23 percent of Americans cut back, or abandoned altogether, their weekend travel plans because of gas prices, a survey by consulting firm Deloitte & Touche found, according to Bloomberg. High gas prices coupled with worries about the economy will likely have a big impact on this year’s travel season and beyond. Investors should consider the implications of such changes.
People are always going to need vacations and time off, so one way or another they are going to get it. The question is, where are they going to go? Obviously with gas prices so high traveling long distances, either by car or plane, becomes more expensive. Thus we can conclude that people are going to be taking their vacations closer to home than they normally would. Instead of driving 400 miles to a lake resort in a neighboring state, maybe families will settle for the one 50 miles away, whether or not it is as nice. Resorts, camp grounds and other recreational and vacation-type places close to urban centers will in all likelihood see increased business. These naturally will become the places people from the city turn to instead of further out locations. Owners of vacation and recreational properties that are far out but get most of their business from in-city travelers could be in for some rough times.
While the above scenarios focus mainly on weekend-type vacation, there will also be impact on international travel. Vacationing in Europe was already becoming prohibitively expensive thanks to the falling dollar, but now with airlines raising ticket prices to cover the cost of fuel, the dream of a European vacation is now out of reach for most people. Instead of traveling to Europe those vacationers looking for a more exotic local might turn to Mexico or a Central American country. The flights to Mexico and Central America are still affordable, and the cost of goods and services in Latin America are cheap.
High gas prices are changing more than just the thickness of our wallets, they are changing our lifestyles. It used to be that gas was an afterthought; now it is on the forefront of everyone’s mind. Instead of the big SUV, more people are opting for the fuel efficient sedan; instead of buying a home in a far out suburb, people are opting for the close in condo or smaller home; instead of traveling long distances for our vacations, we are now staying closer to home. High gas prices are changing the way we live, and since they are unlikely to go away any time soon investors should take note of these trends and act accordingly.