High Gas Prices Trigger Fears for Travel Companies
BY Angus Loten
Nearly half of U.S. consumers say they will scrap their summer travel plans if prices continue to climb.
After losing ground to the Internet for years, small travel agencies could be facing their leanest summer yet as rising gas prices cut into the nation's travel plans, a new report shows.
In a survey of more than 1,500 U.S. consumers, nearly half said they would scrap their summer vacation plans if gas prices continued to climb, according to Principal Financial. As many as 29 percent said they've already cancelled family road trips and other travel plans to avoid higher prices at the pumps.
Last week, average gas prices dropped by a nickel to $3.15 per gallon after climbing to record highs across every region. Despite the decline, prices were still more than a quarter above the same period last year and are expected to rise again in the months ahead, according to the Energy Information Administration.
"For economy travelers, I can see this affecting them," said David Francis, a co-owner with his wife of Bowling Green, Ky.-based Carried Away Vacations.
Still, Francis isn't too worried. Recently, he helped plan a summer trip to Memphis, Tenn., for a local hot-dog stand owner -- exactly the kind of client who would be most impacted by higher fuel costs, Francis said.
"We're serving the rural American market and they're the ones who are going to feel this the most," said Francis, who also runs a local small-business advocacy website. "But when you get the travel bug, a few extra bucks on gas isn't going to stop you."
Regardless of gas prices, he expects most consumers will go ahead with their summer plans -- just as they did when gas prices spike after Hurricane Katrina -- and instead adjust their spending along the way.
Indeed, a third of the consumers surveyed by Principal Financial said higher gas prices had them re-considering car purchases, carpooling, or changing fuel grades. Those that planned to stay home were more likely to put money into household projects and renovations, the survey found.
Likewise, travel agents and destinations -- such as hotels, campgrounds, parks, and other attractions -- can also readjust their spending strategies by marketing closer to home, Francis said.