Tourists adjusting to high gas prices, analysts say

2012-04-08T23:30:00Z Tourists adjusting to high gas prices, analysts sayBy LORNA THACKERAY lthackeray@billingsgazette.com The Billings Gazette

Gas prices steadily climbing toward $4 a gallon may mean that the 10.5 million or more tourists expected to visit Montana this year will spend less on souvenirs and restaurants and book cheaper hotels.

But tourism officials say they are still going to come.

Travelers are adjusting psychologically and financially to high gasoline prices, said Sarah Lawlor of Montana's Office of Tourism.

"It's living in the new normal," she said.

Nick Mann, marketing director for Southeast Montana Tourism, formerly Custer Country, said potential visitors he has chatted with don't seem discouraged by prices at the pump.

"I just got back from the Northwest Sports Show in Minneapolis and we had a huge response at our booth," he said. "About 150 people stopped by who definitely plan a trip to Montana, and they definitely plan it this year."

A forecast of a 2 percent increase in Montana tourism in 2012 hasn't shifted as gas prices rise.

People joked about gas prices, he said, but no one mentioned it as a major issue in making travel plans.

"It's not that we haven't seen $4 a gallon before," noted Rick Hoeninghausen, marketing director for Xanterra, the concessionaire at Yellowstone National Park. "What we've learned over the years is that people are going to travel and the parks in Montana and Wyoming look pretty good when the economy is slow."

Four years ago, the first time Montana experienced $4-a-gallon gas, it was a different story. Gas prices that summer seemed to hit a threshold Americans were reluctant to cross. Montana saw a 6 percent decline in visitor numbers in 2008.

A new survey conducted by the University of Montana's Institute of Tourism and Recreation Research suggests that the threshold has moved. Christine Oschell, assistant director of the institute, said responses showed that consumers would change their driving behavior when the price of a gallon hits $4.41. But it also found that even at that level, most people planning a trip to Montana would not cancel their visit, she said.

Asked if rising gas prices would cause them to eliminate their trip to Montana, 73 percent said no; 12 percent said yes, and 15 percent weren't sure.

But 66 percent said they would spend less on discretionary items while they are in Montana; 55 percent said they would eat out less; 65 percent said they would look for less-costly activities; and 45 percent said they planned fewer hotel-motel stays.

In 2010, the latest year for which numbers are available, out-of-state visitors spent $2.4 billion in Montana, the bulk of it on gas (33 percent), retail sales (19 percent) and restaurants and bars (19 percent). Only 13 percent was spent on lodging.

A national survey by the U.S. Travel Association released on March 27 wasn't quite as optimistic as the UM survey. It found that 54 percent of leisure travelers and 27 percent of business travelers might alter their plans if gas prices continue to rise.

That survey also showed that 44 percent of vacationers traveling by car said higher gas prices might mean that they take fewer trips and that 38 percent said they would drive shorter distances.

"If travelers are spending more on gas, they are spending less on hotels, attractions, shopping and restaurants, which could have a negative impact on our overall economy," said Roger Dow, president and CEO of the U.S. Travel Association.

On the same day that the U.S. Travel survey results were released, AAA Executive Vice President Mark Brown testified before Congress that a recent survey by the American Automobile Association found that 84 percent of respondents had already changed their driving habits or lifestyle in some way because of gasoline prices.

But he was cautiously optimistic about the summer driving season.

"A quick poll of some of our agents suggests that (AAA) members are not canceling their vacation driving plans, but may alter the distances and number of destinations."

Most of Montana's visitors come over the road. They cover a lot of distance and burn a lot of gas. The average price of a gallon of gas in the U.S. was $3.936 on Friday, up from $3.707 at this time last year, according to AAA.

The average price in Montana on Friday was $3.738, up from $3.534 last year. Wyoming, with the nation's cheapest gas, was an average of $3.604 on Friday, up from $3.446 last year.

With gas prices high, a visit to this part of the county may seem a bargain, said Xanterra's Hoeninghausen.

"Gas prices in Montana and Wyoming trend lower than the national average," he said. "People coming in from the Midwest or West Coast are already paying $4 a gallon. They come here and think, 'Wow, I'm getting a break.' "

Lawlor, of the Montana travel office, said lodging costs in Montana run about 20 percent below other parts of the country, and that the fee for an entire family to enter one of the national parks is less than half the cost of half a tank of gas.

The state needs to get the word out that "we are an affordable destination," she said.

Stuart Doggett, executive director of the Montana Lodging Association, said the lodging industry is optimistic about summer.

"Most people don't give up summer vacations because of the price of gas," he said. "They adjust after the initial shock."

Hoeninghausen said overall reservations at Yellowstone Park were on par with last year, although spring has been a little soft because of an ongoing shift of visitor preference to the fall months.

Montana's Office of Tourism is responding to potential fallout from gas prices by advertising in key markets close to home. Lawlor said a significant campaign is under way in Montana's "drive" markets -- North Dakota, South Dakota, Wyoming, Idaho, Canada and the Spokane area.

The state is also continuing its "Get Lost in Montana" campaign, aimed at getting Montanans to visit parts of the state they haven't seen before.

Kelly McCandless, communications manager for the Billings Area Chamber of Commerce, said the chamber sees the situation as an opportunity.

"We serve such a regional demographic that higher gas prices can actually help us," she said. "People may want to stay closer to home instead of heading off to Disney World. We play off it in a big way."

Marketing wrapped around local events helps draw in the "staycation" crowd.

"It just kind of alters who we reach out to," she said.

Copyright 2014 The Billings Gazette. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Follow The Billings Gazette

Popular Stories

Get weekly ads via e-mail

Featured Businesses