Wednesday, August 31, 2011

Modest drop predicted in holiday travel

Expected decrease tied to economic uncertainty


AAA predicts that some 27.3 million people will take to the roadways for holiday travel this weekend. Photo by Mountain Express

A modest decline in travel this Labor Day holiday suggests that Americans will take cues from some broader economic factors and a closer examination of their own pocket books, AAA predicts.

The association forecasts that 31.5 million Americans will travel 50 miles or more from home during the Labor Day holiday weekend, a 2.4 percent decrease from the 32.3 million people who traveled one year ago.

"The decrease in expected travelers is a result of a mixed economic outlook, consumer uncertainty regarding the overall economy and recent downturns in economic factors that affect discretionary income," said AAA Idaho spokesman Dave Carlson.

The predictions are based on economic forecasting and research by IHS Global Insight, a Boston consulting firm that looks at employment, output, household net worth, asset prices and other economic drivers to determine travel intentions.

The model considers travel variables like gas prices, airfares and hotel room rates, along with a survey of travel perspectives to draw its conclusions.

Real disposable income is up just 1.3 percent, which is being offset by the travel price index, which has risen 6.7 percent since last year. Higher airfares will limit air travelers this year. And while gas prices have dropped 13 cents in the past month, the U.S. average price of $3.58 is 88 cents higher than a year ago.

Holiday travel by the numbers

Altogether, AAA predicts that 31.5 million Americans will travel during the holiday period from Thursday, Sept. 1, to Monday, Sept. 5. That's down from the 32.3 million who traveled a year ago.

About 27.3 million people, or 87 percent of all holiday travelers, plan to take to the roadways this Labor Day holiday weekend. That's a slight increase of 0.5 percent from the 27.2 million Labor Day 2010 auto travelers, and a 3 percent increase in the share of total holiday travelers from last year's 84 percent.


Air travel is expected to account for 8 percent of holiday travelers, a 1.9 percent decrease from a year ago. Rising fuel costs, combined with steady air travel demand, have resulted in rising airfares over the past several months.

According to AAA's Leisure Travel Index, Labor Day airfares are expected to be 13 percent higher than last year with the average lowest round-trip rate of $202 for the top 40 U.S. air routes. Higher airfares will contribute to the first expected decline this year in air travel for a major travel holiday.

Other modes of travel, including trains, watercraft and multi-modal travel, will make up the remaining 5 percent of total person-trips, 1.7 million, down from an 8 percent share a year ago.

Travel via these "other" modes is extremely volatile from year to year because they are highly used by those within lower income brackets. As such, they are highly sensitive to changes in disposable income as well as the travelers' confidence in the economy and their finances.

Impact of gasoline prices on travel plans

A consistent story throughout the year has been the significant increase in gas prices. Idaho's current average price for regular unleaded gasoline is $3.67. That's 68 cents higher than a year ago, when the state's average was among the highest in the nation. The national average price is 9 cents lower than Idaho's average, at $3.58 a gallon, but 88 cents higher than a year ago.

Gas prices peaked in May and have dropped about 10 percent since then. Gas prices will have less negative impact on Labor Day travel than they had on Memorial Day and Independence Day when 42 percent and 44 percent of travelers, respectively, said gas prices would impact travel plans.

For the Labor Day holiday, 71 percent of intended holiday travelers said gas prices would not impact their travel plans. Twenty percent said they plan to economize in other areas, and the remaining 9 percent are divided between changing their mode of travel or taking shorter trips.

"Should gas prices drop prior to the holiday, it could boost travel decisions for those travelers who are sitting on the fence," Carlson said.

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