Global Courant 2023-04-15 20:13:31
Travel shows no signs of cooling off this summer as both demand and prices are expected to remain high.
“There’s still a lot of demand going back to the pandemic,” Book holdings That’s what CEO Glenn Fogel said in “Squawk on the Street” last week. “They have a lot of savings, they want to spend it.”
Fogel, whose company runs several travel expense aggregators including Booking.com, Priceline.com and Kayak.com, said the company saw a 26% increase in room nights in January compared to the same month in 2019. He also pointed to the TSA checkpoint travel numbers, which are now within a few percentage points of 2019 traveler numbers.
That demand has kept prices high, Fogel said, pointing to recent trips he’s taken.
“I was staying at a hotel in New York City on Thursday and Friday nights and I was like, ‘Wow, that’s a lot of money,'” he said. “I was in Miami earlier this week and it’s expensive, but people are willing to spend it.”
The price of flying also shows no signs of falling. Air fares rose 17.7% year-on-year in March, according to the most recent United States Bureau of Labor Statistics data, even as some other consumer prices cooled.
“(Consumers) haven’t had the experiences they wanted for three years, including last summer,” Delta Airlines That’s what CEO Ed Bastian said on “Squawk Box” earlier this week. “If you think back to last summer, we were still in a position where people had to test to get back into the country and other places, and there was a lot of uncertainty around Covid – we went through everything I think.”
Even as airline stocks took a hit from higher fuel and labor costs, company chairman Glen Hauenstein said during Delta’s April 13 earnings call with analysts that the airline saw “record advance bookings for the summer” with March prepaid cash bookings up nearly 20% in compared to 2019 levels.
Bastian said that while domestic flights are doing well, “international flights are clearly where people are trying to get back experiences they’ve lost over the years.”
People are not retreating from travel spending
Travelers walk to the gates at LaGuardia Airport in New York City April 6, 2023.
Eduardo Munoz | Reuters
Expectations of continued consumer spending have been common among companies in the travel industry in recent quarters, despite companies and executives in almost every other industry waving warning signs that people might cut back.
Amazon CEO Andy Jassy said on “Squawk Box” last week that consumers are becoming more “deal conscious” as they try to save money. “Consumers are spending money, but they’re just much more careful about what they spend on and we’re seeing a lot of price drops,” he said.
CNBC’s recent Financial Confidence Survey, conducted in conjunction with Momentive, found that most Americans live paycheck to paycheck. According to the survey, about 70% of Americans admit to being stressed about their personal finances these days and a majority – 52% – of American adults said their financial stress has increased since before the Covid-19 pandemic began in March 2020.
Fogel noted that despite consumer concerns, recent issues such as the instability in the banking sector “may cause people to worry about what they may or may not spend”.
However, he said that “long-term travel will continue to grow better than GDP.”
Bastian said that from his perspective, consumers are “leaving certain markets or leaving goods and entering the service world.”
“We are in a multi-year recovery from the pandemic that will be much better than anyone expects,” Bastian said.
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