Staycation or USAcation For This Summer?
For those planning a staycation this summer, check one of the following reasons:
- High gasoline prices.
- High airline ticket prices.
- Natural disasters — home or abroad.
- Travel security concerns.
- Weak U.S. currency.
- Still unemployed or no pay raise.
- All of the above.
If you answered yes to any of the above, click here for a summer reading list
If you're still on the fence, read on.
“I’ve seen a lot of people cut back or make changes to their summer travel plans,” says Patrick DeHann, Senior Petroleum Analyst at GasBuddy.com.
Higher gasoline prices are the obvious reason, but with civil unrest in the Middle East and North Africa, natural disasters from Japan to Australia to Alabama, and new travel security concerns following the death of Osama Bin Laden, it may be an unappealing time to get on a plane.
The question then for many in the travel industry is, Will this summer be of the staycation or USAcation variety?
After all, the economy — though in a modest growth mode — is the best in four years, and it's not the first year air travel is expensive.
Rick Seaney, founder of FareCompare.com, notes that 2011 is unusual in that there have already been seven fare hikes.
“That is a steep increase in ticket price for someone used to paying $200 for a ticket,” says Seaney.
Fuel prices were also high or higher for much of 2008, but back then, notes Seaney, planes were usually 30 percent empty. Now, with capacity cutbacks, they're fully booked.
“There are just more people chasing fewer seats,” says Seaney, where fewer planes and more travelers result in higher prices, especially for international travel.
Air travel may be the biggest casualty, but the energy price spike reaches far and wide.
“The oil prices affect shipping costs and driving costs, which in turn greatly affect hotels and restaurants,” says Lee Woodriffe of Pegasus Tours and Travel. “Coming off of a recession that had already weakened the tourism sector worldwide, the costs are making ‘staycations’ ever more popular.”
Industry analysts predict gasoline could top $5 a gallon — perhaps even $6 — this summer, and those prices could mean vacations parked at home.
"It appears that high gas prices will slow things down,” says DeHann.
Other analysts, however, think that the “shock factor” might not be as great this year. While gasoline prices may hit new record highs, consumers experienced the same thing in 2008.
“Back in 2008 it was a real shock — now I think people are a little punch drunk and they’ve accepted it,” says David Fessler, energy and infrastructure analyst for The Oxford Club. “Drivers have just accepted the fact that gasoline is $4 a gallon, and you either pay it or you don’t drive. But people are being more efficient in how they drive and that is saving money."
What's more, with the economy picking up, consumers are recovering from cabin fever and are itching to get out.
The hotel industry is on the rebound, with gateway destinations such as New York and Chicago doing exceptionally well, says Anil Aggarwal, CEO of Milestone Internet Marketing, whose firm represents the service and hospitality industries.
“2009 was dismal for business, but 2010 was getting better, and 2011 will likely be an improvement," says Aggarwal.
At the worst then, higher costs could keep them closer to home.
Overseas Off Limits?
“Outbound traffic could be bad," says Aggarwal. "People will be worried about traveling to Asia [Japan], the Middle East and the subcontinent. We’re already seeing that.”
Aggarwal says he has already seen four groups scheduled to visit Japan cancel their plans.
Some parts of the world will essentially be closed for business, while those that are open will likely just cost more.
“New Zealand is still in recovery mode,” says Michelle Grant, research manager for Euromonitor International, noting that Christchurch, the second largest city in the island nation, is largely being avoided following the devastating February earthquake.
Australia, devastated by summer flooding, is definitely open for business, and the industry and government are aggressively getting the word out that it’s fine to come back.”
Even nearby Canada is more expensive because of its strong currency.