Stronger Vacation Season Forecast

May 28, 2004
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High gasoline prices will affect travelers' plans for this summer but shouldn't cut into Michigan's $15 billion tourism industry, according to industry outlooks.

The state, in fact, could actually see some benefits if gas prices, as predicted, stay near or above $2 per gallon.

The high gas prices may prompt travelers to defer long-distance vacations elsewhere and stay in Michigan, or cause people from neighboring states to opt for a destination in the state that's within a day's drive, such as the beach, said Dave Lorenz, vice president for Travel Michigan, the state agency responsible for promoting tourism in the state.

"As much as we don't see any good in it, we don't see that it's going to hurt the tourism and travel industry," Lorenz said. "The real difference in cost to take that trip in Michigan is not that great. People will make adjustments but they'll still spend the money they have allocated and maybe even more."

Weighing in the industry's favor are a rebounding economy and pent-up demand to travel that should help to largely offset travelers' concerns about higher gas prices, Lorenz said.

Travel Michigan's 2004 Tourism Barometer, based on surveys with businesses and travelers, indicates that gasoline prices would have to climb much further before any significant impact on tourism occurs.

The consumers surveyed indicated that gasoline would have to hit an average price statewide of $2.82 per gallon before they'd consider making a "substantial" reduction in the number of miles they drive for a pleasure trip and $2.55 per gallon before considering a "moderate" reduction.

At an average price of $2.35 per gallon, travelers would consider a "slight" reduction in their travel plans, according to the results of Travel Michigan's survey that were released last week.

The average price of gasoline in Michigan going into the Memorial Day holiday weekend was $2.09 per gallon statewide, according to AAA Michigan's latest weekly price survey. That's 57 cents higher than a year ago.

The U.S. Energy Information Agency predicts that the average price of gas nationwide, after peaking at $2.03 per gallon in June, will ease to about $1.90 for the summer months.

While the present price of gasoline won't deter travelers too much, it may have them looking for ways to offset the higher costs, Lorenz said. Travelers will likely look for better pricing, discounting and packaging as they plan their trips, he said.

Travel Michigan is encouraging destination communities and attractions, in light of the high gasoline prices, to alter their marketing and business plans accordingly.

"We're going to do everything we can to take advantage of this," Lorenz said.

Destinations and attractions will have to "do a lot of value-added things" that encourage people to stay in or come to Michigan, he said.

"People will adjust and look for those deals," Lorenz said. "The reality is it's going to be a little harder hit in the wallet, so we need to make it easier for them."

The Travel Michigan summer Travel Barometer shows that more than half of the respondents view gas costs as a small part of the expense of a trip and will drive to where they want to go regardless of prices, although half conceded they may limit their driving and stay closer to home.

The barometer offered mixed results on how the industry may fare this year, although businesses are "somewhat optimistic" heading into the summer travel season. Forty-two percent felt their business would do better than last year, one-third predicted the same results as 2003, and one in five forecast a worse year.

Michigan State University's Travel, Tourism & Recreation Resource Center in March, prior to the spike in gas prices, forecast a 3 percent to 4 percent increase in travel volumes in 2004 and 4 percent to 5 percent growth in travel spending.

Nationally, the Travel Industry Association of America in mid-May forecast a 3.2 percent increase in leisure travel for the summer season, and a Web site devoted to people who travel by recreational vehicle, funroads.com, reported last week that 91 percent of RVers are still planning to take their trip, despite high gas prices.

In one West Michigan community, Grand Haven, where tourism has an estimated $41.2 million annual economic impact, the visitors bureau is standing by its prediction for a 5 percent increase in travel this year, based on revenues from lodging assessments. The area is a drive-to destination that relies heavily on travelers from Michigan and neighboring states who are close enough that higher gas prices shouldn't affect travel plans, Grand Haven-Spring Lake Visitors Bureau Director Marci Cisneros said.

"I don't think it's going to be enough to deter them or make people change their vacation of weekend plans," Cisneros said.

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