THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Tuesday, April 23, 1996 TAG: 9604230378
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER
LENGTH: Medium: 66 lines
Hampton Roads should see more visitors this spring and summer thanks to decreasing gas prices, improved roads and tourists' rising income, according to an economic forecast released Monday by Old Dominion University.
Overall the local economy will continue to grow steadily with hotel room revenues and employment showing the most increases in the next three months, said Old Dominion economics and business professors Gilbert Yochum, Vinod B. Agarwal and Mohammad Najand.
Tourism, as quantified by hotel room revenues, should jump in the second quarter to $119.57 million, the trio predicted. That's a 7.2 percent increase from $111.52 million in the second quarter of 1995.
Despite recent spikes in gas prices, more refineries are converting production from winter heating oil to gasoline. That will increase gasoline supplies and ease pressure from the rising pump prices, said Yochum, chair of the Old Dominion economics department.
Rising personal income in the region's main tourism market, specifically the Northeast corridor, and more tourism advertising spending by the region's cities will add to the stream of tourists into the region, according to the forecast.
Extension of the Route 1 bypass in Delaware will cut the travel time from Hampton Roads' main tourists markets, making it easier for visitors to reach the region.
With more tourists coming to the area and the lack of hotel construction, some hotels will reach maximum capacity, increasing their hotel room rates and overall revenue. Although not all the region's hotels will see a huge jump in occupancy, the hotels that do see more rooms filling up will push up the overall average in rates and revenues, Agarwal said.
Old Dominion also predicts that more spending in the region's core industries like tourism, the port and retail will help expand employment. Many of last year's companies that announced expansion will start or continue hiring.
Civilian employment will improve to 696,032 in the second quarter, a 0.4 percent increase from last year's 693,673 at the same period. The number of jobless people in the region should drop to 30,667. That's down 13.5 percent from 35,469 in 1995.
Growing disposable income and more overall spending in the economy will contribute to taxable retail sales' improvement to $3.126 billion, compared with $2.928 billion at the same time last year.
Recent increases in long-term and short-term mortgage rates may push the value of single-family housing permits down this quarter. Old Dominion forecasts the value of housing permits will fall to $151.6 million, compared with $156.7 million last year in the second quarter.
According to Old Dominion's forecasting team, Wall Street overreacted to the drastic drop in economic activity in January and the economy's rigorous resurgence in February.
As a result, Old Dominion predicts that the mortgage rate increases will adjust, level off and decline at the start of the third quarter.
General cargo tonnage is expected to rise, but at a lower rate than anticipated for the first quarter of the year. Acquisition of new shipping lines and expanding global economies should increase port activity to $2.557 million, or 5.3 percent, from $2.429 million last year.
KEYWORDS: ECONOMY by CNB