and admissions—follow patterns that are similar to one another. (See Chart 1.) However, most pronounced of these patterns is for transportation, which shows a parabolic pattern for the years before and during the recession ($538 in 2005; $643 in 2007; $543 in 2009), and a linear pattern afterward (rising to $570 in 2010, and to $603 in 2011).

Chart 1

Average spending per consumer unit on travel, selected categories, 2005–2011

Year	Total trip spending	Transport	Food and alcoholic beverages	Lodging	Fees and admissions
2005	$1,293	$538	$320	$294	$141
2006	1,408	610	329	321	148
2007	1,462	643	332	343	145
2008	1,411	622	327	329	134
2009	1,273	543	313	300	116
2010	1,300	570	309	299	122
2011	1,372	603	329	315	125

View Chart Data

Allocating the travel dollar. Notably, while the level of travel dollars fluctuates during the 2005–2011 period, the allocation of those dollars is fairly stable. For example, lodging accounts for 23 to 24 percent, with transportation other than airline fares ranging between 18 and 19 percent. Airline fares account for between 24 and 25 percent of total travel expenditures for each year except 2005 (22 percent). Only fees and admissions exhibit a change in a consistent direction, falling from nearly 11 percent of travel expenditures to 9 percent from 2009 through 2011. (See Chart 2.)

Chart 2

Share of expenditures for the travel budget, 2005–2011

Category	2005	2006	2007	2008	2009	2010	2011
Food and alcohol	24.7	23.4	22.7	23.1	24.6	23.8	24.0
Lodging	22.7	22.8	23.4	23.3	23.6	23.0	22.9
Airfare	22.0	23.8	24.6	24.3	23.6	25.0	24.9
Other transportation, including recreational vehicles	19.6	19.6	19.3	19.7	19.0	18.8	19.1
Fees and admissions	10.9	10.5	9.9	9.5	9.1	9.4	9.1

View Chart Data

The food and alcohol budget is particularly interesting to examine. Although stable in the aggregate, accounting for nearly one-fourth of all travel dollars each year, the composition of these expenditures change. While the share of expenditures allocated to alcoholic beverages is between 12 and 14 percent each year, the proportion allocated to food prepared by consumer unit on out-of-town trips—for example, food purchased at grocery stores—rises from less than 13 percent in 2005 to nearly 16 percent in 2009, with the share allocated to food away from home—that is, food at restaurants—declining from 74 percent to 71 percent in the same time period. (See Chart 3.) Consumers may have substituted grocery store spending for restaurant spending by purchasing more from grocery stores than restaurants.

Chart 3

Allocation of food and beverage expenditures by consumers while on travel, 2005–2011

Year	Panel A	Panel B
	Food away from home	Food prepared by consumer unit on out-of-town trips	Alcoholic beverages
2005	74.0	12.9	13.1
2006	73.8	13.0	13.2
2007	73.9	12.9	13.1
2008	72.8	14.9	12.3
2009	71.2	15.5	13.3
2010	72.2	14.0	13.8
2011	71.9	14.4	13.6

View Chart Data

A closer look at consumers who travelled. An important item to consider is that the expenditures described so far represent the average for all consumer units, whether or not they travelled. To get a better idea of whether changes observed in expenditures reflect a change in travel patterns, as opposed to a change in something else (such as prices for travel), the percentage of consumers who reported spending money on travel is useful. The percent reporting any travel expenditure declined from 32 percent in 2005 to 30 percent in 2007, where it remained until 2009. Thereafter, it fell again, to 29 percent in 2010 and in 2011. (See Table 2.) Although a 3 percentage-point drop may not seem substantial, consider that this means that total numbers of consumer units travelling dropped by about 10 percent (3 out of 32 percent) during this period. It should be noted that the major components of travel show a similar pattern to total travel expenditures. (See Chart 4.) This indicates that travel in all forms is down equally. If one mode (for example, airline fares) had fallen much more sharply than another (for example, train, bus, or ship fares), this might indicate substitution of one mode of travel for the other.

Chart 4

Percent reporting travel expenditures, by selected transportation categories

Year	Total trip spending	Food away from home	Lodging	Fees and admissions	Airfare	Train/bus/ship fare
2005	32.2	26.7	16.6	13.9	11.3	6.2
2006	31.3	26.1	16.2	13.8	11.7	5.9
2007	29.8	24.9	15.2	12.8	11.0	5.4
2008	29.9	24.9	15.0	12.4	10.6	5.4
2009	29.7	24.7	15.1	12.2	10.7	5.4
2010	28.7	23.7	14.3	11.6	10.6	5.5
2011	29.2	24.4	14.6	12.0	10.6	5.5

View Chart Data

In addition, percent reporting is important because it allows one to examine expenditures for those who actually incurred them. For example, dividing average travel expenditures for all consumer units by percent reporting provides the average expenditure for those who actually travelled. Among travelers, expenditures rose nearly 20 percent—from $4,010 to $4,904—between 2005 and 2007. They fell nearly as quickly—to less than $4,300—by 2009, but started to recover thereafter. (See Chart 5.) No single expenditure appears to account for this, although airfares exhibit a similar pattern, as do lodging away from home, gasoline and motor oil expenditures, and to a lesser extent, fees and admissions and food away from home. Caution must be used in interpreting these figures, however, because the percent reporting only applies to the item in question. Therefore, means for similar categories (for example, food purchased by consumer unit on out-of-town trip, food away from home, and alcoholic beverages) cannot be added to get an average spent by those reporting.

Chart 5

Average travel expenditures for consumers reporting travel, selected categories, 2005–2011

Year	Total trip spending	Airfare	Lodging	Train/bus/ship fare	Car/truck rental	Fees and admissions	Food away from home	Gasoline/motor oil
2005	$4,010	$2,515	$1,773	$1,191	$1,030	$1,015	$887	$517
2006	4500	2872	1984	1401	1109	1073	930	579
2007	4904	3257	2253	1557	1185	1128	986	625
2008	4722	3248	2194	1317	1203	1081	954	691
2009	4283	2799	1987	1340	1182	948	903	527
2010	4533	3082	2089	1186	1220	1046	940	599
2011	4700	3230	2158	1130	1223	1045	968	680

View Chart Data

Price change or quantity change? An expenditure consists of two components: price per unit and quantity purchased. Because of this, a change in dollars spent may not indicate a similar change in quantity purchased. For example, if prices rise sufficiently, expenditures will rise, even if quantity purchased stays the same or even falls. Therefore, as with percent reporting, it is useful to examine expenditures after adjusting for price change—that is, to examine expenditures in "real dollars." The Consumer Price Index (CPI), also published by the Bureau of Labor Statistics, is used to make these adjustments.⁷

Chart 6 combines the percent-reporting and price-adjustment methods by showing selected expenditures, adjusted for price change, for those who reported these expenditures. Taken together, the data tell an interesting story. With the exception of gasoline, all expenditures shown (airfares, lodging away from home, train, bus, and ship fares, and food away from home) rise from 2005 to 2007, and dip to lower levels thereafter. Because these data are price adjusted, and for travel expenditure reporters only, they suggest that those who traveled took more trips each year from 2005 to 2007, and then fewer each year thereafter. For example, the airfares trend line is consistent with purchasers taking more flights each year from 2005 to 2007, and returning to 2005 numbers thereafter. Note that train, bus, and ship fares follow a similar pattern to airfares, but gasoline expenditures decline sharply each year up to, and especially in, 2008. Therefore, travelers may have been substituting flights or other modes of transportation for driving, consistent with a large increase in gasoline prices from 2005 through 2007—about 10 percent each year on average— a figure that was surpassed in 2008, when prices rose nearly 17 percent.⁸ If this theory is correct, the lodging trend line may not indicate that the number of trips increased, but that travelers took longer vacations in 2007 than in prior or subsequent years. The food away from home line is also consistent with both explanations—more trips or longer stays would each explain why these expenditures peak for consumers who reported in 2007.

Chart 6

Price adjusted expenditures for travel by consumers reporting travel, 2005–2011

Year	Airfare	Lodging	Train/bus/ship fare	Gasoline/motor oil	Food away from home
2005	$3,232	$1,858	$1,230	$1,246	$1,061
2006	3,530	1,996	1,391	1,093	1,079
2007	3,934	2,159	1,553	1,007	1,104
2008	3,502	2,095	1,288	752	1,023
2009	3,299	2,046	1,388	1,175	936
2010	3,368	2,141	1,194	955	962
2011	3,230	2,158	1,130	679	968

View Chart Data

For reference, the figures presented in Chart 6 are also included in Table 3. However, components of major expenditure categories (that is, food from grocery stores, food from restaurants, and alcoholic beverages) cannot be aggregated to compute price-adjusted expenditures for the aggregate category, because data presented are for expenditure reporters only.

Vacation home ownership rides the housing wave. Although not treated as expenditures on trips in the CE data, outlays for owned vacation homes are clearly related and interesting to examine in this report, given the changes that have taken place in U.S. housing markets in recent years.

Prior to the onset of the recession, housing prices rose rapidly in the United States, and the percentage of homeowners increased. Both figures fell thereafter.⁹ Interestingly, the CE data show that these phenomena were not limited to primary residences; owned vacation homes fit this pattern as well. From 2005 through 2009, the percent reporting expenditures for owned vacation homes rose substantially, from 3.0 percent to 5.8 percent.¹⁰ Similarly, the percentage reporting other costs associated with vacation homeownership, such as expenditures for utilities (from 3.0 to 4.1 percent) and payments for mortgage principal (from 0.8 to 1.8 percent), rose during this period. All figures declined in 2010 and again in 2011.

This article examines data on expenditures for travel from the 2005 through 2011 Consumer Expenditure Interview Surveys to ascertain how expenditures changed during the recent recession. Although levels of travel expenditures and the percentage of consumer units reporting them changed during the recession, the allocation of the travel budget for those who did travel did not change much. However, even here, there are indications that consumers who traveled attempted to minimize costs; for example, by allocating a larger portion of the food budget to purchases at grocery stores rather than restaurants. When adjusted for price change, there is evidence that those who traveled increased either length or frequency of travel before the recession, but cut back after its onset. There is also evidence that increases in gasoline prices, which peaked in 2008, spurred consumers to fly, or ride the train, rather than drive to their destinations. Furthermore, there is evidence that the rapid changes in housing markets experienced during this period affected not only primary residences, but vacation properties as well. The percentage of consumer units reporting expenditures related to owned vacation homes rose substantially until the middle of the period of study, and then fell again, consistent with the pattern exhibited in the primary residence market.