Low gas prices, inbound travel fuel promising US summer
Low gas prices, inbound travel fuel promising US summer
13 MAY 2016 8:58 AM

Hoteliers are preparing for an especially strong summer with the current state of the oil markets, consumer confidence and an increase in inbound domestic and global travel.

REPORT FROM THE U.S.—With low gas prices, strong consumer confidence and increasing domestic and international leisure travel, hoteliers around the U.S. are expecting an especially strong summer.

Joseph Khairallah, COO at Marcus Hotels & Resorts, said his company expects those factors to come together to fuel demand for a strong season.

“Our outlook for this summer is positive, our properties are forecasting demand to be similar or higher to last year where summer was very strong,” he said. “We are expecting a good mix of both transient and group business.”

And sources in popular leisure destinations said they’re also seeing positive signs.

Karen Thomson, vice president of sales and marketing at Paramount Hotel Group, said the company is expecting a busy summer at its properties in Charleston, South Carolina.

“We’re forecasting to do extremely well in the Charleston area,” Thomson said. “That’s just such a hot button for destination weddings and the beach is right there, and it’s that whole kind of country environment. It’s really inviting.”

According to data from MMGY Global, travel in Florida is expected to hit an all-time high for the season. As of April, MMGY Global’s Travelhorizons Travel Sentiment Index reached an all-time high in its nine-year history. The index, which calculates leisure travel demand six months out based on several indicators, was at 121, up six points from 2015.

Cheaper gas prices equal more travel
With the stabilization of the oil markets, hoteliers said more guests are willing to drive a longer distance to their destinations.

“Any time gasoline is affordable, that always (leads to) families getting out and taking vacations,” Thomson said. “(Travelers) in the past would only stay within a 50- or 75-mile radius (from home) because of higher gas prices, but now they may venture out into a further radius to drive.”

Khairallah said lower costs to travel and improving consumer attitudes in general will help Marcus properties maintain steady leisure demand throughout the summer.

“Favorable fuel prices combined with positive consumer confidence trends will help keep leisure travel demand strong this summer.”

In a first quarter earnings call, Choice Hotels International President and CEO Steve Joyce said the company is also expecting more people to travel and an overall busy summer.

“(Gross domestic product) growth is decent; employment, which is a key factor we look at, has really improved; and it looks like it will continue to improve. … Housing starts look good, and there’s optimism in those markets,” Joyce said. “And consumer confidence is there.”

Leisure leading the way
Destination weddings are one major driver in the South Carolina market for Paramount, but Thomson said guests often double as wedding-goers and leisure travelers, making leisure another main component for successful summer business.

“(Summer guests are) a combination of both,” she said. “I think what we see is people coming in and they’re wearing two hats. You know (guests say,) ‘Hey, let’s stay three or four nights in the Charleston area and one night we’ll go to the wedding, and the other will be the leisure go-to-the-beach-type thing.’ I think we’re seeing more of that combination type traveler, but it’s definitely stronger on the leisure side than on the corporate traveler side.”

Thomson said leisure travelers at Paramount properties in Des Moines, Iowa, often visit the state for the Iowa State Fair, which this year will be held 11-21 August. She said families traveling for sports tournaments have also opened up a new business outlet for Paramount’s Iowa hotels.

At Xanterra Parks & Resorts’ Yellowstone National Park Lodges, leisure travelers make up the majority of summer visitors. Rick Hoeninghausen, director of sales and marketing at Yellowstone, said park visitors start rolling in in May, but peak season is from mid-June to mid-August.

With the national parks across the U.S. celebrating a centennial this year, Hoeninghausen said events centered around the 100th anniversary could result in more summer visitors than last year.

“Park reservations are pacing a little ahead of last year, and last year was a very good year for lodging and campgrounds,” Hoeninghausen said. “We had a record visitation year, last year. Typically before the end of the summer, we will have sold out for the vast majority for the nights in the park.”

More inbound global visitors
Yellowstone has always had a strong visitor mix from Japan, but over the past few years, the number of summer visitors from China has grown, Hoeninghausen said. He said the park doesn’t do much marketing to China, but visitors are increasing.

With the recent terrorist attacks in Europe, Hoeninghausen said European travelers are becoming very interested in vacationing in the U.S. because of the higher level of safety in America.

“According to our representatives in Europe, the trend is that there is still a big interest in traveling, and long-haul travel is a good thing,” he said. “America’s a popular place, and there’s safety that America provides that’s even more important right now to some of these European travelers.”

Khairallah said Marcus Hotels & Resorts is expecting a little extra business in major markets this summer from global guests.

“We predict hotels in major markets like Chicago, Los Angeles and Las Vegas will enjoy additional business from international travelers, especially from China,” he said.

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