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  The Herman Trend Alert

December 19, 2001

Travel's Loss is Home's Gain

In the past, we forecasted a rosy future for the travel industry. And very long-term, we still see a bright picture. However, the terrorist attacks of September 11th surely dealt a heavy blow to the travel, tourism, and hospitality. And while, eventually, people will feel comfortable about walking jet ways again, right now, they are no longer willing to get on airplanes at the drop of a hat, or stay away from their families for more than a brief period. Many business travelers are not afraid to fly, but simply do not want to be separated from their families during these high stress times . . . especially while the government continues to issue warnings to expect another attack. Though a lot of business travel was thought to be mandatory, leisure travel certainly is not. . . and a great deal of optional travel (business and leisure) is being postponed, in some cases, indefinitely. No matter how much reassurance they receive, many folks will simply not get on airplanes anytime soon.

At the same time, these people still have discretionary dollars to spend on themselves. While some funds will be held for savings and a cushion of financial security, people will continue to spend money on things they want and need. Expect a significant up-tick in sales at home improvement stores and other types of stores that sell items to enhance the hearth and home. People will cocoon for a while in their homes and will want to be as comfortable as possible. That means more sales of consumer electronics, home decorating, furniture and furnishings, and home remodeling. The slowdown in the economy not withstanding, these product categories will suffer a lot less.

Also, as with any slow-down in the economy, there will still be a market for what Faith Popcorn calls those "little indulgences", imported chocolates, compact discs, premium ice cream. Family trips to major entertainment destinations like Orlando will not be as popular, but those families will look for other close-to-home, lesser-known attractions. Americans will find alternatives, but will continue to enjoy their customary lifestyles.

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