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Four Industries to Benefit from Increased Spring Break Spending in 2017

After a long winter of late-night study sessions and microwaved meals, millions of US college students are setting aside their textbooks and heading out on spring break adventures. Whether it is a road trip along the West Coast or a beach-side getaway in Miami, more than half of the nation’s 20.9 million college students are expected to travel for spring break this year. Overall, IBISWorld estimates that spring breakers will spend $1.8 billion this season, boosting revenue for travel and hospitality industries in the United States.

 

Flying south

Enticed by the prospect of surf, sand and sunshine, most students are expected to head south for spring break, flocking to popular coastal destinations such as Panama City, FL, and South Padre Island, TX. For many of the 57.6% of college students who attend college in the Mid-Atlantic, New England or Great Lakes regions, this means packing flip-flops and sunscreen into a carry-on and catching a southbound flight. According to the US Department of Transportation, domestic revenue passenger miles (RPMs), a calculation of the number of paying passengers by distance traveled, trends about 3.0% to 5.0% higher in March than on average. However, for airports located near major spring break destinations, waves of college students can cause revenue passenger miles to increase as much as 50.0% in March. In 2016 alone, Florida’s Daytona Beach International Airport outperformed its 2015 average by 17.3% in March, while the Fort Lauderdale-Hollywood International Airport bested its yearly average by a substantial 22.2% during the same period. Contributing to the sunny outlook of the $156.1-billion Domestic Airlines industry, relatively low fuel prices are expected to sustain high profit margins this season. In fact, profit represented 12.5% of the average airline’s revenue in 2016, up from 6.2% in 2011.

Road trips

While those traveling by plane fight for arm rests and snack on peanuts, more than half of US spring breakers will take to the open road for their vacation travels. Encouraged by increased disposable income levels and relatively low fuel prices, college students are expected to drive farther distances and spend more on fuel this season. These factors have aided the recovery of the $343.2-billion Gas Stations with Convenience Stores industry, which has declined at an annualized rate of 5.7% over the past five years. This industry will also benefit from roadside purchases of snacks, bottled drinks, personal hygiene products and other groceries, which typically represent 12.8% of the average gas station’s total revenue.

Surfing couches

This season, college students are also expected to hunt for less costly housing options, with an estimated 95.0% of spring breakers sharing hotel rooms to save money. Additionally, according to a 2016 Priceline.com survey, nearly 90.0% of students cut costs by booking rooms for a regular or long weekend rather than a full week. Therefore, while spring break typically brings an influx of revenue to the $173.3 billion Hotels and Motels industry, overstuffed rooms and shorter vacations will limit the industry’s performance this season. As tech-savvy millennials continue to dominate the market for spring break accommodations, traditional hotels will likely turn to travel agents for help attracting penny-pinching students.

In the past, most spring breakers traditionally planned out their travel and hotel accommodations well in advance, booking flights and hotel rooms early to cut costs. However, in 2017, mobile platforms managed by the $37.5-billion Travel Agencies industry help college students to organize trips and book rooms with relatively little planning. In fact, an estimated 56.0% of hotel rooms occupied by spring breakers in 2016 were booked on the same day of check-in, while just 3.0% of students booked their rooms more than a week in advance. Growing demand for impromptu housing is expected to generate significant revenue for travel agents this season, contributing to the industry’s projected growth of 2.2% in 2017. At the same time, traditional travel agents and hotels will continue to face strong competition from alternative accommodation services, with companies like Airbnb and Homeaway.com giving students the chance to spend their vacations in privately owned houses and apartments. According to Hipmunk, 9.5% of spring break accommodation bookings were made through Airbnb in 2016 and this figure is expected to increase in 2017. This is expected to boost competition for traditional accommodation providers that rely heavily on spring break bookings.

Four Industries to Benefit from Increased Spring Break Spending in 2017 PDF

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