'06 travel industry predictions hopeful

Commercial flights will be fewer in number, more expensive and even more crowded, especially domestically. Hotels will fill up sooner and rooms will cost more. And conventioneers will be out in force, as both business and leisure travel increase in the new year, continuing a recovery in the industry that began in late 2004 and built momentum last year.

Travel-industry experts are making generally robust forecasts for 2006. The reasons for their optimism, they say, include a continuing U.S. economic expansion and the desire of airlines and hotels to make up for several lean years by raising prices and returning to profitability.

But the rosy forecasts for 2006 could fade with a wide outbreak of bird flu, another major terrorist attack or continuing high fuel prices.

The closely watched annual forecast by American Express Business Travel calls for more travelers and higher prices across the developed world and in new economic powerhouses China and India.

Economy-class fares on domestic and short flights will rise 3 percent to 6 percent, and business-class fares on international and longer flights will increase 3 percent to 5 percent, according to American Express. On the hotel side, room rates overall for mid- range properties will increase 1 percent to 3 percent, while rates for upper-range properties will increase 3 percent to 5 percent.

In North America, price increases will top the global average, according to the forecast.

Even car-rental rates are heading up, jumping 7 percent to 8 percent from 2005 levels, according to American Express number- crunchers.

The Travel Industry Association of America, which tracks U.S. tourism, is also forecasting growth this year.

Leisure travelers will grow in number by 2 percent, the association said, while international travelers to the United States will increase by 5.5 percent.

In 2005, according to the association, international visitors to this country increased by 7.8 percent from 2004, and they spent an estimated $646 billion on hotels, taxis, restaurants, museums, tours, shopping and other fixtures of the travel trade.

The robust travel-industry forecast is good news for travel providers, who were hammered by the economic slump, the Sept. 11, 2001, terrorist attacks, the war in Iraq, the high price of oil and SARS from 2001 through 2004.

Although oil prices remain high, several U.S. carriers are expected to post profits in 2006. Among them are perennially profitable Southwest Airlines and Continental Airlines. With reduced labor costs, expanded outsourcing, smaller and more fuel-efficient planes and reduced route networks, the airlines are beginning to raise their fares from historic lows and generate more revenue.

That's not welcome news for corporate travel planners, who face increased strain on budgets. Nor is it welcomed by leisure travelers, who are likely to face rising airfares, especially for domestic flights, and find themselves squeezing into the middle seat on crowded planes. But it's a shot in the arm for an industry that lost billions in the early years of this decade.

The cruise-ship industry, too, is looking for a strong 2006.

Some cruise-ship operators have pulled vessels out of the Pacific and reassigned them to Europe, where the strong euro has discouraged some travelers from staying in hotels and eating in pricey restaurants.

For gritty determination to make 2006 a banner year, any city would have to go a fair piece to match traditional tourist favorite New Orleans, which plans to mount a scaled-down but still festive celebration of its 150th Mardi Gras, despite the destruction caused by Hurricane Katrina.

"No other city can put on a party quite like New Orleans," reads a hopeful herald of this year's bash, "and Mardi Gras 2006 will be the most important of its 150-year history as New Orleanians show the world that this is a city reborn."

Distributed by Scripps Howard News Service, www.shns.com

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