Despite continued economic uncertainty more Americans are expected to choose family over finances resulting in first significant increase in any holiday travel this year, AAA reports.
AAA forecasts 42.5 million Americans will travel 50 miles or more from home during the Thanksgiving holiday weekend, a four percent increase from the 40.9 million people who traveled one year ago. This is the first significant increase in any holiday travel this year.
The Thanksgiving holiday travel period is defined as Wednesday, November 23 to Sunday, November 27.
“Driving AAA’s projected increase in the number of Thanksgiving travelers is pent-up demand from Americans who may have foregone holiday travel the last three years,” said Bill Sutherland, vice president, AAA Travel Services. “As consumers weigh the fear of economic uncertainty and the desire to create lasting family memories this holiday, more Americans are expected to choose family and friends over frugality.”
“This is the first significant increase in any holiday travel this year,” said Sutherland. “Memorial Day travel was statistically flat while Independence Day and Labor Day travel experienced decreases of 2.5 percent and 2.4 percent, respectively.”
While primary economic drivers continue to show improvement from one year ago, growth levels are not high enough to support a quick return to pre-recession levels of holiday travel. Rather a slow climb back is expected from 2008, which was a decade-low year for Thanksgiving travel with only 37.8 million Americans taking a trip. With volumes still below historical averages, pent-up demand will be a contributing factor in increased holiday travel, despite current economic conditions, AAA says.
Total economic activity, measured as real gross domestic product, is expected to grow by just 1.3 percent for the fourth quarter of 2011 compared to the fourth quarter of last year. The national unemployment rate is expected to be just fourth-tenths of a percentage point below last year’s level. Personal income, real disposable income and consumer spending are all forecast above last year’s levels. However, the growth rates of these indicators are weaker than last year, and Americans are expressing uncertainty about the future by way of weaker consumer sentiment and consumer comfort survey results. In particular, household net worth is expected to be 5.6 percent lower in the fourth quarter of this year compared to last year.
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 travel increases four percent, remains dominant mode of transportation, AAA says. Approximately 38.2 million people (90 percent of holiday travelers) plan to take to the nation’s roadways this Thanksgiving holiday weekend, a four percent increase compared to Thanksgiving 2010 when auto travelers totaled 36.8 million.
Automobile travel remains the preferred choice of transportation for holiday travelers as it is often more affordable, convenient and flexible. The current national average price for regular unleaded gasoline is approximately $3.39 per gallon, about 50 cents more than one year ago. However, the national average price is about 60 cents less than this year’s peak price of $3.98 on May 5.
The number of air travelers is expected to increase despite higher airfares, AAA says. Almost 3.4 million leisure travelers (eight percent of holiday travelers) will fly during the Thanksgiving holiday weekend, a 1.8 percent increase from 2010. Fuel costs, combined with steady air travel demand and capacity cuts have resulted in rising airfares over the past year. According to AAA’s Leisure Travel Index, Thanksgiving airfares are expected to be 20 percent higher than last year with an average lowest round-trip rate of $212 for the top 40 U.S. air routes. The combination of higher fares and lower availability of seats is expected to limit air travel growth this holiday to less than half of total traveler growth.
Other modes of travel (bus, trains, watercraft, multi-modal travel) will make up the remaining two percent of the total person-trips, with just over 900,000 people expected to travel by these modes, 14.7 percent higher than in 2010. Travel via these modes has declined significantly since 2008 and remains well below historical averages, so there is stronger pent-up demand from consumers that travel using these modes. In addition, economic conditions are dictating that those who otherwise might travel by air or automobile are traveling by alternative modes of travel.
Hotel rates for AAA Three Diamond or mid-range lodgings are expected to increase six percent from one year ago with travelers spending an average of $145 per night compared to $136 last year. Travelers planning to stay at AAA Two Diamond hotels can expect to pay seven percent more at an average cost of $103 per night. Weekend daily car rental rates will average $37, an eleven percent decrease from one year ago.
According to a survey of traveler intentions, the average distance traveled by Americans during the Thanksgiving holiday is expected to be 706 miles, which is a decline of 13.5 percent from last year when travelers planned to log an average of 816 miles. Median spending is expected to be $554, which is a 12 percent increase from $495 last year. However, Thanksgiving holiday travel is typically less expensive than other travel holidays because of the emphasis on the Thanksgiving meal and gathering of friends and family. Fuel and transportation costs combine to consume the largest share of holiday spending (33 percent), followed by shopping (18 percent) and food and beverages (18 percent. Other expenditures include accommodations (16 percent), entertainment and recreation (12 percent), and other costs (three percent).
Sixty percent of travelers report no economic impact on travel plans, AAA said. Despite high levels of concern seen in some consumer confidence and consumer comfort surveys, intending travelers seem comfortable with the state of the economy with respect to their travel plans. Sixty percent of intending travelers feel the economy has either no impact on their travel plans or that things have improved for them. The remaining 40 percent do state an intention to scale back travel plans but in light of the current economic conditions, this is still a positive sign for the industry and an additional reminder of just how important traveling is to the American people.