Despite fuel costs reaching their second highest point in history—with some analysts predicting prices will approach the $4-per-gallon mark before summer’s end—Americans are traveling more than ever before.Executives from the American Automobile Association (AAA), Best Western International, the world’s largest hotel chain, and Southwest Airlines recently convened in New York City to discuss a variety of topics important to the business and leisure travel market.

From soaring fuel costs to new trends affecting travelers, industry leaders shared their views on a wide range of issues that could impact the travel industry for months to come.

Fuel Costs and the Travel Industry

Dorothy Dowling, senior vice president of marketing for Best Western, said this year’s high gas prices have not deterred leisure or business travel within North America. Hotels at popular family destinations like Orlando, Anaheim and the Grand Canyon, as well as at the chain’s popular water park hotels across the U.S., continue to see record-breaking occupancies.

According to Sandi Hughes, vice president of travel services for AAA, there is no specific fuel price point that will deter leisure travelers from hitting the road.

“Historically, traveling by car has been the traditional form of travel regardless of gas prices,” said Hughes. “The leisure market will find a way to travel—even if that means taking a shorter trip. Statistics may show that people won’t travel because of high gas prices, but in the end, they do anyway. By the time vacationers eat, stay in a hotel and sightsee, those prices are much higher than the price of gas alone.”

Although the cost of fuel has had an impact on the airline industry, demand for air travel is breaking records and remains strong throughout the summer, said Beth Harbin, Southwest Airlines’ director of strategic communications.

“2005 was the fifth year in a row in which the airline industry lost money,” said Harbin. “We’ve seen a turnaround this year as demand continues to increase. Fares have gone up a bit, but are still lower than they were before 9/11. As a low-fare carrier, we are very mindful of pricing as it’s what our customers rely on most.”

Business Travelers Adjust to the Times

Gas prices are affecting business travelers more so than those in the leisure market. Although the hospitality industry in general has not seen an increase in business travel this year, Best Western has experienced growth in this area as more businesses seek affordable and dependable lodging for their employees.

“Business travelers’ dollars no longer buy what they did just a few years ago, so many are reconsidering the midscale market,” said Dowling. “Best Western provides the business traveler with a value proposition that can’t be beat—beginning with free high-speed Internet access at every hotel in North America.”

Niche Travel Continues to Grow

As travel becomes a rite of passage for Americans, many are seeking more adventure on their trips. AAA, Best Western and Southwest Airlines have noticed an increase in this trend, with the hotel chain offering accommodations in areas that provide a wide range of activities, including skiing, rafting, rock climbing and hiking.

“One of Best Western’s strengths is that our properties are virtually everywhere the traveler wants to be,” said Dowling. “In addition, as more Baby Boomers reach retirement age, we’re predicting continued growth in ‘soft’ adventure travel, such as canoeing, whale watching and bike riding.”

Southwest Airlines’ Harbin says fliers who take their gear with them are living proof that adventure travel is on the rise. “We’re seeing it in the belly of the aircraft. Surfboards, skis and mountain bikes have all become part of normal everyday cargo for us.”

Reservation Roulette

AAA has long advised travelers to book in advance in order to secure the best prices possible. As time passes, supply and demand comes into play and costs rise. As a result, Hughes says many vacationers must sacrifice certain activities in order to compensate for the increased cost of their flight or hotel room.

Not all travelers seem to heed this advice, however. Southwest Airlines’ research shows a majority of their customers book flights 14 to 21 days prior to a trip. Best Western also sees a later booking pattern for room reservations.

“Although it is more advantageous to book earlier because demand for rooms is exceeding today’s supply, a larger percentage of our guests book their reservations seven days, or less, prior to arrival,” said Dowling.

Hot Destinations for 2007

International travel has seen immense growth over the past year, especially with families traveling to Europe. Best Western continues to see a large influx of American visitors to many Old World destinations, where the company offers a richly diverse hotel product with numerous value-added services and amenities. One of the more popular stops is Paris, which serves for many as a stepping stone to other cities on the continent. Half of the guests staying at the 68 Best Western hotel locations in the City of Lights are American.

While traditional European destinations continue to be popular for AAA’s customers, “off the beaten path” locales such as Budapest and Riga, Latvia, are growing at a fast clip.

“People are craving atypical trips nowadays,” said Hughes. “With more options on the market, many want to have something unusual to talk about at a cocktail party, which allows them to potentially one-up their friends or colleagues.”

Southwest Airlines is also seeing growth in traditional family locations within the United States. Orlando and Chicago continue to be hot spots, as well as Washington, DC. The airline recently announced it will begin service to Washington Dulles International Airport in October.
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