- The Washington Times - Thursday, April 24, 2008

Americans are scaling back on summer vacation plans as a slowing economy, spiking fuel costs and rising air fares combine to form a gloomy summer travel forecast.

But the American summer vacation isn’t going to disappear. Industry experts say travelers will likely choose destinations closer to home or not stay away as long as they did in the past — that the summer escape from school and work is too sacred to sacrifice to save a few dollars.

“Never underestimate the U.S. consumer and what seems to be their inalienable right to vacation,” said Rod Petrik, lodging analyst at Stifel, Nicolaus & Co. Inc. in Baltimore. “No matter how tough times are, people are still somehow budgeting their vacation.”

Getting to vacation hot spots is going to cost more this summer, as all forms of transportation — planes, cars, trains and even cruise ships — are feeling the pinch of record crude-oil prices. The spike has already sent several airlines to the poor house and is expected to send pump prices to the $4 mark.

Hotels, however, are likely to offer incentives to get Americans into their guest rooms by reducing rates or at least not raising them, experts say.

Travelers loading up the family car this summer will pay $20 to $40 more in gas than they did last summer for the average trip. That comes out to “about the cost of one family meal at Pizza Hut,” said Roger Dow, president and chief executive officer of the Travel Industry Association, a Washington trade group.

“The travel industry is aware of the effect rising prices have on Americans, and many destinations, such as New Hampshire, are proactively rolling out incentive programs, such as gas-rebate cards,” he said. “Expect that to increase as summer draws closer.”

Travel deals are going to be a bit harder to find, but they’re still out there, said George Hobica, who runs the deal-seeking Web site airfarewatchdog.com.

“You have to be more flexible than ever to find the low fares,” Mr. Hobica said, pointing to $69 one-way flights from Washington Dulles International Airport to Orlando, Fla., on JetBlue. The airline is offering the low rate after it starts the service May 1.

He said that the more flexible domestic fliers are — willing, for instance to book on Tuesdays and Wednesdays — the more likely they are to find a deal.

“Hoteliers and airlines, they’re still incentivized to create deals and opportunities to fill seats,” said Jay Rein, president and chief executive officer of travel site TravelWorm.com. “At the end of the day, every seat not filled is a wasted seat.”

Hotels are more likely to offer deals because they can’t take rooms out of service. Airlines, on the other hand, can take planes out of service and offer fewer flights, increasing occupancy on the planes they are flying, Mr. Rein said.

Even so, hotel companies are feeling the pinch. Marriott International Inc. of Bethesda last week blamed disappointing first-quarter earnings on “slowing economic growth” in the United States.

Business hotels and big-city hotels are still feeling pretty comfortable, but budget and interstate hotels are already starting to feel the economy’s pinch, Mr. Petrik said.

Foreign travelers could help. The weak American dollar is like a huge “sale” sign for travelers coming to the United States carrying British pounds or euros.

The nation’s gateway cities — New York, Washington, Los Angeles and San Francisco — are seeing a bit of a boost from foreign travelers taking advantage of the dollar’s woes, Mr. Petrik said.

Transportation companies have had trouble recouping the rising, record cost of fuel. The price of crude oil topped $118 per barrel for the first time this week, and the nation’s average cost of gasoline topped a record $3.50, according to AAA Mid-Atlantic.

“It’s ricocheting all across the economy and the travel industry,” said John B. Townsend III, spokesman for AAA Mid-Atlantic. “We’ve never seen this, where across the board everything is going to be this expensive.”

Airlines have tacked on one fuel surcharge after another, typically about $20 but some reaching $70 per round trip.

Some are choosing other unique fees to raise revenue: five of the country’s largest carriers now charge $25 for a second piece of checked luggage, following the move of United Airlines in February. US Airways and JetBlue Airways are now charging customers extra to sit in the first few rows or the spacious exit row.

Seagoers are facing extra fares, too. Cruise lines are demanding customers pay fuel surcharges of up to $9 per day. Some of the companies had tried tacking on the costs after customers had paid for their trips. Florida Attorney General Bill McCollum pressed the companies to return at least $61 million in fees to those customers.

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