Despite rising gas prices, high travel rates could aid restaurant recovery.
In years past, high gas prices have had a chilling effect on travel and, in turn, the hospitality sector, including niche foodservice operations like hotels, amusement parks, stadiums, and fairs. But after two summers of stymied activity, pent-up demand is unlikely to hinder travel, even when gasoline is predicted to hit $6 per gallon by summer’s end, per JPMorgan.
“Come hell or high gas prices, people are going to take vacations,” energy analyst Tom Kloza told CNN last month. Kloza is the founder of price-reporting agency OPIS (Oil Price Information Service).
Indeed, travel insurance provider Allianz Partners reported that spring break travel was up 134 percent compared to 2021. Plus, supply chain orders are already hinting at moderate growth.
According to The NPD Group, broadline distributors shipped 47 percent more case units to lodging foodservice operators this April compared to the same month the previous year. For recreation foodservice outlets, it was a 46 percent increase.
“With more consumers vaccinated and comfort levels higher, spring break 2022 made progress in recovering from the last two years,” says Tim Fires, president of NPD’s SupplyTrack. “If the momentum continues throughout the summer as AAA and other travel-related groups predict, foodservice distributors and manufacturers can expect a higher recovery rate for lodging and recreation this year.”
These gains are somewhat tempered, however, still falling short of 2019 levels by 13 percent for lodging and 6 percent for recreation foodservice. But within the recreation category, The NPD Group uncovered a few areas that have made a full recovery, namely amusement parks (up 23 percent compared to April 2019), stadiums and ballparks (up 18 percent), bowling alleys (up 11 percent), and fairs (up 9 percent).
Some of these categories, like stadiums and fairs, are the realm of quick service. Nevertheless, major parks including Disney World, Universal Studios, and Six Flags include sit-down restaurants on-site.
Tourism also has a pronounced effect on more elevated concepts. According to the National Restaurant Association, 41 percent of fine-dining sales came from visitors and tourists in pre-COVID years. What’s more, one out of four fine-dining operators said these guests accounted for more than 60 percent of their business.
Whether that dynamic returns this summer is yet to be seen. At the very least, analysts predict an improvement in the tourism and hospitality sectors—even if it’s incremental in some cases.