June 24, 2009 / 11:09 AM / 10 years ago

Economic woes to bite into July 4th travel

NEW YORK (Reuters) - U.S. travel over the Independence Day holiday weekend will drop 1.9 percent this year compared to 2008, a casualty of higher fuel prices and economic worries, travel and auto group AAA projected on Wednesday.

Fireworks illuminate the sky next to a U.S. national flag at the new U.S. embassy during its opening ceremony in Berlin July 4, 2008. REUTERS/Tobias Schwarz

Approximately 37.1 million Americans will travel 50 miles or more away from home during the Fourth of July holiday weekend, typically the busiest time for auto travel in the U.S., down from 37.8 million last year.

“Many Americans remain cautious about the outlook for their personal finances and these attitudes are reflected in the slight decline in travel we are forecasting for the upcoming holiday weekend,” said AAA Chief Executive Robert L. Darbelnet.

Ongoing fears about the state of the economy coupled with increasing joblessness and falling incomes are major factors in reducing Fourth of July travel, AAA said.

Auto travel, which will account for 88 percent of total travel, will drop 2.6 percent from last year’s levels due to higher fuel prices. But air travel, which will account for just 5 percent of Fourth of July travel, will increase 4.9 percent due to lower fares and pent-up demand. Other modes of travel will account for the remaining 7 percent of travelers.

Gasoline prices are more than 30 percent lower than they were a year ago, but recent increases at the pump will steer Americans away from road trips, AAA said.

Attractive airfares are also likely to contribute to less auto travel, AAA said.

On Tuesday, average U.S. retail gasoline prices were $2.68 a gallon, about 11 percent higher than a month ago, although they have steadied in the last ten days, according to AAA.

Travel for the rest of the summer will hinge in part on whether gasoline prices continue to rise or level off, according to AAA.

“We’re at a critical juncture for the travel industry in terms of its economic well-being for the rest of the summer,” Geoff Sundstrom, a spokesman for AAA, said.

AAA had forecast that gasoline prices would reach a high of $2.50 a gallon this summer in its Memorial Day forecast, but later revised the forecasted summer high to $2.75 a gallon as higher oil prices boosted prices for gasoline.

AAA’s forecast for the July 4 weekend is the opposite of the forecast for the Memorial Day holiday weekend in May, when AAA predicted a 1.5 percent increase in travel from 2008 levels, with automobile trips increasing 2.7 percent and air travel dipping 1 percent.

Despite the gloomy news keeping more Americans at home this summer, those who do venture out on vacation will find some good bargains.

The lowest average published airfares over the holiday weekend are expected to decrease 16 percent from last year and hotel rates are also expected to be cheaper than last year.

“Those who do vacation this summer will find a plethora of attractive discounts,” Darbelnet said. “If you can afford to go, this summer is a smart time to travel.”

Reporting by Rebekah Kebede; Editing by Christian Wiessner

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