Vacations still continue despite rising gas prices

By: Jeannine Aversa

WASHINGTON — Vacationers coping with surging energy prices this summer could take shorter trips or pass up that extra souvenir or fancy dinner. But most people do not seem to be cutting back dramatically on their spending or skipping holiday travel altogether.
That helps explain why the tourism business in the United States is holding up well, industry experts and economists suggest.
A recent survey by the Federal Reserve found that reports from the tourism and hospitality sectors were mostly positive. Tourism was “exceptionally strong” in New York City. Atlanta, St. Louis and San Francisco all saw brisk activity.
Money spent on air fares, lodging, dining, souvenirs and other tourism components rose to $571.3 billion, at a seasonally adjusted annual rate, in the first three months of 2005.
The most recent figures available from the Commerce Department’s Bureau of Economic Analysis also show that spending from January through March was 6.6 percent higher than the same period in 2004.
Overall economic activity also is expanding solidly despite high energy costs.
Some in Portales rely on heavy travel for business purposes, like veterinarian Kevin Hertel. High gas prices haven’t deterred his vacation plans, but that’s because he didn’t have any.
“With my son going to Texas Tech in the fall, we are trying to save money so that eliminates the idea of vacations,” Hertel said. “When I make house calls I have been trying to be more efficient in getting to more than one (call per trip) instead of going and coming back (to the office between calls).”
Oil prices reached record territory in March and set a closing high of $61.28 a barrel in early July. Gasoline prices last week set a record of $2.33 a gallon nationwide, the Energy Department reported.
“There is clearly sticker shock when you drive past a gasoline station and see prices above $2 a gallon. It concerns travelers and justifiably so,” said Allen Kay, a spokesman for the Travel Industry Association of America.
“People will make some changes to their travel plans. They may not stay as long or travel as far. But they almost certainly will not cancel,” Kay said.
Portales real estate agent Beverly Bennett is one who has no such plan to cancel.
“I am driving a smaller car around and watching the gas prices closely,” Bennett said, “since I have a daughter in rodeo who’s currently traveling the country.”
With her daughter Brittany Bennett serving as the state’s rodeo queen, Beverly Bennett travels a lot to offer support.
The association, as part of its summer travel forecast, estimates that people in the U.S. will spend around seven nights away from home on vacation this summer, down from 7.6 nights last summer.
Travelers plan on spending an average of $1,019 on their longest leisure trip this summer, which would be 7 percent less than in the summer of 2004, the association said.
Vacation spending is being supported by an improved job market, income gains and a rekindling of home mortgage refinancing, which is leaving people with extra cash, said Mark Zandi, chief economist at Economy.com.
Those factors are helping to offset the potentially negative impact of higher energy prices, he said.
A weaker dollar compared with other currencies makes it more expensive for Americans to travel abroad, so people decide to vacation in the U.S., Zandi said.
The flip side of the weaker dollar is that it is a cheaper and thus more attractive destination for foreigners.
Some 49.1 million international visitors are expected to come to the U.S. this year, which would represent a 6.5 percent gain over 2004, according to an estimate by the Travel Industry Association of America.
“There is a pent-up demand for travel” that had taken a big hit from the attacks of Sept. 11, 2001, said Kathryn Sudeikis, president of the American Society of Travel Agents.
“People will moan about high energy prices or fuel surcharges, but they haven’t said `no thanks’ about taking a vacation,” she said.
Justin McNaull, a spokesman for AAA, said expensive gasoline so far does not appear to be crimping summer road trips. “From a summer vacation standpoint, the automobile still rules the roost,” he said.
Tony Berger, chief operating officer for Cendant Corp.’s hotel group, says business is brisk. “Despite higher gas prices, summer road trips are strong, benefiting our economy chains, including Days Inn and Super 8,” Berger said.
Ed Mortimer, director of congressional and public affairs at the U.S. Chamber of Commerce, said the group is pleasantly surprised that travel and tourism seem to be holding up so well in light of the high energy costs.
“From everything we’ve seen at this point, people are just swallowing the increased energy costs and finding a way to travel and vacation,” he said.

PNT Staff Writer Marc Schoder contributed to this report.