‘Tis the Season for Holiday Travel

Between Friday, Dec. 23, and Monday, Jan. 2, AAA forecasts that 91.9 million Americans will travel 50 miles or more from home during the upcoming holidays, a 1.4 percent increase over the 90.7 million people who traveled one year ago.  However, fewer Americans will be traveling by plane, opting instead for car and bus travel, AAA said. 

“The 11-day yearend holiday period is the longest travel season of the year, providing many Americans time to visit family or take vacations,” said Jim Lehman, executive vice president, AAA East Central. “Yearend travel has steadily increased since 2008. Traditionally the holidays are a time of rest and rejuvenation before the new year.”

Economic improvements are continuing at a very slow pace, and consumer surveys show active concern and pessimism over that pace.  The measure of economic activity, real gross domestic product, is expected to increase for the fourth quarter of 2011 by 1.5 percent vs. the fourth quarter of 2010.  While 1.5 percent growth is still slow, it is a slight increase over the expected 1.3 percent fourth-quarter growth predicted only one month ago. 

“While pent-up demand was projected to inspire significant Thanksgiving holiday travel growth this year, yearend holiday travel tends to be less dependent on economic factors, Lehman explained. “So, pent-up demand did not play a large role in the forecast.”

Travel during the yearend holiday period did not see the dramatic drop in travel following the 2008 recession that other holiday periods experienced.  Yearend holiday travel has grown each year since 2008-09; 89.5 million in 2009-10; 90.7 million in 2010-11; 91.9 million this year.  

Fifty-nine percent of those planning to travel feel the economy has either no impact on their travel plans or they feel like things have improved for them. The remaining 41 percent state an intention to scale back travel plans due to economic concerns.  Given current economic conditions, a majority of travelers reporting no economic impact on their travel plans is a positive sign for the travel industry and another reminder of just how important traveling is to Americans.   

AAA’s projections are based on economic forecasting and research by IHS Global Insight. The Boston-based economic research and consulting firm teamed with AAA in 2009 to jointly analyze travel trends during the major holidays. AAA has been reporting on holiday travel trends for more than two decades. 

Automobile is top transportation choice, increases 2.1 percent

Approximately 83.6 million people (91 percent of holiday travelers) plan to take to the nation’s roadways this holiday travel season, a 2.1 percent increase compared with 2010-11, when the number of auto travelers totaled 81.9 million.  

The current national average price for regular unleaded gasoline is around $3.26 per gallon, about 29 cents more than one year ago.  However, the national average price is about 72 cents less than this year’s peak price of $3.98 on May 5. 

Air travel down nearly 10 percent

About 5.4 million leisure travelers (six percent of holiday travelers) will fly during the holiday travel period, a 9.7 percent decrease from 2010-11. Jet fuel costs and capacity cuts continue to affect holiday air travel.  According to AAA’s Leisure Travel Index, holiday airfares are expected to be 21 percent higher than last year.    

Train, bus, other modes of travel increases 4.2 percent  

Other modes of travel (bus, trains, watercraft, multimodal travel) will make up the remaining three percent of the total person-trips, with 2.9 million people expected to travel by these modes, 4.2 percent higher than 2010-11.  Economic conditions are dictating that some Americans that otherwise might travel by air or automobile are traveling by these alternative modes of transportation. 

Hotel rates increase; car rental rates decrease

According to AAA’s Leisure Travel Index, hotel rates for AAA Three Diamond or mid-range lodgings are expected to increase a modest one percent from last year with travelers spending an average of $126 per night vs. $125 a year ago.  Travelers planning to stay at AAA Two Diamond hotels can expect to pay four percent more at an average cost of $92 per night, up from $88 last year.  Daily car rental rates are $40 on average, a 21 percent decrease from a year ago and the lowest seen in the past five years. As the demand for used cars fluctuates or car manufacturers offer fewer opportunities for buying back fleets, it can become harder for car rental companies to shrink their fleet to meet demand.  With a larger pool of cars in the market, car rental companies must lower pricing to match supply and demand. 

Travel distance decreases; median spending increases

According to a survey of traveler intentions, the average distance traveled by Americans during the holiday travel season is expected to be 726 miles, a decline from 2010-11, when travelers planned to log an average of 1,052 miles.  Propelling the reduction in expected travel miles is the 9.7 percent decline in air travel and indications that many air travelers are choosing shorter-distance flights.  Median spending is expected to be $718, which is a three percent increase from $694 last year. Fuel and transportation costs combine to consume the largest share of holiday spending (32 percent), followed by shopping and food and beverages (tied at 19 percent). Other expenditures include accommodations (15 percent), entertainment and recreation (12 percent), and other costs (four percent).