Summer may be winding down, but the road to adventure lives forever in our hearts. Or does it? People still take road trips, but where they go and why has changed drastically over the last 30 years, and the coming wave of EVs is going to alter our idea of a road trip even more.
So, do gas prices matter at all? Do sky-high airfares impact our willingness to sit in a car for 20 hours? Did roadside hotels see a post-pandemic dip or boost in summer occupancy? What's the worst state to drive to? And are people still driving cross-country, Griswold-style?
Summer may be winding down, but the road to adventure lives forever in our hearts. Or does it? People still take road trips, but where they go and why has changed drastically over the last 30 years, and the coming wave of EVs is going to alter our idea of a road trip even more.
So, do gas prices matter at all? Do sky-high airfares impact our willingness to sit in a car for 20 hours? Did roadside hotels see a post-pandemic dip or boost in summer occupancy? What's the worst state to drive to? And are people still driving cross-country, Griswold-style?
This is how much it dates me. As a child of the 80s, I still use national ampoune as a descriptor when I talk about road trips. I often define it to people in just casual conversation as oh yeah, we're going on a big national ampoune road trip of America. I think people still get that reference. Hi, everybody, it's Matt Brown. This is Jeff Borman that I'm talking to. Jeff, you still get that reference Of course, of course.
Jeff Borman:I think I used it recently when a car broke down. You know what it was Actually. No, my dad and I were recently doing a couple baseball parks. We went from a Cardinals game to a Royals game. As we were driving across the state of Missouri, we were talking about where we could find the biggest ball of twine.
Matt Brown:Both of us immediately knew that was a reference, I think the kids still get it, I think those millennials who are now 40, and the Gen Zers oh Lord, who knows how old they are I think they still get it only because that movie and its progeny kind of lived on cable for like 20 years after. They would always be on Comedy Central through all that time. National Lampoon has probably written by John Hughes. It was probably a little bit of the inspiration for our conversation today, as was our individual trips this summer. But first a little backstory. Everybody Growing up I am the child of educators we would do this massive drive from Louisiana, where I grew up, where we lived, to all points west over like two weeks pretty much every August We'd go to New Mexico, we'd go to California, we'd go to Colorado, we'd visit mom's old friends, visit dad's old Peace Corps friends. It would just be this epic adventure across the country. It's halfway across the country but to me, 13-year-old, it felt like across the country.
Matt Brown:I think all this has gotten us talking about the state of the Great American Road trip, namely, do people still do them and if so, what's their economic impact? We're a show about the economic impact of travel. It naturally led us down that path. I actually just finished a big road trip with my wife, amanda, and our dog, tilda. We did one through America's Heartland and we did it in very large part because it was cheaper. We had to go, you know, went to a wedding and then we went to go visit her parents and my parents and friends, and so we went all over. We did Wisconsin and Des Moines and St Louis and then Atlanta, and doing all that through flights and rental cars, with bags and dog, would have cost thousands of dollars and instead, with gas and snacks, we kept it in the hundreds, which was a powerful incentive for us to do all the hours in the car and it is a ton of hours in the car. And also, just, you know, I've been thinking a lot about it, getting reflective in my advancing years, and I want the American road trip to survive, because I don't think it's just about seeing the sights and all the beauties that America has to offer, even though there are many of those.
Matt Brown:There's something to me and, jeff, I think this is the case for you as well there's something that's very internal about it. It's the people you go with, the podcasts and soundtracks you listen to, looking at you, music of season two of the Bear, the random motels and restaurants, the transcendental silences, the night drives and just the general idea of moving on down the road. It is a deeply personal American experience and I embrace that, even though that modern American experience is brought to you by your sponsors at General Motors, walt Disney, the Eisenhower Interstate system, the conflicting forces of capitalism and our unending restlessness and desire to see what's next. But I could wax on philosophically about road trips all day. The road trip is not dying but it is changing and we're going to talk a little bit about how it is changing.
Matt Brown:I'm not sure how many families do the cross-country thing anymore, but they definitely do more than 250 miles, which is kind of the arbitrary distance that people sort of set for road trip. So this episode is about the state of the great American road trip. Jeff, first question before we get to the stats, because we've got to give people stats that can't just hear my philosophies Did you do road trips as a kid? Did you do big national impoon trips when you were a child?
Jeff Borman:No, not really. I was the oldest by seven and eight years of my brother and sister, so the road trip with younger kids really wasn't my parents' idea of a good trip Loading up family with young children who have no patience for long car rides. It was really more about the destination. Growing up for me, I really thought a movie theme, I thought we'd be doing the Muppet Movie, kermit and Fuzzy, a frog and a bear.
Matt Brown:Sure, yep, we're going to stick with the economics Far more interesting, the economics of travel and rev bar for roadside hotels. That's where we're going to head today.
Jeff Borman:Yeah, let's do rev par Every podcast listener really wants more stats.
Matt Brown:Well, you know, what I've noticed about the road trip is it's such a famous part of American life but it is hard to wrangle statistics about it and I wonder if that's because so many people have so many different versions of it and it's hard to track as one thing. You know, like airline tickets, you can track as like one thing this is the number of people who are flying from the East Coast to Los Angeles. Road trips are just so diverse it's tough to get a bead on the economic impact. Everybody knows there is one.
Jeff Borman:I think we can right. So one of the ways that STR divides performance numbers across the US is they look at location type, and the big location types, of course, are urban hotels and suburban, airport hotels, resort hotels, but the biggest two are interstate and small town, metro, small towns and if you look at it, you know across all United States, according to STR, there are 63,000 hotels.
Matt Brown:And STR is what.
Jeff Borman:Industry reporting agency based just outside of Nashville. Okay, so they give you like every quarter.
Matt Brown:They give you a bunch of statistics about where people are going and what they're doing.
Jeff Borman:That's right. What was the occupancy in all these different cuts of luxury versus upscale, versus economy, versus this market and that market? Of the 63,000 hotels that report data to star across the United States, 27,000 of those are interstate small-town hotels, nearly half. So if we look at those as a proxy for how's the great American road trip, interstate hotels tend to run a lower occupancy than urban hotels. That makes sense. New York, la, chicago, your big cities, they should run, or you would at least intuitively think and they do run a higher occupancy in New York City than you do in a town an hour outside of Birmingham.
Jeff Borman:But what we look at, really, at least what I think is interesting is versus 2019. So, q2 prior to pandemic, what's the state and health of the markets that serve the great American road trip? They are healthier than they were before in comparison. So the total United States in the second quarter ran a 69.8 occupancy in 2019. Today that is five points less. So we're not going to take this into a conversation about where the United States travel businesses in its recovery from COVID, but as a place setter and as a benchmark to compare against all the US. Five points less in Ock still. But when you look at just the interstate hotels, only down a point and a half. So they've held on. The road trip is still extremely popular.
Jeff Borman:Let's go a layer deeper and we just go not Q2, but just in June. Those numbers are even better when you would expect them to be the great American road trip, probably less significant in April, more significant in June. Well, in June, slightly better Again. Interstate and small town Metro one and two and a half points below Ock of 19, whereas urban hotels are still eight and a half points below 19. Oh, wow. So I think it's very popular and very resilient. If I look at one more cut the top 25 cities in the US occupancy versus 19 in June, seven points down. All other markets outside the top 25, down three and a half. So that deficit to prior to COVID is half for the hotels that we're talking about today.
Matt Brown:I'll see your statistics and I'll raise you, jeff, with a few lazily acquired stats of my own Wallet Hub. But a month and a half ago, for all the summer travel started. They reported that nearly 80% of Americans plan to take some sort of road trip this summer by the 250 mile measure. I've got a couple of questions for you here. Where do you think the highest gas in the nation is, the highest price for gas?
Jeff Borman:I would say California or maybe New Jersey, if we've got taxes included in that.
Matt Brown:You blame California for everything, and the problem is you're right. The highest gas prices in the nation are California. The best destination for road trip, based on these metrics that Wallet Hub came up with, was Texas highest score based on cost activities safety. Okay, all right. I'd like to see some of the methodology here, but okay, texas just went.
Jeff Borman:no speed limits in high rural areas.
Matt Brown:The state that will give you the worst value for your trip is Rhode Island, which I feel is very unfair to Rhode Island.
Jeff Borman:Providence is lovely. Can you take a road?
Matt Brown:trip in Rhode Island, though it's 30 minutes. You cannot go more than 30 minutes in any direction in the state.
Jeff Borman:I see that as a feature, not a bug but Joe Burrow will have more yards in the air this season than you could throw across Rhode Island.
Matt Brown:Also, flights to Europe and Asia, as reported by Hopper, have experienced a considerable increase. I think they're like $300 on top of what they were last summer. I think anybody who's gone on Expedia, has been looking to take a trip over the last three months, six months, has noticed that airline prices are radically different from, say, 10 years ago or 15 years ago, and I think that has given some strength to the idea of the road trip.
Jeff Borman:If we're gonna stick to stats, the price sensitivity. We're seeing that in the hotel market also, the economy hotels that tier is performing better and again I think there's a correlation that most of the economy hotels are in places that you would find on the Great American Road Trip. Right, you cannot afford to run an economy hotel really in New York City. Costs are too high. It's no longer. By the time you cover your costs it's not an economy hotel anyway, even if it's got an economy hotel brand. But if we look at where performance is in June versus 19,. Again, economy is half the ack loss, very similar to what we're just talking about with interstate and small towns. So yeah, I mean, listen, prices are a factor of anywhere from 30% to 100% higher to fly, and that's not all, just fuel based and it will get to that.
Jeff Borman:But you can't talk about the Great American Road Trip and costs and consumer preferences and travel without talking about fuel at some point. Ultimately, fuel is going to impact both of these industries. Whether you're in the car filling the tank yourself, where you're paying an airline for a ticket, you're covering the cost of fuel. What I think is really different on the airline side is, a couple of years ago, labor exceeded fuel as the number one cost. So when you're flying to Europe or anywhere else, you're paying for more than that. Also, whereas you're doing the drive-in Matt, you're saving the money there.
Matt Brown:Right. Of course, my romantic view of the American Road Trip is tempered by some inconvenient truths. If American cars, suvs and pickup trucks were their own country, they would be the sixth largest emitter of heat trapping carbon dioxide emissions in the world. It would be like a nation state of cars, which we essentially are. So all of this is to say that EVs are coming.
Jeff Borman:Can I burst your sustainability bubble? Aaa? It's really, I think. The authority on predicting road travel in America Projects 50 million Americans to travel 50 miles or more this past Independence weekend, which would be a new record More Americans hitting the road than ever. Domestic travel on long summer weekends will increase by 2 million people just year-over-year 22 to 23. And this year's projection of exceeding 50 million for the first time in a single holiday weekend will top all other modes of transportation and you start going global. This is bigger, right? Other modes of transportation are on the rise, but AAA expects 3.5 million people to travel by bus, cruise and train combined, which is 24% up year-over-year. But that pales in comparison to the number of people who will be in a car. So, yes, let's get back to sustainability if you're lying, but it's going to get worse. Sure, I mean. Listen.
Matt Brown:Thank you for those encouraging words. You don't believe that there's an impact of gas prices, right you? First of all.
Jeff Borman:You phrase the question wrong because you act as if this is a belief. Right? There's no belief here. There is simply no correlation whatever. Gas prices have no correlation whatsoever to how many people hit the road period, study after study.
Jeff Borman:Starting really first, I saw was during the great financial crisis, where oil surged. Right During COVID it was the opposite. Right, oil plummeted. You couldn't pay people to store oil. People weren't traveling anyway. Circumstances were just different. But going back at least 15 years, there's a consistent desire to study that effect and it never shows a correlation. So there's a company called the Arrivalist. They do studies using GPS locations for mobile phones yes, audience, you're all being tracked and they measure the distance people travel from their homes based on where their phone is. So in April of 2020, when people were scared out of minds and locked up and lockdown was in full swing right, mobile phones weren't leaving one to two miles from their home locations. Fair enough, we kind of all felt that, and by the end of June of 2020, people's phones traveled 50 miles on average. That was a big trip in the summer of 2020. By the end of 2020, people's phones were moving 150 mile radius from their homes. So it was brilliant the way this company Arrivalist measures.
Jeff Borman:Yes, brilliant and creepy, brilliant and creepy. So the same company today measures gas prices where they are the highest and the distance where people travel in those locations, correlating or trying to call it. Is there to match point any correlation between high gas prices and gas conservation? And the simple answer is no, matt, there is no correlation. And people don't say, hey, gas is cheap, let's just drive. Nobody's ever said that. Nor do they say it's expensive, let's stay home or fly. People still haven't urged to get out and the cost of flying and the cost of driving are going the same direction, totally irrelevant. I think part of the challenge is that when fuel for automobiles is expensive, jet fuel is even more so.
Matt Brown:Right. I wonder what that cigarette tax price is going to be that finally starts to curb it. Will it be? Will we get to a point where it's OK, it's $20 a gallon.
Jeff Borman:That's and that's. You know, your cigarette tax is a great example, because the small tax made no impact on smoking and it did have to get to New York where it was like $18 a pack of cigarettes before people started to curb their behavior.
Matt Brown:Raise of sunshine we need raise of sunshine to keep the road trip alive. And let's get back to EVs, which I know have a ton of issues around them as far as battery life and cost and rollout and everything. And there's hope, there's hope everybody.
Jeff Borman:Matt, we should do a follow-up show with an expert just on EV and the impact that it's going to have on the future of the road trip, both consumers and businesses. That is a deep, deep subject.
Matt Brown:Yes, because you want to hear my hot take, hot take, give it to me. There are about a fourth of hotels reportedly the fourth of 63,000 sounds like a lot to have this that apparently have EV charging stations. And as we talk about the future of the Great American road trip, I think we're talking about a road trip that is going to be dominated by electric vehicles 20 years from now. And the big bug there with EVs is how long is it going to take to charge it? And if I'm going to go like with a gas power car, you can essentially go 600 miles straight if you want to without gassing up, and when you do gas up, it's five minutes.
Matt Brown:Electric vehicles, it's a different animal. For that to change, the charging time will need to come down, which I think it will. But my hot take is that if you are a destination of any kind, including a hotel, a theme park, an arts district on the main street, any place that you want to draw visitors and keep them there for a second, you should be installing electric vehicle chargers right now. If you can put on your website that you have a charging station, you will get more visitors and you will get more business, at least in the short term. True or false?
Jeff Borman:I don't know that I would press the timing the way you're describing, meaning that the early. If you're an early adopter of a hotel and you get there first, I don't know that there is a sustainable value by getting there first. You just might be the first to tap into that demand. Eventually, the people who stayed at your hotel today aren't necessarily going to remember you fondly in five years for having that EV station. There's going to be so much more of the experience, I hope, than hotel experience better be a whole lot more than I got to charge there Getting there today in that space welcoming EV arrivals. I think you're right. There's a competitive advantage because people are hitting their own EVs and there aren't many places to go charge up at night. Short-term yes, good, smart, short-term play. Long-term it will like Wi-Fi. It will eventually just become table stakes. You're not going to choose your hotel because, man, I remember getting Wi-Fi at that Marriott back when Wi-Fi wasn't everywhere.
Jeff Borman:I'm still going out in the area.
Matt Brown:That's a good point. I wasn't expecting your Wi-Fi comparison. That's a good one.
Jeff Borman:I just made that one up. I do think that in series.
Matt Brown:it's a little fall show, that's how good he is.
Jeff Borman:We should have a follow-up show with an expert on this, because this is a deep subject, because you're right, in a state like California and eventually it will spread, evs will be required. You won't even see it. It'll be so hard to find a gas station in 10 years. That's going to be out there. That's going to be a reality. One of the attractions for a hotel to be better suited for drive traffic is that it's a more responsive market to marketing than fly-to traffic. I mentioned the company earlier called the Arrivalist. I don't think it's the, I think it's just called Arrivalist. They partnered years ago with the Montana Tourism Business Development to do a study of the impact of marketing dollars to change travel behavior between fly-to visitors to Montana and drive-to visitors to Montana. What they learned conclusively was that drive-to travelers are two and a half times more likely to respond favorably to marketing. I thought that was just brilliant, putting that offer out there to people who are within driving distance of Montana. They can't respond favorably and go oh, I think I'm going to take that trip. It's a simpler trip. It doesn't require the same degree of planning. Consumers respond and say, yeah, good idea, I'm going to do that I'm going to change my action as a result of what I saw in the ad Come to Montana and do this, come, do that. Whereas marketing to people beyond 600 lines with those same visit Montana messages was not nearly as effective. Everybody in Texas or Florida or New York was not saying, ah yes, that ad inspired me to go to Montana, I'm going to do that. The difference in that was, if you had to get on a plane, you were significantly less likely to respond to the marketing.
Jeff Borman:Back to hotels. Does it matter? Does drive traffic have additional benefit? Does things that you're throwing out there like let's be EV friendly?
Jeff Borman:I think those things go together where, if being within 600 miles means you can turn a person's decision and being within 600 miles is about the distance, reasonably that someone's willing to travel in an EV, not because it's necessarily the range, but because pulling over for an hour is way different than driving 2000 miles and you have to pull over seven times. Right, you have to pull over one time for an hour, pull over six times for an hour, each time very different scenarios. So I think they go together there where EV friendliness for the, just the range that you can expect out of an EV and people respond favorably to marketing. I think the great American maybe that's not the great American road trip map, maybe that's the weekend getaway but I think there's a correlation between willingness to get in the car, responsiveness to my marketing dollar to tell people hey, I'm open for business, I got a good deal for you, come do this. I think those things all tie together, jeff, it's time for the mystery question.
Matt Brown:It's here. Give me a recommended road trip and wait, it has to be more than 1000 miles. They give me round trip 1000 miles, but yeah, that's a good criteria.
Jeff Borman:And it does remove Cincinnati to date in Ohio. Yes, well, I'll answer you with my favorite I've done and the favorite I'd like to do. The one and this has come up a number of times, it's a real theme here Southern Utah. I don't know if it fully hits the 1000 miles, but let's go Vegas to Arches. It's somewhere around that 1000 mile. I mean, it's probably not quite a thousand. I just think it's the most beautiful 800 mile stretch or so of America. But of trips I've not done and would love to, most by road. Let's call it the 1000 mile journey up in the Northwest. I don't know, does PCH go all the way from tip to tip, border to border, mexico to Canada?
Matt Brown:I think it does. That's something I should know, but don't, so I will confirm that.
Jeff Borman:I've done the portion of call it Mexico to the Bay Area and I would love to do that second portion Bay Area all the way to Washington, up to Seattle, cascade Mountains, oregon coastline. Never done it. I'd love to do that. Jeff, I'll see you out there on the road, maybe in Oregon. I'll see you out there on the road.