Gas Prices and Drive Markets
Gas prices are a big topic across the travel industry right now. Following price increases for goods and services, the costs of travel increasing because of fuel is certainly reason for concern. It’s the focus of many news stories and earned a spotlight in research we watch about travel sentiment. The question our clients ask is: “Do I need to adjust my targeting to drive markets when gas prices soar?“
Longwoods International has been updating the industry on traveler sentiment throughout the pandemic. The information they are collecting is extremely valuable for understanding where we stand with travelers and forecasting what’s coming. The titles of the last few waves of the study tell the story of travelers’ feelings around gas prices.
- Rising gas prices replacing Covid-19 as travel worry (Wave 57, March 8)
- Gas price worries accelerate among travelers (Wave 58, March 22)
- Despite the high price of gas, travel demand remains strong (Wave 59, April 5)
Here we see the initial concern at the beginning of March, which carried through the month but appears to be fading in April.
Other sources told optimistic stories over the past few weeks.
In CNN’s article “Travelers are feeling the sting of high gas prices as they weigh summer plans,” the conclusion is that travelers are more resilient because of pent-up demand. “But the travel industry says the extra premium is not deterring Americans from booking trips, especially after the coronavirus pandemic complicated travel for the past two summers,” they note.
The New York Times agrees. Their article “Even With High Gas Prices, the Open Road Still Beckons” draws the same conclusion about pent-up demand. “… many road trippers plan to follow through with their original itineraries — or they will make adjustments by taking shorter routes, choosing destinations closer to home, and spending less on lodging, food and other purchases.”
Is pent-up demand so high that not even sky-high gas prices will deter travelers? Is this realistic? Can we bet our marketing dollars against it?
Skift presents us with what I would say is a more balanced view. In their story, “U.S. Road Trips Still a Go With Higher Gas Prices But Here’s What Changes,” they address the point the New York Times mentioned. That travelers may spend less in-market if they travel further.
“This new data is concerning for the U.S. travel industry, because while gas price increases […] won’t cancel the American road trip, the higher cost will impact consumer behavior as far as how often travelers will choose to spend on the road this year as well as how far they venture. […] Fresh data from Arrivalist’s Daily Travel Index, looking at the past three years, confirms a strong correlation between gas prices and domestic road trips of more than 50 miles.”
Targeting Drive Markets Now
We are taking the additional costs into consideration in our targeting, especially for digital advertising campaigns. It may take a little more to compel travelers from further out to make a trip to your destination. While we did have a few clients pull back to more regional drive markets in March, we have not advised pulling back too much. They have all returned to their full markets now. There is definitely still travel to be done and experiences to be had.
When it comes to positioning, we do not recommend mentioning or addressing gas prices in your marketing materials. Unless you have an incentive or deal targeted at helping offset the costs.
Travel is back. It’s back and the people who matter most – the travelers – are not going to let obstacles stand in their way!