AAA Projects 1.2% Increase in Memorial Day Travel

AAA projects 34.8 million Americans will travel 50 miles or more from home during the Memorial Day holiday weekend, an increase of 1.2% — or 500,000 travelers — from the 34.3 million people who traveled one year ago, according to its May 15 report. The Memorial Day holiday travel period is defined as Thursday, May 24 to Monday, May 28.

“The overall domestic economic picture continues to improve slightly; however, American consumers faced a new challenge this year as steadily increasing gas prices throughout the spring significantly squeezed many household budgets,” said AAA President and CEO Robert L. Darbelnet. “Americans will still travel during the Memorial Day holiday weekend but, many will compensate for reduced travel budgets by staying closer to home and cutting entertainment dollars.”

Automobile adds to dominance as lead transportation choice, up 1.2%

Approximately 30.7 million people plan to drive to their destination, an increase of 1.2% from the 30.3 million who drove last year. Almost nine out of 10 holiday travelers (88%) will take to the nation’s roadways during the Memorial Day weekend keeping automobile travel in the traditional lead as the dominate mode of holiday travel transportation.

Car rental rates drop, hotel rates rise

According to AAA’s Leisure Travel Index, weekend daily car rental rates will average $36, 4% ($2) less than last year.

Hotel rates for AAA Three Diamond lodgings are expected to increase 8% from a year ago with travelers spending an average of $160 per night compared to $148 last year. Travelers planning to stay at AAA Two Diamond hotels can expect to pay 10% more with an average cost of $120 per night.

Impact of gasoline prices on travel plans

A survey of intended travelers found that 53% said recent increases in gasoline prices would not impact their Memorial Day holiday travel plans. Of the remaining 47% of travelers who said gas prices would impact their travel plans, 9% are planning to take a shorter trip, 4% will travel by an alternate mode of transportation and 34% will economize in other areas.

Those who intend to economize in other areas plan to reduce spending on entertainment (65%), stay at a lower priced hotel (34%), stay with friends and relatives instead of reserving a hotel room (31%) or stay in a hotel that includes value-added amenities like free breakfast and Internet (27%).

Number of air travelers expected to decline by 5.5%

More than 2.5 million leisure air travelers (over 7% of holiday travelers) will fly during the holiday weekend, a 5.5% decrease from last year’s 2.7 million air travelers. The remaining 4.5% of holiday travelers are expected to travel by other modes, including rail, bus and watercraft.

Average travel distance significantly less than last year

According to a survey of traveler intentions, the average distance traveled by Americans during the Memorial Day holiday weekend is expected to be 642 miles, which is 150 miles less than last year’s average travel distance of 792 miles.

The decline in expected air travel is a factor in the travel distance decrease as fewer flying miles can be contrasted with the slight growth in automobile travel. Miles flown for weekend travel are typically longer than those driven. Last year, the shortest trips, those less than 150 miles, made up 19% of total travel compared to 21% this year, reinforcing the expectation that shorter trips are especially popular this Memorial Day weekend. Median spending is expected to be $702, only slightly more than the $692 median spending last year.

Change in income demographics of Memorial Day Travelers

Survey results reveal that the share of expected holiday travelers in the under $50K household income bracket has fallen 5%, from 31% to 26%. The share of expected travelers in the $50K-$100K household income bracket dropped 1%. Conversely, the share of travelers with household incomes over $100K increased six%, from 30% to 36%. The effect of higher gas prices is more significant on lower income households as fuel costs make up a larger share of overall spending.

AAA’s projections are based on economic forecasting and research by IHS Global Insight. The Boston-based economic research and consulting firm teamed with AAA in 2009 to jointly analyze travel trends during the major holidays.