The Official Magazine of IAAPA
Simple Math
Award-winning economist Severin Borenstein, faculty director of the Energy Institute at UC Berkeley's Haas School of Business, is skeptical that gas price increases will significantly dent long-distance travel. "Gasoline costs are a pretty small part of the cost of any sort of long-distance travel," he says. "Certainly, anything that requires staying overnight—the cost of food and lodging and so forth—swamps the sorts of increases we're seeing in the price of gasoline. Just a simple calculation shows that even if you get 20 miles to the gallon, you take a thousand-mile trip, that's 50 gallons, an extra dollar a gallon is an extra 50 bucks."
Borenstein's deeper concern is the cumulative toll on low- and middle-income households.
"They may just feel like they have less money to travel overall. Not because the price of gasoline for the trip itself is a problem, so much as the price of gasoline for their daily travel has chewed up their budget."
A Rise in Costs
The impact, Borenstein warns, extends beyond the pump. "It's not just the price of gasoline; we're going to soon see that it feeds through to other parts of the economy. You're paying more for any good that is being delivered. It's just going to create a larger strain on the budget. That might cut back on discretionary expenditures."
Still, he sees a potential silver lining for regional attractions. "The offsetting argument might be that [attractions] are what people trade down to when they're not going to take a long trip—they instead go to a local amusement park. And that could be a saving grace."
A Seasoned Industry Vet's Insights
Eugene Naughton, president of The Dollywood Company, shares Borenstein's more measured outlook. "I'm not looking out over the horizon with a lot of concern about the short-term impact of a spike in gas on consumers visiting us," he says.
For Naughton, the more pressing question is whether the overall value proposition still holds. "As an operator and as a leader, you have to be sure the value equation you offer your guests is strong enough to overcome the costs associated with enjoying a day at your venue." He points to Dollywood's breadth of programming as a key part of that equation, including live shows and experiences that deliver value even to guests who may not ride a single coaster. "We have many grandparents who visit with their grandchildren who won't ride one of our 11 coasters, but we have a full range of shows that can keep them busy all day long."
Naughton also emphasizes the importance of listening directly to guests. "I tell people that God gave us two ears and one mouth for a reason. One of my favorite things I do on the job is walking our campus and talking with guests and our hosts, because the answers to what to do lie right on the midway." The goal, he says, is repeatability. "You don't want it to be a one-trick pony. You want guests to come back time and again.
