Fewer Americans plan to travel after surging fuel costs hit budgets

LOS ANGELES – Americans are rethinking travel plans as war in the Middle East rattles international routes and pushes up the cost of fuel.

The share of US consumers planning vacations abroad or road trips closer to home fell in March, according to survey data out this week from the Conference Board.

Just under 17 per cent said they intend to travel internationally over the next six months, matching the lowest share since the end of 2022.

That would mark a shift in behaviour following a period after the Covid-19 pandemic years in which Americans splurged on trips to places far and near.

Disruptions from the war are only the latest challenge facing consumers already dealing with a softer labour market, persistent inflation and a weaker dollar.

“We have to take the gas price increase as a part of a larger picture,” said Mr Jan Freitag, the national director of hospitality analytics at CoStar Group. “Airfares may just be the last straw.”

While US airlines are so far seeing a rush in customers trying to lock in cheaper airfares before the surge in energy prices pushes costs even higher, some are warning of challenges ahead.

Transatlantic airfares for flights 21 days in advance are already up by about US$200 (S$257.23) on average compared to a month ago, according to a Deutsche Bank AG analysis of price data.

United Airlines Holdings Inc warned last week it may have to hike prices by 20 per cent if jet fuel prices remain elevated.

Between the surge in airfares and rising geopolitical tensions, Ms Heather Estremera and her family will probably forgo travel to Europe and opt for a “staycation summer” in 2026.

The 42-year-old real estate attorney is headed to Hawaii in a few weeks with her 11-year-old daughter. But after that, “we’re just buckling down,” she said.

Rising gas prices are quickly altering the calculus for upcoming vacation plans by land, too.

They topped US$4 gallon this week for the first time in years, and the Conference Board survey showed just 22 per cent of respondents expect to travel by automobile in the next six months, the least since 2020.

For some of those who will still hit the road, the itinerary has changed.

Mr Chris Rubino and his wife are set to depart their home in Fredericksburg, Virginia in May in their RV to celebrate their 35th anniversary.

The Rubinos, who are retired, were planning to drive about 3,000 miles (4,828km) to the Gulf of Mexico and back, but now they’re headed on a shorter trip to the Outer Banks of North Carolina instead.

“Now that gas is jacked up a little bit, suddenly that’s adding a whole other dimension to the trip,” said Mr Rubino, who estimates the original plan would mean spending US$600 to US$800 more on gas given that their camper only gets about 10 miles to the gallon.

They also plan to spend less time driving from place to place and stay longer at the camp grounds they visit, he said.

Accommodating higher gas prices in the budget means a whole host of businesses catering to travellers is set to lose out.

That’s the typical pattern historically when gas prices pick up, even if consumers are unlikely to cancel their trips altogether, according to Mr Adam Sacks, president of the consulting firm Tourism Economics.

“If we see gas prices protracted at current levels or higher, you will see a trading down in hotels or meals, you’ll see travelling to distances that are closer, and you’ll see drops in terms of number of days away,” Mr Sacks said.

For economists, that all means a scaled-back outlook for US economic activity in 2026.

Wall Street firms have downgraded their forecasts for gross domestic product in 2026 to account for the higher inflation and resulting hit to consumer spending that rising energy costs will bring.

Before the surge in gas prices, Mr David Bocchetti and his family had planned to take a week-long road trip from Minneapolis to Kansas City during their children’s spring break.

It was supposed to be their big trip of the year, replete with kitschy tourist road stops and baseball games at stadiums along the route.

Instead, the family of four traded the multi-stop road trip for a four-day stay in Chicago.

When Mr Bocchetti, 42, sat down to finalise their plans, he realised if they went with the original idea, they’d be spending about US$100 more on gas than before.

At that point though, the price of a full week of hotel stays – plus pet care for their two dogs – made it less feasible for a family that has already had to “tighten the belt” on spending, he said.

“The increase in the cost of gas is more like another line item on the trip,” Mr Bocchetti said. “Another US$100 or US$150 just wasn’t really in the cards.” BLOOMBERG