The Air Transport Association projects U.S. airlines will carry 9% fewer travelers this holiday season than last year, as Americans postpone trips or stay closer to home.

Now in the throes of global recession, travel demand is declining for the first time since the period following the 9/11 attacks. From July to November, travelers on the top seven U.S. airlines declined by 15%. The Air Transport Association projects U.S. airlines will carry 9% fewer travelers this holiday season than last year, as Americans postpone trips or stay closer to home. More importantly, IATA reports that premium, high-end, worldwide passenger traffic, which is almost exclusively business travel, declined 8% in 2008.

More Rooms at the Inn

Like airfares during the recent economic boom, hotel room rates rose 15% between 2004 and 2007, according to NBTA. Now, with waning travel demand, hotels are also pinched and will likely struggle in 2009. The average U.S. hotel occupancy rate declined to 61.2% in 2008, a 3% drop, according to Smith Travel Research (STR), a research firm specializing in the lodging industry.

Some empty rooms may be attributed to the travel downturn, but new hotel construction is also a factor. While ground is broken on most new hotel properties in good times, the economic climate is often very different when that hotel finally opens its doors for business. According to STR, U.S. hotel room supply increased by 2.5% in 2008 and a similar bump will occur in the coming year, yet occupancy rates will drop to 59.1%, the lowest since 2003.

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