According to the Travel Industry Association’s
Travel Price Index, travel prices are rising faster
than the overall rate of inflation and have been
doing so for some time.
During 2005, the Consumer Price Index rose
3.4%, but travel prices as calculated by the TIA
were up 5.3%. For the first seven months of
2006, the CPI was up 3.9%, but the Travel Price
Index was up 6.3%.
Throughout this period, price increases for
lodging, food and entertainment were at or under the rate of increase for the CPI. Virtually all
of the gap between the two indices stems from
the rising costs of fuel and its effect on transportation costs.
As reported on page 18, respondents in this
year’s Travel Industry Survey were asked about
their attitudes toward various social or economic trends that could affect their business.
When agents were looking back at 2005,
most cited Internet competition as the trend
that had the greatest impact on their business.
Since it was a record year for hurricanes, it’s no
surprise that “natural disasters” came in second
at 23.4%.
In a statistical tie for second place, however,
was “increased cost of travel” at 23.3%.
When agents were asked to look ahead and
identify the trend that would have the greatest
impact on their business in the future, Internet
competition again took the lead at 34.3%, but
“increased cost of travel” claimed nearly as
many votes at 32.7%.
Are inflation and energy costs keeping travel
agents awake at night?
Perhaps not — or not yet — but as the following reports indicate, rising prices for energy
and travel are bound to create ripple effects, and
some agents are beginning to feel them.
RDamn the fuel costs,
full speed ahead
By Laura Del Rosso
ising energy prices, particularly at the gas pump, became a major topic of concern and conversation in the travel
industry this year, putting a scare into businesses that cater to motorists and creating havoc for the airline industry’s
recovery, but this was one economic jolt that seemed to leave few scars on the nation’s travel agencies.
Although gasoline prices started
trending down just before the Labor
Day weekend, anecdotal evidence
suggests that some business and discretionary travelers switched from
highway to air or rail travel for some
trips this summer or revised their
planning for fall and winter travel.
It is likely that retailers are picking
up a portion of that business, but it is
also likely that some consumers had
second or third thoughts about air
travel this year, owing to rising fares
and security concerns. It could be a
wash.
Some travel agents said they noticed
a slight uptick in rail and air bookings, but the meager increase made it
difficult to discern if it was prompted
by gasoline prices or other factors.
“By the time they call me, the decision to fly vs. drive has already been
made, so I really don’t know about
it,” said Linda Stark, manager of Vista
Travel in Boise, Idaho. “They usually
fly because of a time issue. As far as
the higher fuel prices, they mutter
and complain, but they still seem to
travel.”
At AAA, which, unlike most travel
agencies, promotes and offers help
in planning both drive and air vacations, there’s no question that
consumers think abou t
gasoline prices when
they make travel
plans, said Mike
Pina, a spokesman
for AAA in Wash-
ington.
“What we’re seeing is that when gas
prices go up, people
continue to travel, bu t
they may decide to tr avel
within their own state or a neighboring state, stay in less expensive hotels
and eat in less expensive restaurants.”
AAA has seen a spike in the use of
its Fuel Cost Calculator (www.fuel
costcalculator.com), which enables
users to determine the gasoline cost
of a trip. Visits to the site surged from
43,250 in January to 748,800 in May.
“More people are going online to
plan and budget before they go,” Pina
said. “They can determine that if
they are traveling by themselves over
a fairly long distance, flying makes
more sense. But once you get
a nother person in the
c ar, driving becomes
c heaper.”
Another AAA
service, the Fuel
Finder Web
site (accessible
through AAA
c lub sites), shows
r egional gasoline
p rices. Visits to that
s ite jumped nearly 168%
in the last year. More travelers are
also using AAA’s online search engine
for discounted hotels, 25% more in
April compared with the same month
in 2005, Pina said.
CLUES
AAA does not track directly wheth-
er U.S. travelers may have switched
from driving to other modes because
of high gasoline prices, but some AAA
research provides a few clues.
For example, in June, when gasoline
prices were skyrocketing, AAA Travel’s
advance air bookings for the Septem-ber-November period were up 23%
over the same period of 2005. Nobody
knows for sure, but could all of that be
attributed to pent-up demand?
Jacquelyn La Scola, manager of
Central Travel in Lambertville, Ohio,
is one agent who has sold more airline
and rail tickets since gas prices rose.
“People would rather hop on an
airplane than drive,” she said. “We
also have seen an increase in trips by
rail to Windsor [Ontario] and Toronto, which are popular weekend trips
from our area. We’re booking more
and more rail. They are not big-dollar
trips, but every little bit helps.”
The increased business seems to be
a fair reflection of consumer demand
because La Scola said the agency
had not actively promoted rail or air
