By Debbie Carlson for CME Group
AT A GLANCE
- Spending patterns are changing as more Americans stay closer to home for vacations, and choose road trips over flying
- Despite more trips by automobile, gasoline demand is still below pre-pandemic levels
Americans are choosing road trips over flights as they choose a safer-perceived way to vacation, and that’s having an economic impact, say analysts who follow the travel and retail industries. The phenomenon is expected to last at least through the end of 2020, if not early 2021, but it remains to be seen if this is a structural change in consumer habits.
Omer Rabin, managing director at Guesty, a property management software firm used for short-term rentals, says they are seeing several travel trends. Trips are shorter-distanced, generally about 100 miles away, and reservations are very last minute. They’re also seeing travelers repeatedly book the same units, with those stays growing from weekend getaways to two-week trips.
“A lot of our (managers) are now seeing a lot more … repeating customers, basically taking the family in the car and driving for a couple of hours to work from somewhere else,” he says. “It’s really about changing scenery than getting new experiences.”
Spending Patterns Change
Demitry Estrin, founder and CEO of The Futurist Group, started collecting weekly and monthly data on consumer spending patterns when the shutdown started in March. The Futurist Group conducts 12,000 interviews and works with Kantar, a market research firm, to monitor spending patterns by merchant category to find out where consumers are spending and what they plan to spend on in the future.
While the overall travel spend this year versus last year is “awful,” Estrin says, by the summer it had picked up from spring levels.
Jan Freitag, senior vice president, lodging insights for STR, a data research firm for the hospitality industry, says their research shows hotel occupancy along interstates in early August were higher than those near airports, which is one indicator that more people were driving rather than flying.
He says for the next six months at least, and without a vaccine, people who can choose to drive will probably drive. “Road trips are probably here to stay for a little bit,” Freitag says.
RVs, Campgrounds and Car Maintenance
Nick Shields, senior analyst at Third Bridge who covers retail sectors, says there’s been a definite trend in sectors that benefit from road trips. The RV sector is a well-known beneficiary, and purchasers of these campers have been older Millennials and Gen Xers entering the market for the first time, rather than retirees.
A survey by Kampgrounds of America showed more non-campers interested in camping because of the pandemic, with leisure travelers ranking it as the safest form of travel.
Shields says retail sales data shows an uptick in other categories related to road trips. Although new car sales are down, this summer saw a rise in the aftermarket auto parts sales as people sought to tackle car maintenance they had otherwise put off earlier in the year when they weren’t commuting to work. “If you're going on a road trip, that's 300, 400, 500 miles across the country, you can't put off that maintenance anymore,” he says.
Another ripple effect of the type of vacations Americans took now was an increase in purchases of outdoor sporting goods, Shields says, with sales of camping, fishing and even boating gear up. That also goes with increased bike sales as people look at different types of travel. Shields suggests that this winter may see increased sales of outdoor winter sports equipment, too.
Shields says Third Bridge is expecting the car-rental industry to be strong this winter as snowbirds continue to seek places to go, although much of that depends on virus case loads in Sun Belt regions.
Gasoline Demand Still Down
Even though vacationers took more road trips, gasoline demand isn’t where it was pre-pandemic. Stewart Glickman, energy analyst at CFRA Research, says overall gasoline consumption, the largest liquid-fuels consumption category, overall is down 10% from 2019, but up from lockdown levels. How much it bounces back remains to be seen, especially if the work from home trend become more permanent.
Although gasoline demand is down, jet fuel, the smallest consumption category, is down significantly because fewer people are flying, whether for business or leisure, Glickman says. “The problem that everybody faces is, I think, everyone realizes that the idea of being in confined space and breathing the same air is not ideal,” he says.
Although people may be traveling to closer destinations for a change of scenery and extending the typical travel window beyond the summer, that all depends on the virus. Estrin says when The Futurist Group asks people their plans, it also anchors participants to the current situation about the spread of Covid. “There's optimism to travel, but at the same time, there's this other kind of concerning trends of the rising cases,” he says.