May 2 looms large for the travel industry. No, it’s not the day gas prices will magically plummet, nor is it the birthday of St. Christopher (you know, the patron saint of travelers).
So what’s the big deal with May 2? It’s the first day that federal tax rebate checks land in Americans’ mailboxes. The money shower continues into July ($600 per adult and $300 per dependent child for typical households). For a family of five, that’s an impressive $2,100.
If a University of Tennessee economist is right, a hefty chunk of those checks will go to travel purchases—despite claims by many that they’ll save the money or use it to pay down debt.
Dr. Steve Morse created quite a buzz at the Southeast Tourism Society’s spring meeting in early April when he unveiled his study that outlined five reasons the rebates could boost travel in 2008. An Associated Press story that followed appeared in papers from Anchorage to Key West.
Read Morse's full report | Read the AP article
Among the reasons: Consumers’ behavior with a similar rebate in 2001 showed they spent more than they planned, checks are arriving during peak travel planning time and some consumers will use the rebates as a reward that compensates for the slow economy.
The pleasantly readable study is a mixture of financial research, a bit of history and the psychology of windfalls.
Morse observes that in the last couple of years, many consumers adjusting their vacation budgets (cutting back in some areas to make up for higher gas prices). The rebates, he says, may be seen as “new income” and inspire consumers to fund vacation travel at prior levels.
Some corners of the travel industry have been quick to create “tax rebate packages” and offer special deals that very interestingly come in $300 increments. Hmmmmmm.