Travel Patterns Hold Steady Despite Higher Fuel Costs

The poll focused specifically on holiday travel, but the results have implications for the travel industry at large, particularly regarding American's willingness to spend money on travel during the 2005 holiday season.

Gas prices had no impact on travel in 2005

Poll questions were developed when gas prices were hovering around their all-time high of $3.00 per gallon. Since gas prices are typically a significant spending predictor, it seemed reasonable to assume that high fuel prices would deter holiday travelers, especially since there are so many other expenditures this time of year. This proved not to be the case. The percentage planning holiday travel was nearly identical to polls taken in previous years.

Furthermore, only eight percent of total respondents cited higher gas prices as a reason to cancel a trip they would normally take. Apparently, those canceling plans were offset by approximately equal numbers who said they planned to take a holiday trip they normally didn't take. When considering these combined findings, the conclusion is that dramatic gas price increases were not going to dampen holiday travel plans, even before gas prices began to fall again in November.

While inflation causes annual price increases, Americans were resigned to spend more money on holiday travel in 2005 compared to previous years. Those who value holiday travel make it a priority despite higher costs. Over half (51%) of those who planned to travel said they were expecting to spend more in 2005 than in 2004. This figure is significantly higher than previous years:

Additionally, the average amount travelers planned to spend on 2005 holiday travel was up slightly ($1,251.41), $108 more than in 2004:

The data suggests Americans still feel positive about the economy. An earlier 2005 Maritz Poll indicated three out of four (74%) people said their employer was doing 'better' in 2005 than in 2004. Ninety-six percent (96%), of those who thought they might leave their jobs within the next several months, said it would be by choice, rather than due to a layoff. Confidence in the economy is likely why high gas prices did not impact 2005 travel plans as it has previously. Plus, gas prices declined in time for 2005 Thanksgiving travel affording an added benefit for travelers willing to pay the extra cost to see loved ones.

No significant shift from driving to flying

There was some notion that the high gas prices might induce some to fly. However, there was no noteable shift to air travel among those who normally drive. And, nearly two-out of three (62%) opted to drive their own car for either Thanksgiving or Christmas in 2005, as opposed to flying. This number was entirely consistent with previous years.

Poll data indicates major air carriers have been largely successful competing with regional carriers. In 2005, two out of three winter holiday air travelers intended to fly American, Northwest, Delta, Continental, United, or US Air. However, competitive pricing has prohibited the major airlines from recouping financial losses suffered earlier in 2005 as a result of dramatic fuel price increases and other operating costs. Reduced flight schedules have resulted in planes that are full of passengers, but do not necessarily reflect greater travel volume.

Still staying home for the holidays in 2005

Nearly eight-out-ten holiday travelers (78%) planned to stay at the home of a family member or friend for the 2005 Thanksgiving or Christmas holidays. However, there was a small segment of the U.S. population (5%) that intended to stay at a resort, spa, hotel, bed and breakfast, or some other vacation destination for one of these holidays. The average rate paid for overnight accommodations has increased substantially in 2005.

On-line booking remained a popular method of making flight arrangements in 2005

Two-out of three (64%) 2005 holiday travelers booked their flights on-line. This figure was similar to 2004 (63%), although slightly higher than 2003 (56%). The opportunity to find competitive pricing, as well as the opportunity to easily compare competitive options makes the internet a popular travel planning venue.

Leave the cooking to others

Nearly one-third (31%) indicated plans to dine out on at least one of the major holidays. This represents some increase over past years (e.g., 26% in 2004 and 23% in 2003.) In 2005, 13% indicated they planned to have their Thanksgiving dinner in a restaurant; up from 11% in 2004, and 9% in 2003. Dining out for either Christmas Eve or Christmas Day reflected a slight upward trend, with 13% dining out in 2005 compared to 12% in 2004 and 11% in 2003. Surprisingly, only 4% plan to dine out for 2005 New Year's Eve. This number has held steady over the past three years and does not take into consideration other New Year's Eve celebrations that may include food and drink.

Summary

Although gas prices rose steadily during 2005, there was no discernible impact on travel over Memorial Day, Independence Day, Labor Day, Thanksgiving, or Christmas. This represents a deviation from the past as historically, rising gas prices have had an adverse effect on the economy. Furthermore, the data shows people aren't altering their driving habits to any significant extent, nor are they hesitant to spend more money on travel-related expenses.

Holiday travel remains a high priority for a significant number of Americans. Beyond this, the data suggest Americans still have enough confidence in their earning potential that the foreseeable future looks positive for most travel and hospitality industries. The one exception seems to be the airline industry, which still must find ways to recoup losses due to rising fuel and ongoing operating costs.

Published by Maritz Research
Date: Volume 19 - January 2006

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