Rising Gas Prices Could Seriously Slow Entire U.S. Tourism Market

Rising gasoline prices that are expected to approach $3.50 per gallon by the summer and even $4 soon after could have a negative across-the-spectrum impact on the U.S. tourism market, experts say. “It’s not a fun situation,” said Dawn McLaren, a research economist with the W.P. Carey School of Business at Arizona State University.

Mr. McLaren predicted the situation will get worse before it improves. “The impact is obviously negative,” both because it costs tourist operators more and discourages consumers from taking trips, said Tourism Industry Association of Canada chief executive Randy Williams.

In the hotel segment of the tourism market, executives point out financial measures like average daily room rates and revenue per available room are still healthy, if not at the levels of the past couple of go-go years.

The airlines, which have recently started to be profitable, see the rising gas prices as a serious setback to their recovery. “These are costs that, for competitive reasons, we can’t just pass on to consumers,” said Valerie Wunder, a US Airways spokeswoman. Instead, they are cutting into profits.

Destination cities such as Savannah, Georgia, where the majority of visitors are drive-ins, are also warily eyeing gas prices.

Even with the gasoline prices creeping up in 2007, a record number of people visited Savannah last year. Experts say those travelers gave up longer, or flying vacations, to drive to places like Savannah, but hospitality and travel managers are still worried about the future.

Tourism officials say one likely outcome of soaring gas costs are that visitors will stay closer to home in the near future.