May 24, 2013

Summer travel forecast: Better, but no blowout 


Those with money are taking more extravagant vacations, but a large swath of the population is staying close to home.

By Jonathan Fahey and 
Scott Mayerowtiz / The Associated Press

(Continued from page 1)

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A tourist boat passes Spring Point Ledge Lighthouse as a solitary visitor enjoys Willard Beach near Fort Preble in South Portland.

2008 Press Herald File Photo / Gordon Chibroski

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Those with higher incomes never stopped traveling, but thanks to new highs in the stock market they now feel secure enough to take longer vacations.

Patrick Veling, the owner of a California real estate data analysis and consulting business, says he's taking his "most expensive vacation ever" this year. Instead of the normal one-week vacation, he and his wife Susan are taking their two adult kids on a three-week vacation through northern Europe that will include a 12-day cruise. They'll see Denmark, Norway, the Shetland Islands, Ireland and the Netherlands.

"My confidence in the economy and my business is now strong enough that my wife and I have pretty much insisted we make this trip," says Veling.

Others are benefiting from rising home prices and low interest rates. Their homes are finally worth more than they owe on their mortgage, and they are finding it easier to refinance. That leaves them more money to spend.

"The improvement in confidence is all in the upper-income brackets," says Diane Swonk, chief economist at Mesirow Financial. 

NOT ALL PARTS OF RECOVERY ARE EQUAL

There has been a slow and steady climb back, but not all parts of the recovery have been equal.

Luxury hotels such as Four Seasons, Park Hyatt, Ritz-Carlton and Mandarin Oriental are filling 73 percent of their rooms on average, surpassing their pre-recession peak, according to an Associated Press analysis of data from hotel research firm STR.

But budget hotels like Days Inn, Econo Lodge and Motel 6 are still below their 10-year occupancy average and more than 3 percentage points below their peak.

The same pattern holds for fliers.

Domestic traffic is projected to grow 0.7 percent this summer, while the number of people buying more expensive international tickets will climb 2.6 percent, according to Airlines for America.

"Expect luxury travel to continue to rebound – consistent with luxury across all industries – while the rest of summer travel will be flat" as the economy still weighs heavily on middle-income families, says Adam Weissenberg, who heads the travel and hospitality consulting group at Deloitte.

But some less-expensive destinations are seeing a recovery.

CAMPGROUNDS FARE WELL

Campgrounds fared well during the downturn because they are relatively affordable. Some are now doing better business than ever because the operators have retooled their facilities to entice visitors beyond the typical outdoor types.

Steve Stafford, general manager of North Texas Jellystone Park Camp-Resort in Burleson, Texas, has attracted a broader swath of people with "homesteads." These are recreational vehicles that look like cottages. Now the camp can accommodate campers with tents who only have to pay $32 a night for an empty patch of ground and those who want to stay in the comfort of the largest homesteads for $209 a night.

The 37 existing homesteads were booked solid last year. So Stafford is adding a dozen new ones. Those are already booked, even though they are still being installed.

In recent years, the campground has added activities such as arts and crafts, live bands, laser tag, outdoor big-screen movies and theme weekends to try to lure people back. On the schedule for Memorial Day weekend: A chocolate pudding slip 'n slide.

The moves appear to be working.

"The way it's looking so far, we are going to be way up," Stafford says. "No matter how bad things get, people are going to take a vacation."

The hunt for inexpensive vacations is helping companies that recreational vehicles, too. Traveling by RV means families don't need to pay for hotels and can cook most of their meals. Families may not be ready to buy one – sales are only up slightly – but more are choosing to rent one this summer for as little as $100 a day, or $300 during peak weeks.

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