America's summer hot spots wonder: Will the vacationers still come?
Tim Cafferty, who owns a vacation rental business on North Carolina's Outer Banks, is upbeat about the summer season, but he is also doing anything he can to lure would-be vacationers.
His company, Outer Banks Blue, ran a special promotion in March offering a 15 per cent discount on bookings. He is encouraging property owners to drop their prices. And for the first time, he is allowing visitors to reserve many of the 300 houses his company manages for just a few days instead of requiring them to stay a full week.
All that has helped juice his sales, but there are still surprising vacancies. The week of the Fourth of July, a highly coveted rental period, is 'very soft for some reason,' Cafferty said. And more houses than usual are still available for late August, which could be because people are waiting until the last minute to book their getaways.
In the end, Cafferty said, he would count himself lucky if Outer Banks Blue's occupancy levels this summer ended flat compared with last year, given the uncertain economic climate.
Dishes are preapred at Lucky 12 Tavern in Nags Head, N C. — The New York Times
'People are ready to come,' he said. 'They are just looking for a good price.' Cafferty's cautious optimism in the face of those worrisome trends is indicative of how many business owners in popular vacation areas are approaching the crucial summer months. Although American consumers are showing some signs of strain amidst concerns about higher prices and the prospect of a recession, many businesses that cater to domestic tourists are preparing, somewhat guardedly, for what they expect to be a relatively normal summertime surge.
Their bullishness is not unfounded. For all the concerns in recent years that consumer spending would buckle under soaring inflation and high borrowing costs, it has managed to remain solid, powering economic growth even when the economic outlook was hazy.
The summer season will provide the latest stress test for that sunny spending pattern — and the lifeblood of many vacation towns is at stake.
Seating at a restaurant at the Nags Head Fishing Pier in Nags Head, N C. — The New York Times
'Right now, it's all scary,' said Gary Jonas, who owns a bar and food truck lot, the Little Fleet, in Traverse City, Michigan, a summer destination in northern Michigan known for its cherries and vineyards. 'We're just crossing our fingers and hoping that it's similar to previous years.' Typically, American consumers put their money to work during the summer months on trips and leisure activities. Airlines, hotels and short-term rental companies count on bumps in bookings. Local economies in destination areas benefit from a swelling summertime population that buoys beachside cafes, souvenir shops, ice cream parlors and resorts.
But consumers are bedeviled this year by a confluence of challenging circumstances that could curtail their summer spending. Their feelings about the economy have soured significantly since the beginning of the year amidst President Donald Trump's tariff rollout. Stock market volatility has made some consumers more apprehensive.
So far, consumers are still spending. But for the most part, they no longer have the savings they had amassed during the pandemic that allowed them to spend more freely. Credit card debt that is 90 days or more past due has been rising across income levels and household debt has piled up. On calls with investors, consumer-facing companies are reporting that customers are trimming spending on discretionary items like meals out and snack foods; and warning that tariffs will force them to raise prices.
Anglers at the fishing pier in Nags Head, N C. — The New York Times
And if tariffs rise at the end of Trump's 90-day pause, that will put additional pressure on consumers who may suddenly find themselves facing higher costs for goods and services — just as the summer season is revving into high gear.
'There's a pullback in travel demand,' said Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives, a forecasting firm. Prices for hotels and airfares have fallen, she noted, which suggests consumers are pulling back their spending on leisure. 'That's a sign of some weakening,' she said.
There are some bright spots for summer businesses. Travel often holds up reasonably well when the economy softens, though it takes a hit if the circumstances become dire enough. Spending on travel dipped during and after the Great Recession in 2007-09, for instance.
And for now, the labour market remains strong, without the kind of steep job losses that typically translate into less spending. Domestic destinations could also see a boost from American travellers, especially those with lower incomes, who may choose to vacation in the United States rather than go abroad.
The share of consumers planning to go on a domestic vacation in the next six months bounced back in May, to about 42 per cent, according to The Conference Board.
'I would expect there to be more domestic travel this year than the previous few,' said David Tinsley, an economist at the Bank of America Institute, which found that lower- and middle-income households were more likely to drive to their destinations than fly.
'It's consistent with an idea of people being a little bit more prudent,' he said.
It is that consumer frugality that has made Brian Gagnon, president of the Lake Area Chamber of Commerce, confident about the upcoming months. The Lake of the Ozarks, a human-made body of water in central Missouri, is a favoured driving destination for people in the Midwest, which he hopes will make it more attractive for travellers looking to save on airfare this summer.
Gagnon, who also owns a swimwear shop in the area called Summer USA, says foot traffic on Bagnell Dam Strip, the main shopping and dining street, has been high. Tickets for an annual car show in May sold out within days. Sales at his store are slightly up at this point compared with last year.
Racers at LeMans Go-Karts in Lake Ozark, Mo. — The New York Times
'We'll keep an eye on things and just keep our finger on the pulse with everything,' he said. 'But I think going into it, it looks pretty positive from everything we've seen so far.'
The picture could be very different for places that depend heavily on overseas visitors, such as New York. Research firm Tourism Economics expects that international travel to the United States will be down 9.4 per cent in 2025 as foreign travellers stay away for reasons including economic and political uncertainty.
Some business owners are also preparing for the possibility that visitors might be less inclined to open their wallets this year.
Nick Sharp, director of a restaurant company in Steamboat Springs, Colorado, known as Rex's Family of Restaurants, said he was planning to more aggressively market discounts at happy hours, for example, as well as hire fewer employees across his six restaurants. One of the establishments, a Mexican restaurant called Salt & Lime, is introducing a less expensive lunch menu instead of charging the same prices for lunch and dinner.
'Our thought pattern is revolving around this consumer sentiment situation where people are not yet without money but just not yet sure that they are going to have the money that they would normally spend,' he said.
On the Outer Banks, a chain of barrier islands off North Carolina, businesses are likewise adapting to the current economy — and holding their breath.
Mark Ballog, who owns Lucky 12 Tavern in Nags Head, North Carolina, said he did not plan to raise menu prices this summer despite the hefty cost of fish and meat because he worried about 'scaring people away.' He is anticipating selling a lot of his signature 16-inch New York-style pizzas this year to families who want cheaper meals.
But his outlook is hardly gloomy.
'I'm pretty hopeful,' he said. 'This area here — we attract a lot of people that don't have a money problem in the world.' — The New York Times
BLURB
Consumers are bedeviled this year by a confluence of challenging circumstances that could curtail their summer spending. Their feelings about the economy have soured significantly since the beginning of the year amidst President Donald Trump's tariff rollout
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