Summer is here, and most Americans plan to take a vacation. But according to a new poll, 61% of those vacation planners hadn't fully booked their summer trips by mid-May. Travel industry professionals say what started as a bet-hedging mechanism during the 2008 recession may have become the new standard practice for Americans planning getaways.
Travel-deal site Airfarewatchdog's May poll pulled in 13,000 responses, and 46% of them indicated they hadn't booked anything for their summer travel, with another 15% saying they'd booked part of their trip. Last-minute planning seems like a way to get stuck with higher rates and fewer choices. But there are plenty of reasons for the last-minute booking trend -- and the wait isn't hurting the hotel industry.
Strategies held over from the recession
"Planning closer to the date got popular after the 2008 economy downturn," said Eric Hrubant, president of New York-based CIRE Travel. "Prior to that, most people planned their vacations three to nine months in advance. I think that most people were hesitant to book leisure travel too far in advance in the event they got laid off."
Tour guide trainer Cherie Anderson agreed. "This is typical behavior when the economy is 'iffy.' People book at the last minute because they aren't sure what's going to happen. It may be money they'll need if the economy doesn't recover."
Anderson added that it's not just leisure travelers putting things off. Corporate planning for meetings, conventions, and other travel have a shorter lead time, too.
"Fortune 500 companies normally book their meetings and incentives nine months to a year in advance. Now they are booking like crazy, but usually with a couple months and even a couple weeks' notice."
A new travel-planning landscape
The wait-and-see approach made financial sense during the recession, when individuals and companies kept a nervous eye on the economy. Now that the economy is recovering, why haven't vacationers gone back to locking down their vacation plans in advance? Experts point to a changing hotel-industry landscape and more cautious consumer mindset.
The recession may have forced consumers to adopt a wait-and-see approach to travel planning, but the habit seems to have stuck. Pam and Larry Willis, owners of the Gables Wine Country Inn in Santa Rosa, California, think the harsh winter caused people stuck in the "polar vortex" to tally up their heating bills before booking a summer trip. Now that winter is done, "they are starting to come out of the woodwork."
Travelers now expect deals—and hotels deliver
Beyond waiting to see if the money is there, leisure travelers are waiting for the best deals, as well.
"The hotel industry has trained customers to expect deep discounts when they book last minute," said Glenn Haussman, Hotel Interactive trade magazine's editor in chief. Travel marketer Tegan Kopilenko said that at the same time a growing number of hotels have reduced or eliminated blackout dates and other booking restrictions, they're also offering package deals with perks like larger rooms, car rental, and meals.
"I think packages like this are part of the reason people can wait to book," Kopilenko said. "They can essentially decide where they want to stay and wait for whatever other puzzle pieces they have -- vacation time, airfare pricing -- to fall into place."
Plenty of last-minute rooms, not so many last-minute flight deals
If travelers can't find a room at the inn when they're ready to go, they have options outside the traditional hotel industry. Because of the boom in private-home rental sites such as Airbnb and HomeAway (NASDAQ:AWAY), "most travelers aren't worried about finding a cheap place to stay," said Jennifer Clark, communications vice president at travel site Gogobot.com. "But they are sensitive to the cost of flights."
That's because airfare is often the most expensive part of a vacation, especially for families with kids. And as the airline industry prepares for what it expects to be its busiest summer since pre-recession 2008, waiting to book air travel can sharply reduce options for routes, times, and the likelihood of getting seats together -- another big consideration for parents traveling with children. Haussman said that travelers still tend to book their leisure flights months ahead, but that road-tripping vacationers can leave lodging to the last minute and probably still find deals.
A sunny forecast for the hotel industry
Consumers are definitely benefiting from the endless parade of deals, a growing pool of lodging options, and the flexibility that comes with late-stage vacation planning. And hotels are thriving in the current climate, too.
Hospitality systems provider TravelClick's May 2014 report on bookings shows that North American hotels have seen an increase in both occupancy and average daily rates for all types of travel, but especially non-group leisure travel, which posted the biggest increase over the same period last year.
Only time will tell if travelers will revert to the pre-recession practice of booking vacations far in advance. But with so many incentives to wait -- and with the hotel industry doing just fine -- last-minute booking may be the new normal.
Casey Kelly Barton has no position in any stocks mentioned. The Motley Fool recommends HomeAway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.