July 4 travel likely to fall in US amid high fuel costs, reducing gasoline demand

The American Automobile Association (AAA) forecasts 39 million Americans will travel 50 miles or more from home during the Independence Day holiday weekend, a 2.5% decline from the 40 million people who traveled a year ago.

The Independence Day holiday travel period is defined as Thursday, June 30 to Monday, July 4.

“AAA is projecting a slight decline in the number of Independence Day travelers mainly due to fuel prices being approximately one dollar per gallon higher than last year,” said Glen MacDonell, director of AAA’s travel services.

“Increased fuel costs are also responsible for a shift in the demographics of the typical Independence Day traveler as higher prices impact lower income households more significantly.”

The amount of money spent each month on gasoline is unlikely to vary much across household income groups. However, as a share of total spending, fuel is obviously going to consume a larger share of the budget for lower income households, the agency said.

As a result, the percentage of travelers with a household income of $50,000 or less is expected to decrease from 41% to 33%, while travelers with a household income of more than $100,000 are expected to increase to 35% from 26%.

AAA’s projections are based on economic forecasting and research by IHS Global Insight.

Automobile travel down 3%, but five of six travelers will drive to destination

Approximately 32.8 million people plan to travel by automobile. That’s a decline of almost a million auto travelers from the 33.7 million who drove last year.

Automobile travel remains the dominant mode of transportation (84% of holiday travelers) despite gasoline prices about a dollar per gallon more expensive than a year ago in many parts of the country.

AAA said it expects the US average price for regular gasoline to remain between $3.60 and $3.70 per gallon during the Independence Day holiday weekend.

Impact of gasoline prices on travel plans

A survey of intended travelers found that 56% said rising gasoline prices would not impact their travel plans. For the remaining 44% who said rising gas prices would impact their travel plans, seven out of 10 will economize in other areas and three out of 10 are planning to take a shorter trip or travel by a different mode of transportation.

Number of air travelers expected to increase by 9%

A little more than three million leisure travelers (8% of holiday travelers) will fly during the holiday weekend, a 9% increase from last year’s 2.75 million air travelers. This increase continues a rebound in air travel that began in 2010 following the lowest years for air travel in the past decade - 2009 and 2008.

The rising cost of gasoline is a contributing factor to the increase in air travel, as the increasing cost of travel by car is making air travel a more viable option for some travelers despite recent increases in air fares. The remaining 8% of holiday travelers are expected to travel by other modes, including rail, bus and watercraft.

Travelers to experience increases in airfares, hotel rates and car rental rates

According to AAA’s leisure travel index, Independence Day holiday airfares are expected to be 11% more than last year, with an average lowest round-trip rate of $213 for the top 40 US air routes.

Hotel rates for AAA three-diamond lodgings are expected to increase 3% from a year ago, with travelers spending an average of $147 per night compared to $143 last year.

Travelers planning to stay at AAA two-diamond hotels can expect to pay 8% more, at an average cost of $110 per night.

Weekend daily car rental rates will average $56, a 3% increase over a year ago.

Average travel distance down 7%; median spending up 25% from last year

According to a survey of traveler intentions, the average distance traveled by Americans during the Independence Day holiday weekend is expected to be 573 miles, which is 7% less than last year’s average travel distance of 617 miles.

Median spending is expected to be $807, an increase of 25% from $644 last year.

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