Higher energy costs during the summer months means lower overall tourism revenue for the Sate of Nevada.
According to data from the U.S. Energy Information Administration (EIA) and the Nevada Commission on Tourism (NCOT), high gas prices during the months of May through September result in decreases in incoming vehicle counts, visitor volume, and overall gaming revenue for Nevada. A substantial drop in those three categories means less income for a state that’s already facing large budget cuts.
“Tourism is the largest source of income for the State of Nevada,” Nevada Commission on Tourism’s spokesperson Bethany Drysdale said. “It’s the largest contributor of jobs to the state, and it’s where all of our spending is. So, until the state’s economy gets more creative, tourism is it.”
The data analyzed showed that when gas prices peaked at a little over $4 per gallon between the months of May and September of 2008, visitor volume decreased an average of 5.8% per month along with an average drop of 9.6% in vehicle counts compared 2007. These decreases resulted in a loss of almost 9% of gaming revenues from the previous year. With summer still over a month away, current gas prices have even surpassed those 2008 prices, when the U.S. city average for unleaded gasoline was $4.09 per gallon. As of April 25th, the EIA estimates the average price per gallon for all types of gasoline at $4.15 for the west coast.
Prices also show no signs of dropping come summer time. According to an outlook report by the EIA, Libya’s growing unrest has caused a disruption in crude oil and liquefied natural gas supplies and “uncertainty over security of supply” from other countries in the Middle East and North Africa as well. These events have spurred predictions of gasoline averaging $3.86 per gallon throughout the U.S. by July 2011, with the West coast averaging $4.13 per gallon.
“We need to do something, somebody needs to do something. Whether it’s investing in renewable energy sources or what have you, gas prices are just killing me,” Paul Bragr, a trucker who works in California and lives in Reno said. “They’re not changing the price of what we haul, that’s for sure.”
“My leisure travel is just trying to get home. I don’t even want to get into how much gas is in California. At times like this it’s really a struggle for me to just come home and relax and I’m actually getting to the point where I’m going to quit my job and try to find something here,” Bragr said.
Often, consumers will look to airlines for cheap tickets on small flights rather than long car rides that guzzle up fuel. But rising fuel costs mean airlines need to raise ticket prices to compensate for their extra production costs. The third quarter of 2008 resulted in an average of 12% decline per month in airport volume compared to 2007 numbers, according to the Nevada Commission on Tourism.
“I just recently bought airline tickets, and I think it was something like $2000 for me, my husband and my two kids because of how high gas prices are,” Tiffany Kaiser, a mother with family outside the state said. “We recently had decided that we would get together over spring break, but then changed our minds because we just couldn’t afford the gas prices. It’s about $300 round-trip.”
Drysdale said gas prices have an enormous impact on the way we plan to travel. Many families like Tiffany’s will simply cancel those routine, annual trips solely because of energy costs. The months of May to September are very important for Nevada’s tourism economy, as the state historically receives its highest visitor volume during those months, despite Nevada being known for its winter tourism attractions.
“Summer’s just a great time for anyone to travel. It’s easier for parents to plan trips without having to worry about their child’s school schedule, and Nevada’s outdoors culture really thrives during the summer,” Drysdale said.
To combat the predicted dip in tourism revenues, Drysdale says that NCOT really tries to focus their attention on what they call “drive-up markets”.
“Drive-up markets are those areas that are only a short, drivable distance from Nevada. Places like San Fransisco, Phoenix, even Oregon and Utah. People want to travel, people need to get away, even if it’s only for a weekend. So we like to use that to our advantage and really cater to those markets,” Drysdale said.
The problem is drive-up markets are what seem to be taking the biggest hit. In July of 2008 alone, NCOT reported a decrease of more than 500,000 vehicles coming into the state. That’s a drop 18% from the previous year.
Because of this Drysdale also says that NCOT has to get creative as well.
“48 out of the 50 states have made gaming legal in some form or another, so that can’t be our only selling point. We really have to show them just what else Nevada has to offer.”
