Virgin’s 2-day sale kicks off fall travel season

Virgin America launched a systemwide airfare sale today– but it only lasts 2 days. (Photo: Chris McGinnis)

Election-year uncertainty and a weak US economy combined with higher gasoline prices, airfare and hotel rates have not deterred American travelers this summer, and healthy demand should carry on into the fall months.

Even though summer does not officially end until September 21, the fall travel season starts this week and extends through mid-November when demand begins to rise in anticipation of a relatively early Thanksgiving (Thursday, November 22).

Business travel “season” also starts this week as executives head back out on the road after summer breaks to visit clients they missed over the summer, or to attend meetings and conventions, which peak during the fall months. While there will likely be fewer visitors from economically embattled Europe, healthy demand in the US and Canada, as well as an influx of visitors from Asia are helping to counterbalance that decline.

Best Western is not a publicly held company, so it’s the only major hotel player (2,000 hotels in US) that releases valuable forward-looking data. Looking ahead, its advance bookings in the US and Canada for September, October and November are up 10% compared to this time last year. Advance bookings at airport hotels in North America, where guests tend to be predominately business travelers, are up 18%. Similarly, advance bookings at hotels located in intown areas are up 13%. (Disclosure: I write for Best Western’s youmustbetrippin.com blog)

Gasoline Prices: The recent spike in gasoline prices is having minimal impact on travel plans in the US. In early June, the average price of a gallon of gasoline was $3.52. It then dipped to a low of about $3.30 in early July. By the end of August, it had increased rather dramatically to $3.72 according to the US Energy Administration. However, the price jump at the pump did little to keep Americans off the road for Labor Day—according to AAA, travel volume over the long holiday weekend was 3% higher than last year—up to the highest level since the recession began in late 2007. As demand for gasoline declines during Autumn, prices will hopefully decline, too.

Airfare: As the price of a barrel of oil approaches $100 again, airlines are feeling the impact of rising fuel costs, and in August they raised fares across the board for the fifth time this year. However, during fall months, travel demand declines compared to peak summer travel season, so travelers can expect some relief from high fares in coming months. However, the days of broad across-the-board fares sales are long gone—so smart bargain-focused travelers need to keep their eyes peeled for sales of very short duration between specific markets instead. For example, Virgin America launched a two-day fare sale this week good for trips up until October 31– fares are quite good, i.e., less than $300 for transcon trips to NYC or DC. But they are not available on Sundays or Mondays.

In the second half of 2012, airlines will offer seven million fewer seats, and nearly 3% fewer departures than in 2011, according to The Boyd Group. These reductions in airline capacity (down some 11% since 2005), combined with steady demand on the part of consumers, means that airfares during peak holiday travel seasons (Thanksgiving, Christmas, New Years) should remain painfully high.

Advance bookings for fall are up 10% at Best Western hotels like this one near SFO (Photo: Chris McGinnis)

But as always, heavily discounted shoulder season fares in early November, early December or early January should be available for those with the flexibility to take advantage of them. Tip: If possible, schedule business trips to coincide with these dips in demand.

Hotel Prices: Due to steady demand, hotel prices are rising, but the increases are uneven across the US. For example, travelers can expect to see significantly higher rates in large coastal cities such as New York, Boston, Washington, San Francisco or Seattle—especially during the fall months when meeting and conventions peak. However, rates in smaller, interior cities have remained mostly flat, or even declined in some cases. This variation means that average rates should increase less than 5% this fall. Tip: During fall months, travel suppliers reach out to business travelers with special deals and bonuses tied to their loyalty programs—keep an eye on blogs like TravelSkills and program websites for the deals.

Rental Car Prices: Rental car prices have remained mostly flat in recent years, but that could begin to change. This is due to consolidation in the industry, with only three major players left—Avis/Budget, Hertz (which purchased Dollar/Thrifty in August for $2.3 billion) and Enterprise (which now owns Alamo and National brands). Additionally, with airlines cutting service to smaller towns, demand for rental cars will increase as business travelers fly to the nearest airport, and then rent cars to drive to their appointments in smaller towns.

What about YOU? Are you planning to travel more, less or about the same amount this fall compared to last fall? Please leave your comments below.