While Ga$ Price$ Are Increa$ing, Ga$ Pump Saving$ $till ABOUND!

TRAVEL & TOURI$M

 

DIRECT & INDIRECT SPENDING

 

Perhaps, the most underappreciated industry of the US economy is Travel & Tourism (T&T). While GDP growth has been stodgy over the last few years, Travel & Tourism expenditures have grown on avg at slightly better than 6% per yr. T&T’s DIRECT ECONOMIC IMPACT to the US economy in 2014 was worth $927.9 B with over 85% of it being domestic travel spending. While we pine for those BIG SPENDING TRAVELERS from China, Japan, Italy, UK etc.. the truth is that about ½ of our foreign visitors come from Canada and Mexico, and about ½± of ALL US travelers to foreign lands have our NAFTA trade partners as their destinations. The story gets better and BIGGER when we recognize the inputs or Travel & Tourism’s INDRIECT IMPACT on our economy (Indirect T&T spending is the spending that is used to produce the gds & services purchased by travelers & tourists). This is THE multiplier impact on the US economy. The TOTAL related Travel & Tourism o/p for 2014 was $2.1 T±. T & T’s, further contribution to the US economy is noted by the fact that 15 M jobs (1 in 9 US non farm jobs directly and indirectly) depend on the Travel & Tourism industry. (For more info see US Travel Assn.)

AAA TRAVEL FORECAST 2015

 

  • 2 M Americans will become travelers during the Memorial Day holiday 2015, a 4.7% growth from last yr. It is the 2nd biggest number in the 2000s (2005 was the highest with 44 M expected travelers).
  • 6% (33 M) of those travelers will be driving on the road, a 5.3% increase from 2014. Given AAA data we assume that Mem Day road warriors must travel at least 50 miles by car with a max trip of 400 miles. An avg trip will therefore be 200 miles. Using the current 91.6¢ lower gas price (for all shades/all grades of gas) vs Mem Day 2014 , we estimate that our 33 M roadies will save almost $241 M YOY, or $7.328 each. With all shades/all grades avging $2.827 last mon that’s almost 23/5 gals of gas or 2 medium Starbucks’ lattes. DRINK UP!!
  • Air travel is also expected to grow 5% from last yr (2.6 M travelers).
MEMORIAL DAY GA$ PRICE$, $O WHAT?

OK, so gas prices are rising, SO WHAT? OK, so given our holiday gas chart, we discovered that gas prices are higher NOW than at any time since THXGVNG, SO WHAT? That’s right, they are higher now than at Xmas, College Ftbll Championship time, Super Bowl, V-Day, St Pats Day, Easter, and M Day, SO WHAT? The fact is that they are still 91.6¢ lower than last yr at Memorial Day time. Or, should we say it, (the all shades/ all grades) gas is 91.6¢ lower. That means for our hypothetical Mem Day mo, that Americans will save $9.16 B during our Mem Day mo. Since April 20th, GAS PRICES have increased EVERY WK, avging an increase of 6.6¢ per wk. So, even if we were to predict that increase per wk over the next month, Americans would still save over $6.5 B. Our humble family of 4 with 2 drivers (each driving 1000 miles per mo) would still save from $53.00 to $73.28. SO WHAT!! (We assume 3 T miles driven per year AND 25 MPG for our estimates)

 

 

 

 

 

 

 

 

 

 

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About bernacmd

For over 24 years, University of Detroit Mercy Marketing Professor Michael Bernacchi, Ph.D., J.D, has produced "uNDER tHE mIKE-rOSCOPE", a newsletter discussing current "marketing and advertising¹s bends, trends & ends." A well-know fixture in Detroit and national media, UDM's marketing guru has made several appearances on CNN's "Talk Back Live," the Voice of America worldwide radio network (VOA), ABC, CBS, NBC, MSNBC and on the pages of Sports Illustrated, Time, TV Guide, the New York Times, USA Today, the Wall Street Journal and the Washington Post, to name a few. At University of Detroit Mercy, he has taught courses in Marketing Management, Consumer Behavior, Marketing Communications, Research and Corporate Social Responsibility and Sports and Entertainment Marketing. Michael Bernacchi can be reached at 313-993-1116 or bernacmd@udmercy.edu. Please appropriately attribute the following for their work on uNDER tHE mIKE-rOSCOPE: Yen Ju Lee Robert Rouse Vidhyasagar Natarajan Eric Baumgardner & Ian Young
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