American University News
Credit: Stock SnapThis weekend, people across the country will hit the road for long Memorial Day weekend getaways. The American Automobile Association (AAA) estimates that more than 41.5 million people in America will travel for the upcoming holiday weekend – nearly 5 percent more than last year, and the most in more than a dozen years.
What does this mean, economically speaking? And, if it is a positive business trend, is it possible for businesses to quantify it?
The answer to these questions isn’t necessarily a straightforward one. According to Catalin Stefanescu, a lecturer in finance and real estate at Kogod, “It is very hard to quantify a net effect.”
“I would not be very enthusiastic about economic gains because most of the time, they come at a steep cost,” he said, citing as an example the fact that many cities hosting the Olympic games lose significant amounts of money. “Most studies that estimate gains/losses have serious shortcomings.”
Despite such shortcomings, data does point to increased travel, however – and potentially increased business earnings. AAA also projects that airfare and car rental prices will be lower this year, as well, which could incentivize travelers. Airfare is estimated at an average of about $168 on the top 40 domestic routes – 7 percent lower than last year. And the average daily cost of renting a car, $59, is the lowest Memorial Day rate in four years.
It’s notable that gas prices are high, however. The AAA Daily Fuel Gauge states that, as of May 21, the average national gas price was $2.93, the highest going into Memorial Day weekend since 2014, when gas prices stood at $3.65.
AAA does not anticipate this will deter travelers, however. “It won’t keep travelers home this Memorial Day weekend,” said Bill Sutherland, senior vice president, AAA Travel and Publishing.
Of course, the price of transportation isn’t the only factor under consideration, especially in cities …