May 12, 2008

Gas prices, economy may shorten summer trips, experts say

The price of oil has climbed steadily for several weeks, reaching an all-time high of over $125.96 a barrel on Friday (May 9). The national average retail price of gasoline reached $3.718 a gallon on Monday (May 12), and economists expect the trend to continue.

Liping Cai, professor of tourism management and director of the Purdue University Tourism and Hospitality Research Center, said families, especially those with children, will still want to travel.

"Americans won't stop traveling this summer, but it will be a choice," he said. "Our experience tells us they will go shorter distances."

The overall economy also will have an effect on travel plans, said Joseph A. Ismail, associate professor of hospitality and tourism at Purdue.

"I think we could be looking at some form of a perfect storm for travel this summer and people's behavior may be changing," Ismail said. "You have a high number of home foreclosures, a lot of credit debt, and gas and food prices are going up. The Energy Administration is forecasting a decline in gas usage for the first time in 16 or 17 years."

Cai said the surge in highway travel since the terrorist attacks on Sept. 11, 2001, might end.

"Since 2002 we have observed that people expanded their car travel radius by two hours," he said. "In other words, if their limit for driving from home was four hours, they went up to six hours. Rural destinations and communities benefited.

"Driving allowed consumers to think they were in control, both emotionally and financially. But I think that surging gas prices, especially this year, have dampened this trend. Consumers feel they are losing control, both psychologically and economically."

Air travel also may be difficult this summer, Ismail predicted.

"Fuel costs are rising, domestic carriers are focusing more on long-haul international flights, and merger possibilities and business travel are expected to remain strong," he said. "Leisure travelers may find domestic air travel crowded, late, expensive and unresponsive to their needs.

"There could be mergers, gas surcharges, continued delays and cancellations, and what may be a true conundrum for the leisure traveler."

There are alternatives to spending large amounts of money on vacation travel, Cai and Ismail said.

"You have to plan ahead, look for vacation opportunities in your city and your county," Cai said. "You can still get some fresh air and experience nature without panic and pain at the pump."

Ismail had more advice on how to reduce costs.

"Don't eat out every meal," he said. "Take food with you. When I was growing up, my family camped in a Volkswagen bus when we traveled on vacation.

"Taking the Amtrak to Chicago may be a feasible alternative, especially with gas prices up and the cost of parking."

Cai and Ismail said smaller and local businesses might benefit from changed travel trends.

"If consumers change their behavior, there is an opportunity for businesses," Cai said. "An attraction that draws 60 percent of its clientele from the city may see more customers from around the area who are driving shorter distances.

"But businesses need to look hard at who their customers are, know the impact of fuel and food prices on them, and gauge the impact on their business."

Area and state attractions also could be helped, Ismail said.

"The branding of local communities as shopping, dining and museum destinations may pay off," he said.

"The kinds of places that may flourish are local amusement parks and small resorts that are in a local area. It may be a good time for them to focus on value and improvements so that people come back year after year and not worry as much about immediate profits."

Cai said high-end destinations could still do well this summer. If people spend less on travel by going a shorter distance, he said, they could afford more for hotel and lodging.

Writer: Greg McClure, (765) 494-9394, gmcclure@purdue.edu

Sources: Liping A. Cai, liping@purdue.edu

Joseph A. Ismail, (765) 494-4736, ismailj@purdue.edu

Purdue News Service: (765) 494-2096; purduenews@purdue.edu

Note to Journalists: Liping Cai can be contacted only by e-mail, at liping@purdue.edu, through May 20

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