Summer Travel Expected to Be Up Despite Gas Prices

Industry Counts on Pent-Up Post-Recessionary Demand to Fill Hotel Rooms, Cruises, Theme Parks

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Credit: Source: Energy Information Administration
The economy is still sluggish, and gas prices are nearing $4 a gallon. But travel experts say it's unlikely that people craving an escape will be satisfied with a staycation this summer.

"Oh, absolutely not," said Darren Frei, editorial director at Sherman's Travel Media, based in New York. "People may not be taking as long a trip -- either in terms of miles from home or the number of days -- but they are most definitely going to take vacations this summer. They had a pent-up need to travel after a rough economy in 2008 and 2009; it started picking up last year, and we've noticed an increase in traffic to our pages this spring that suggests it's going to explode this summer."

Mr. Frei is not alone in that assessment. In AOL's Great Big Summer Travel Poll earlier this month, 51.3% of those surveyed voted "No" when asked "Is the slow economy affecting your travel plans this summer?" Some 48.5% of respondents said they'll spend $1,500 or more on summer travel this year, the highest dollar-amount choice available on the survey.

Travelocity's 2011 "Traveler Confidence Report" found that 95% of people still planned to travel as much or more in 2011 as they did in 2010.

And marketers in the $600 billion U.S. travel industry are taking note.

Genevieve Shaw Brown, senior editor at Travelocity, said hotels have stepped up with the freebies to help offset the rise in gas prices, including free room nights, free breakfast, resort credits and free show tickets. "Hotels this summer are going to be really big on what the industry calls 'added value,' and the average traveler recognizes that as a freebie. Pretty much everything under the sun is on offer, so they'll take advantage of all of it to offset higher gas prices."

STR Global, a Hendersonville, Tenn.-based travel consultancy, expects the U.S. hotel industry to see a modest increase, according to its summer forecast. STR predicts summer occupancy will increase 1.7% over summer 2010 to 66.7%, average daily rate will increase 4.1% to $103.01, and revenue per available room will jump up 5.9% to $68.68.

"Demand recovery began in earnest last summer, and while the comparables are tough, the 2011 summer season will be well-attended," said Brad Garner, chief operating officer at STR. He added that "this summer will be the continuation of industrywide rate recovery."

Neil Abrams, president of New York-based Abrams Consulting, said gas prices might still be cheaper than airline tickets for some families.

"You can go to one of the rental-car companies and get a seven-passenger van, pile the family in, and drive to Florida in less than a day for less money than it would cost for five or six plane tickets," he said. "That's where the savings are."

Reaping the benefits of drive trips are the usual suspects, including a resurgent amusement-park business. Walt Disney Co. reported that attendance was up at Disneyland in California in 2010 but down at Disney World in Florida, largely because of a whopping 17% increase in attendance from 2009 at nearby Universal Orlando, which opened a new attraction last year, "The Wizarding World of Harry Potter."

Cedar Fair Entertainment Co., parent of Cedar Point Amusement Park in Sandusky, Ohio -- which it bills as the "Roller Coaster Capital of the World" -- as well as Kings Island in Cincinnati and Knott's Berry Farm in Los Angeles, had an 8% increase in attendance in 2010 compared with 2009. Six Flags Entertainment Corp., which has struggled in recent years and came out of a nearly yearlong bankruptcy in April of 2010, had an increase of nearly 1 million visitors to its 19 parks in 2010, year over year.

On, Leo Sun noted that a change in marketing helped Six Flags. "The company is also balancing its discounts and promotions to assure the highest yield by season. Prior to its bankruptcy, Six Flags was notorious for heavy discounts in its widespread promotions, focused on driving volume through a high-volume, low-margin business model," Mr. Sun wrote.

Another big trend developing -- another big year for the cruise industry. Last year, Robert Sinclair Jr., media-relations manager for the Automobile Association of America New York, told Ad Age that 2010 would be the summer of "Cruises, cruises, cruises."

This year?

"Cruises, cruises, cruises," Mr. Sinclair said with a laugh. "Our booking agents continue to tell us they are booking a lot of cruises. They're still hot." Indeed they are. Last year, the Cruise Lines International Association projected 14.3 million passengers would take a cruise in 2010, up from 13.44 million in 2009. In reality, nearly 15 million people cruised in 2010 and the group is forecasting 16 million for 2011.

Mr. Frei said, "Singles cruising is a big trend. The two most dreaded words in the cruise industry are 'double occupancy.' Royal Caribbean will debut their first cabins for single cruisers in June, and The Norwegian Epic just rolled out a single cabin plan last year. Cruises still afford that great value."

Royal Caribbean International, Miami, has already launched a set of TV spots for its summer special -- cruises on three of its largest ships that feature family-themed promotions and special onboard programming for its partnership with DreamWorks Animation SKG May release of "Kung Fu Panda 2." The "Pandamonium" package also features meet-and-greets onboard with the film's characters.

Pauline Frommer, daughter of legendary travel-book guru Arthur Frommer and editor of her own travel guidebooks, said the pent-up demand from last year continues.

"People might end up staying closer to home because of the gas prices, but they're still traveling," she said.

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