As schools across the country let out, travelers are dreaming of their summer plans, but keeping one hand on their wallets. The summer of “revenge travel” should be commencing, but the fuel price increases are forcing people to reevaluate their plans. “That restless mood has many pro travelers and experts predicting revenge travelers could bring back leisure tourism with a bang — though others caution revenge may not be as sweet as we’d like.”[1]
Summer Travel & Airfares:
The good news is that the total cost of airfare is still lower than pre-pandemic levels. “The average cost of airfares in February 2022 was 19% lower than the previous 10-year February average and 15.5% lower than the previous 10-year August average. While the February 2022 price is over 12.7% higher than the average from February 2021, it’s still 16.2% lower than the average of February 2020, which was the last month before COVID-19-related lockdowns in the U.S.”[2] However, crude oil prices have risen $30 since February and show no signs of declining. Domestic airfares have risen over 30% compared to 2019. Analysts note that most of this cost is due to the price of jet fuel but staffing shortages resulting in cancelled flights also has an impact. Airfare, however, is the only segment seeing this trend.
Summer Travel & Lodging:
Because hotels and lodging rely so heavily on labor, their costs are also on the rise. Additional labor costs and inflation, in combination with increased demand for leisure travel, are being passed through to travelers. “A 40-year-old hotelier who works for a luxury group and asked to remain anonymous to protect his job told Insider: ‘It is expected for service levels to drop with so many guests and not enough staff to service them. But if guests are dissatisfied, they will not book again. Hotels will be forced to reduce prices in the long run.’”[3] The wealthiest travelers who demand a certain level of luxury on their trips and (in general) are less price sensitive, could actually be the group forcing hotels to reduce their costs.
Summer Travel & Rentals:
One option to provide trip savings is the driver rather than fly even as the cost of car rentals shows the biggest increase in the chart above. While that is not an option for most international travel, those travelers look domestically to still get away but at a lower cost. The biggest frustration is the lack of available rental cars. In 2020, car rental companies cut back the total vehicles in their fleets, and as they try to add inventory, those vehicles are at the mercy of supply chain issues. The greatest threat to the supply chains is the shortage of automotive chips. As the law of supply and demand drives up prices for rental cars, companies are attempting to recover their losses from the past two years. “Executives defend price hikes by emphasizing that rates failed to keep pace with vehicle costs in the years preceding the pandemic, due in part to internet price comparison sites and oversupply.”[4] Analysts predict that rental company Avis will earn net income of nearly $2 billion this year.
It should come at no surprise that the cost of food away from home (as well as at home) is trending up. Increase transportation and fuel prices are forcing manufacturers to increase their costs.
One silver lining that has resulted from the pandemic is the ability to be more flexible in changing or cancelling your plans. With more flexibility, even the risk-adverse can feel comfortable planning their next adventure.
[1] https://www.washingtonpost.com/travel/2020/07/29/revenge-travel-is-phenomenon-that-could-bring-back-tourism-with-bang/
[2] https://www.nerdwallet.com/article/travel/travel-inflation
[3] https://www.businessinsider.com/hotel-room-prices-skyrocket-amid-worker-shortages-declining-service-2022-5
[4] https://www.bloomberg.com/opinion/articles/2022-06-06/rental-car-shortage-and-soaring-prices-keep-getting-worse
