Labor Day Hotel Rates Plummet

(MoneyWatch)  Travelocity.com released a Labor Day Travel Report today saying that Labor Day hotel rates dropped 15 percent from last year, as hotels attempt to lure visitors. It may be a tough sell since the Automobile Association of America points out that Labor Day this year falls on Sept. 7, at least a week or two after children go back to school, and gas prices are totaling $3 a gallon.

The biggest drops in hotel rates go to recession-hit Las Vegas (-21 percent from last year,) followed closely by New York City (-20 percent.) Las Vegas airfare fell 13 percent while New York dropped 20 percent.

But most hotels are competing with the recession and consumers intent on saving money rather than spending it. The unemployment rate could hit 10 percent by the end of the year, and consumers are holding onto their money. "I travel a lot, but I've had to cut that out this year," Bill Kurasz, 61, of Arizona, told Reuters. "I'll spend time with family and friends, low key."

When faced with the prospect of staycations, hotels are doing what they need to be doing -- dropping rates to attract travelers. Labor Day is typically seen as the end of summer, so if hotels plan to attract visitors who have held onto their money for the last three months, they have to do something dramatic. (Other hotels not dropping rates are at least adding amenities, like free rounds of golf.)

We will see if the travel industry's last-ditch attempts will reap benefits or if visitors will continue to stay home, saving their pennies.