Plummeting leisure travel rates hurt demand for sightseeing transportation services
Los Angeles, CA (PRWEB) August 10, 2012
The Sightseeing Transportation industry began its recovery in 2010, following a disappointing 2008 and 2009 when industry revenue declined 8.0% and 10.7%, respectively, due to reduced travel spending. As the economy and travel rates began to improve in 2010, revenue grew 5.0% to $2.3 billion and grew an additional 3.4% in 2011 to total $2.4 billion. Industry revenue is expected to continue to grow in 2012, with a forecast jump of 4.1%. As a result, revenue is expected to decline at an annualized rate of 1.5% to $2.5 billion over the five years to 2012. According to IBISWorld industry analyst Nima Samadi, the decline of the domestic economy and increase in unemployment in 2008 and 2009, forced people to become more selective in how they spent their income. As a result, they became less likely to spend money on nonessential travel. Leisure travel rates plummeted as households became more concerned about finances. The industry was also affected by falling international arrivals into the United States, which declined 5.2% in 2009. These trends negatively affected revenue for operators. As the economy improved over the course of 2010, however, and some of the fears surrounding the state of the economy subsided, a larger number of consumers opted to take trips and go on sightseeing tours.
In 2010 and 2011, domestic travel rates increased marginally (1.9% and 2.4%, respectively) and are expected to continue doing so in 2012 (3.3%). Meanwhile, international arrivals into the United States increased 8.7% and 5.7% in 2010 and 2011, respectively, and are expected to rise a further 6.2% in 2011. Over the past few years, the weak US dollar made US vacations more affordable for foreigners, while at the same time making overseas vacations prohibitively expensive for some US consumers. These factors helped boost demand and revenue for the Sightseeing Transportation industry. As the US economy continues to recover, the industry is expected to return to steady growth. The low barriers to entry, especially in the bus tour sector, will encourage operators to come back into the industry as tourist numbers pick up. Over the five-year period to 2017, industry revenue is forecast to increase. Because the industry is labor intensive, a future recovery in revenue will heavily drive increased levels of staffing once demand improves.
Industry concentration indicates the extent to which major players dominate the industry; concentration in this industry is low compared to many other transport industries. Operators are primarily small, specialized entities - the four largest firms in this industry comprise less than 15.0% of revenue. IBISWorld believes that small companies will predominate in this industry over the long term, though, minor industry consolidation continues to take place. “Over the forecast period, firms will face increasing pressure due to high levels of industry competition from a large number of industry participants at limited geographical sites, and increasing demands from consumers in relation to ancillary services and low pricing,” says Samadi. Additional factors include increasingly stringent safety and environmental regulations introduced by the federal government to reduce the number of accidents and fatalities. The impact of the global financial crisis on this industry was considerable, with the revenue level having declined in 2008 and 2009. With many businesses forced to the wall, consolidation arrived through a combination of takeovers and exits. For more information, visit IBISWorld’s Sightseeing Transportation in the US industry report page.
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IBISWorld industry Report Key Topics
This industry provides scenic and sightseeing transportation on land, sea and air, such as: sightseeing buses and trolleys; steam train excursions and horse-drawn sightseeing rides; air boats and dinner cruises; and helicopter rides and hot air balloon rides. The services provided are usually local and involve same-day return to place of origin. A business in this industry organizes and operates scenic transportation directly for consumers.
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Globalization & Trade
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