Itineraries & Tours, Travel Trends

The effect of gas prices on tourism in 2022

With gas prices reaching their highest peak since 2008, travel brands, operators and tourism-related companies have been wondering just how much this will affect what’s left of 2022 and the years to come. 

Gas prices increase will, no doubt, affect tourism and the cost of travel, as well as tourists’ vacations and destinations. But the truth is that there are a number of ways to prepare for this setback and reduce the impact. And the secret might just be to adjust to your client’s personal preferences. 

Why do we see changes in the price of gas?

There are a number of reasons why we’ve been witnessing such big increases in gas prices over the last few months and some of them are pretty obvious. 

As Covid restrictions started to fade away across the world the demand for energy started to rise again. This caused costs to trend high, particularly for oil, and the tendency was for prices to keep rising for the next months. 

However, things took a turn for the worst after Russia began its military action in Ukraine. Russia is one of the top-3 oil producers in the world and there was an overall fear that production might be disrupted. That pressure had an immediate effect since demand and supply are the main factors for the constant variations in oil prices.

Sanctions against Russia might just be what it takes for oil prices to go down again, once it is expected to watch them affect incomes in Russian households. But, for now, as long as Russia’s aggression against Ukraine continues, prices should continue to go up. 

How will the increase in the price of fuel affect Tourism?

There’s no way around it and by now it is clear that energy prices increase will affect tourism and travel. But, in spite of what we might take for granted, the effects might just be felt more on the kind of vacations people take and not necessarily on a large-scale reduction of travel. 

According to research published by Longwoods International about the American traveller sentiment, six in 10 travellers say that gas prices will affect their travel plans during the next six months.  Just, by comparison, only two in 10 travellers said Covid-19 had any impact on their decision-making process. 

Gas prices replaced the pandemic as tourists’ number one concern but, just like during the peak of Covid restrictions, travellers are coming up with new ways to spend their vacations. 

Impact of Increasing Gasoline Prices on Tourism Travel 

According to Amir Eylon, President and CEO of Longwoods International “this increased expense might not only limit the number of trips travellers take but also lead to selecting destinations closer to home or reducing their spending on items like meals, accommodations, and souvenirs as they travel.” 

That is precisely the trend we will most likely witness in the next few months: people are choosing destinations closer to home and cutting on other expenses. Distant destinations that come with extra costs, more bureaucracy and represent higher investments are not as appealing to tourists during this global crisis. 

Particular sections of tourism will also be affected, such as RV and Van rentals, which hugely increased during the pandemic. Road trips are still a trend, but the prices of gasoline are too demanding to keep up with the growth rate of the last two years. 

How do I calculate the gas cost for a trip?

First of all, it is important to define how far away you are from your destination, what kind of roads you will be taking and how many stops you wish to make. 

Once you’re set with all this information, you can use a fuel cost calculator and get a pretty accurate idea of how much you will be spending. But be careful to add some extra costs such as tolls, gas spent according to your type of driving, traffic and any set back you might find on the road. Always add an extra 10% in gas expenses. 

Will gas prices affect airfare and increase flight prices?

It is clear that energy prices are pressuring airlines to raise fares, but the situation is not as linear as one might think, especially when we consider customers’ demands. 

The largest operating costs for airlines are fuel and energy expenses so, of course, increases in fuel prices have a direct impact on companies and on flight prices. When gas prices are up, airlines are forced to adjust. Airline fares are already trending high, but we’re not sure if prices will continue to follow the trend in energy costs. 

Ticket prices are determined by operational costs, sure, but are also focused on consumer demand. Airlines tend to protect themselves from jet fuel price spikes, by buying large quantities in advance, and even when fuel prices are low, ticket prices will rise if demand is high. 

Non-essential air travel will take the biggest blow and it is clear travellers are now considering long and hard before flying. But prices should rise in a much more gradual way than in other industries. 

The impact on Travel Brands

For travel brands and operators now is the right time to adjust. It is expected that a lot fewer people will be actively looking for travel packages, so travel brands need to be reaching out to indecisive tourists. 

Travelling trends are expected to continue despite the pressure demanded by energy costs, but customers’ are now considering different options and may reveal some shyness while actively looking for vacation planning. 

Now more than ever, travel brands need to come up with personalised and one-of-a-kind offers, always considering that costs are rising not only for travel but for day-to-day life in general.

How to prepare for the increasing prices? 

Travel brands, operators and tourism-driven companies know that demand will go down (even if we’re not aware of how low it will get) and that customers are more reluctant on taking bigger trips with a lot more costs. 

If you’re looking for ways to prepare for the travel industry’s latest challenge, here are some simple guidelines to help you: 

  • Local packages: travellers are looking for local options and avoiding long distances. Come up with packages and solutions for those that want to cut costs but still want to explore and travel. 
  • Sustainable solutions: now more than ever, sustainable solutions are the way to go. By preparing them you are speaking directly to two of travellers’ biggest concerns – gas prices and the climate crisis. 
  • Personalised options: planning and booking automated platforms, such as TripBuilder, can help you quickly calculate costs, routes, different transportation options and continuously change items to better serve your customer’s needs in real-time.

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