Spending on travel and tourism fell slightly last quarter after taking a nosedive earlier in the year — an encouraging sign for the battered industry.

Travel and tourism spending dropped at a 1.4% annual rate in the second quarter of 2009 from the first quarter, following an 8.9% decline in the first quarter, the Commerce Department said Wednesday.

“People are starting to think about traveling again” said Christopher Pike, the principal of the travel and tourism group at IHS Global Insight. But “the unemployment rate still increasing and the businesses still not showing the corporate profits are going to mean that both leisure and business travel are going to take another quarter or two to really start to rebound.”

The smaller drop was buoyed by an uptick in spending on air transportation, which increased 0.8% in the second quarter — its first increase in four quarters. The increase was primarily from improvement in domestic travel as the H1N1 flu virus deterred many international travelers.

Meanwhile, spending on accommodations declined a much smaller 1.7% last quarter as occupancy rates at hotels improved and business travel posted smaller declines. The slight drop was a major improvement over the 21.8% decrease in the first quarter.

Hotel chain Marriott International Inc.’s slightly better performance underscored the trend as its revenue per available room in its North American hotels fell 19% for its fiscal third-quarter, ended Sept. 11, better than the projected 20% to 24% decline.

Travel prices also continued to fall, declining 3.5% in the second quarter, after a 10.6% drop in the first, as hotels continued to slash prices and airlines offered discounts to spur demand. Travelers paid more for gasoline, though.

Though the pain seems to be easing in the tourism sector, there wasn’t enough improvement to add jobs. Employment in tourism industries fell 4.1% last quarter after a larger 7.2% decrease in the first quarter.

Both the airline and the recreation and entertainment industries cut more jobs in the second quarter than the first, whereas hotels shed fewer positions and restaurants and bars added workers.

Source: WSJ.com