Rising Fuel Prices and Economic Uncertainty to Dampen July 4th Holiday Travel, Says AAA

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(News Source: American Automobile Association)

Millions traveling will find travel bargains and lower airfares, which give air travel a slight boost

(ORLANDO, FL) -- AAA projects the number of Americans traveling on vacation this Fourth of July holiday weekend will decrease 1.9 percent from 2008 with approximately 37.1 million travelers taking a trip of 50 or more miles away from home. Last year, 37.8 million Americans traveled during the same period; a 10.5 percent decline from the 42.3 million travelers who vacationed in 2007. The July 4th holiday is typically the busiest time of year for auto travel since nearly all school-aged children are out of school at this time and, as a result, parents are more apt to take family vacations at this time.

AAA said the projected slight decline in leisure travel is mainly due to ongoing uncertainty about the strength of the economy; especially rising joblessness and sagging personal incomes. The recent rise in gasoline prices may also be causing some travelers to limit or abbreviate their holiday plans, although its impact on overall vacation costs remains minimal, AAA said. 
 
"Many Americans remain cautious about the outlook for their personal finances and these attitudes are reflected in the slight decline in travel we are forecasting for the upcoming holiday weekend," said Robert L. Darbelnet, AAA President & CEO. "Those who do vacation this summer will find a plethora of attractive discounts and special offers resulting in some outstanding vacation values.  If you can afford to go, this summer is a smart time to travel."

AAA's projections are based on research conducted by IHS Global Insight. The Boston-based economic research and consulting firm teamed with AAA earlier this year as part of an agreement to jointly analyze travel trends during the major holidays.  AAA has been reporting on holiday travel trends for more than two decades.  The complete AAA / IHS Global Insight 2009 July 4th holiday forecast can be found at AAA.com/news.

Air travel to increase, while auto travel dips

Although air travel will account for only five percent of July 4th leisure travel, the industry is expected to see a 4.9 percent increase in leisure travel bookings this holiday due to declining airfares and pent up demand from those who have not taken a vacation trip by air in some time.  Two million person trips are expected by air. Last July 4th air travel declined steeply, so this year's rebound is significant.

Although fuel prices remain much lower than they were one year ago, the relatively steep price increase since May will dampen consumer enthusiasm for road trips. AAA projects a 2.6 percent decline in auto trips from 33.4 million last year to 32.6 million in 2009. More attractive airfares also will contribute to the decline in auto travel.

Trips by other/multi modes, including air/auto combinations, rail, buses and watercraft, will be the dominant means of travel used by an estimated 2.5 million Americans, or 7 percent of all travelers.

Average spending will be $1,160 and average distance traveled will be 614 miles

Fourth of July travelers expect to spend approximately $1,160 per household this upcoming holiday weekend.  Transportation and accommodations will account for about half of trip spending, while food and beverage absorbs another 20 percent of the holiday budget.  Shopping, entertainment and recreation will account for the remaining 30 percent of spending on average.

Gasoline prices are up substantially since May, but are still much lower than they were at this time last year.  This should encourage some travelers to drive long distances over the holiday weekend.  Fourth of July travelers will log an average of 614 miles roundtrip this upcoming holiday weekend.  Over one third (38%) of travelers will stay relatively close to home, with expected round trips of under 250 miles.  One third of weekend travelers will log between 250 and 700 miles.  And 28 percent will travel over 700 miles round trip.

Airfare and lodging costs will be lower

According to AAA's Leisure Travel Index - a monitor of pricing in 20 popular cities across the US for hotel and car rentals, as well as 40 pairs of cities for air travel pricing - the lowest average published airfares over the July 4 holiday weekend are expected to decrease 16 percent from last year as air passengers will pay as little as $169. From February 2009 through June 2009, the lowest fares have been less than the same timeframe in 2008.  Car rental rates are up slightly with consumers paying an average of $51 per day compared to $49 a year ago, an increase of five percent. Hotel rates for AAA Three Diamond and Two Diamond lodgings are expected to be 12 percent less than last year with travelers spending an average of $137 per night for Three Diamond properties. Travelers planning to stay at AAA Two Diamond hotels will pay an average of $101 per night.  

Holiday Forecast Approach

In cooperation with AAA, IHS Global Insight has developed a unique approach to forecasting actual travel that explicitly considers current economic conditions, past July 4th holiday travel trends and behavior, and the recent assessment of pre-holiday American travel intentions derived from a survey of 2,700 American households.

The intentions figures act as a leading indicator, but do not constitute the forecast itself.  Instead, travel intentions overlay other key travel drivers along with past trends in an effort to project what Americans will actually do this coming July 4. The approach recognizes Americans do not always behave as they say they will.

The actual travel figures come from the ongoing travel panel database of D.K. Shifflet & Associates, the premier source of American travel volume and behavior.  DKSA interviews over 50,000 American households per month in an effort to track trip incidence, composition, behavior, and spending... all after the trips have been taken.

Regional holiday trip forecasts are strongly influenced by the economic conditions that exist in each market. The pain associated with current economic conditions is of course not evenly distributed throughout the country. Relative strength in the Mountain Region (ID, MT, WY, NV, UT, CO, AZ and NM) for example, is reflected in our expectations for higher than average Independence Day weekend travel. It will be quite the opposite for the New England and East South Central regions.

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