Did Gas Savings Come Too Late?

Relief at the pump has been surprisingly consistent in recent weeks. AAA is reporting that gas prices have fallen for 25 consecutive days through yesterday. But does the relief come too late to save this summer's leisure industry?

The dropoff, though welcome, has been gradual. Since peaking at a national average of $4.114 a gallon, the end result of 25 straight fractional fuel price dips results in a mere 7% decline, to $3.81 a gallon. Drivers may be glad for the discount, but it seems they're still staying close to home.

The whole "staycation" movement has merit. If you're a leisure company that thrives on attracting locals, you're doing fine. Concert promoter Live Nation (NYSE: LYV) posted better-than-expected results last week. Regional amusement-park operator Cedar Fair (NYSE: FUN) saw attendance at its drive-to thrill havens climb slightly this past quarter. Multiplex advertising network National CineMedia (Nasdaq: NCMI) hiked its dividend last week, no doubt inspired by this summer's record box-office receipts. Regional indoor waterpark hospitality leader Great Wolf Resorts (Nasdaq: WOLF) is seeing a bump in occupancy levels.

The same kind of cheery optimism doesn't hold true for travel players that draw crowds from farther away. Disney (NYSE: DIS) actually posted slower turnstile clicks at its stateside parks this past quarter. Cruise companies like Royal Caribbean (NYSE: RCL) are growing their top lines this year, but margins are getting slammed against the rocks, as fuel surcharges fail to offset higher operating costs.

In other words, the recent trend won't be enough to save the travel industry, beyond the thriving local players. With airlines scaling back their flights, and consumers investing in their home entertainment options, this may set an even bigger challenge for the travel industry next summer.

This summer season is coming to a close, but the summer of 2009 is already set for one whopper of a test.

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