Why Travel Marketers Aren't Accelerating as Gas Prices Drop

Cheaper Fill-ups Could Add Psychological Boost to Road Trips

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Plummeting gas prices have some travel marketers hopeful more Americans will hit the highways this summer, but the prospect is far from certain.

AAA estimates Americans are saving about $375 million per day on gas compared with last year. The current national average price per gallon is about $2, but it's expected to dip below that soon, an AAA spokesman said. Prices aren't predicted to rise above $3 this year.

Given that and rising consumer confidence, it's logical to assume more road trips come summer. But gas prices and travel aren't as closely connected as they once were, according to the U.S. Energy Information Administration. The EIA estimates it now takes a short-term price drop of 25% to 50% to increase travel by 1%. In the 1990s a 12% decrease would result in 1% more travel.

The EIA said gas prices have become less elastic in recent decades due to an overall decrease in miles traveled per person; the retirement of baby boomers, who then drive fewer miles; more people moving to urban areas, where they drive less; and a decrease in teenage driver-licensing rates. With gasoline accounting for a smaller share of household expenses, the EIA said drivers may be less sensitive to price changes.

That may be one reason why travel marketers, which spent $4.3 billion on U.S. measured media in 2013, according to Kantar Media, don't seem to be hitting the gas on marketing. "I don't know of anyone offhand who is extending their marketing reach right now," said a spokeswoman for the U.S. Travel Association.

The Florida, New York and California tourism bureaus did not return calls for comment. A spokeswoman for local driving destinations operator Six Flags Entertainment said, "We see little to no correlation between attendance levels and oil prices."

But the tourism office for Motor City's home state is thinking positively. "The first thing you do when you're going on a trip is go to the gas station. When someone sees 'Hey, I paid half of what I did last year,' that's a good psychological start to a trip," said Michelle Grinnell, public relations manager for Pure Michigan.

The other possiblity is that travelers might take the gas money savings and put it toward a higher-end hotel, additional night stays or more restaurant visits.

"Gas prices sometimes have a psychological effect, you literally see the price rising and falling when you're out driving around. That may have a bigger impact than reality," said Dave Huether, senior VP-research at the U.S. Travel Association. "The secondary impact, however, happens in market when people travel. People spending less on gas have more disposable income, and they may spend that by staying longer or spending more money on dining out or entertainment."

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