It’s only March and already rising gas prices are causing motorists to roll their eyes, curse under their breaths, and lament their commutes even more. Did we skip spring? Is it summer already? Of course, gas prices are something hoteliers always have their eyes on, especially in the midscale and limited-service markets. The conventional wisdom goes, if drivers cut back on driving, they cut back on traveling, and that potentially puts the gains made in occupancy and rate since last summer at risk.
But is it time to start dusting off the gas card promotions?
Last summer, the industry made gains in occupancy as travelers—feeling a little more confident in the economic recovery—decided to pack up the family and hit the road once again. In addition, businesses began to send their workers back out on the road. It all added up to a somewhat surprising gain in occupancy last summer that continued to gain momentum through the fourth quarter and into the first quarter of this year.
So, naturally, hoteliers might be a little anxious about the early rise in gas prices this year. At the very least, it has them thinking about the prospects for summer travel a little earlier than expected. Of course, no one wants to see the positive momentum take a step backward. But this time around, hotel executives seem to be taking the situation a little more in stride.
“Historically speaking, gas prices have always been one of those red flags that we keep a very close eye on in relationship to discretionary travel, “ Jim Amorosia, CEO of Motel 6/Studio 6, Accor North America, told me during an interview for a separate story that will appear in the April issue of Lodging. “Interestingly enough, so far it has not had a significant detrimental effect, I think that it’s safe to say that all of us in the hospitality industry, and certainly in the limited-service segment, are keeping a weary eye on where the gas prices are going because they are going up so early this year. It’s really difficult to project where they might end up when the true travel season hits.”
I also discussed gas prices with Roger Bloss, president and CEO of Vantage Hospitality Group. He had a similar take, admitting that the company has indeed discussed gas card promotions but at this point has chose not to re-issue them.
“We just had a meeting about whether gas cards are going to become prevalent this year, and we decided that we are going to shy away from that in favor of promoting the value proposition,” he told me.
That’s not to say that gas prices aren’t a concern, but they need to be looked at in terms of the current state of the economy rather than rehashing the situation from two years ago, or even last year. “It’s always a concern,” Bloss said, “but if you look at the statistics, on one-tank drive trips, you’re talking maybe $10 to $20 difference. We don’t really believe with the pent up demand that people are not going to travel for $10 or $20. I do think they’ll be look for value within that range though.”
With the beginning of spring just about a week away, it’s impossible to know just what might happen with gas prices by the time Memorial Day rolls around. Hoteliers should keep an eye on them, of course. But, it seems unlikely that they’ll be detrimental to summer demand and rates. However, as always when it comes fuel costs, a lot can happen between now and the summer. Stay tuned.