Global Courant 2023-05-14 17:00:00
If you sat out the overcrowded, overpriced, overbooked travel season last summer hoping for cheaper and more convenient getaways this year, you may be out of luck.
Sixty-three percent of American adults planning to travel this summer, compared to 61% around this time last year, according to a recent survey by consumer finance data provider Bankrate. Airlines are bracing for high demand and aviation authorities are warning of another season of flight disruptions.
Expectations come as inflation eases to 4.9% in April from a peak of 9.1% last June and as the Biden administration ends the pandemic emergency, officially closing the era of Covid-related travel restrictions, which have largely evaporated anyway.
Customers are simply willing to pay what it costs to do what they’ve been waiting three years for.
Sandy Staples, owner of Artistic Travel
This summer, wealthier people are increasingly planning to pay for travel, while lower earners are pulling back, industry analysts and travel experts say.
“Clients are just willing to pay what it costs to do what they’ve been waiting three years to do,” says Sandy Staples, owner of luxury travel agency Artistico Travel in Granite Bay, California.
“We have customers who are on a huge cruise,” she said, “and the business class round trip to Iceland cost more than $11,000 per person. They paid for it.”
Passengers check in at Chicago’s O’Hare International Airport in January. Scott Olson/Getty Images
Of households earning more than $100,000 a year, 81% are likely to take summer vacations, Bankrate found, up from 75% last year. At the other end of the spectrum, only 54% of households earning less than $50,000 said the same, compared to 56% a year ago.
Many travel costs are still rising faster than overall inflation, says Sally French, a travel expert at personal finance firm NerdWallet. “Because inflation is already high, this summer will be tough for people who want affordable travel,” she said.
But instead of shelving plans for a summer vacation altogether, 80% of travelers told Bankrate they were looking for ways to cut costs.
While the prices of airline tickets do decreased by only 0.9% since a year ago, gasoline prices have fallen by more than 12%, according to inflation figures. The airfare tracker Hopper predicts domestic return costs to climb to $328 by June – $72 less than last summer’s record high, but still 4% higher than pre-pandemic. So travelers like Terri Johnson of Ocala, Florida, prefer road trips to flying.
“I’m going to a wedding in Fayetteville, North Carolina, and then to Raleigh to visit cousins I’ve never met,” Johnson said after finding them on an ancestral platform.
“Flying costs more with multiple destinations, so I drive,” she said, adding that she limits her hotel stays and takes her own car to avoid high rental car prices.
She will have a lot of company on the road.
To save money, 26% of vacationers plan to drive rather than fly to their destination this summer. up from 16% last yearsaid Bankrate. The national average price for a liter of regular gas costs $3.54down from $4.42 a year ago, AAA data and prices for rental cars show decreased by more than 11% last month of the year before.
Bankrate also found that 29% of summer travelers will choose cheaper accommodations or destinations, a larger share than 22% last year. And 26% – versus 19% – will travel fewer days.
A security checkpoint at Newark Liberty International Airport in Newark, NJ in January. Aristide Economopoulos/Getty Images
“We take every opportunity to get away from home, but make adjustments for inflation,” said Michael Huntsberger of McMinnville, Oregon. For this summer’s getaway, his family canceled a two-day planned trip to California’s wine country and decided to vacation in eastern Canada because it was cheaper than New England.
“We couldn’t find a hotel for less than $450 in Portland, Maine, and the cost of traveling from there to Montreal was prohibitive,” he said, “so Ottawa, here we come!”
More travelers are also turning to loyalty points and rewards programs to cut costs 34% do so this yearan increase from 28% last July, according to research released by Morning Consult in March.
Redeeming travel points instead of putting them away not only frees up money for other expenses, but it can also be a good tactic for fighting inflation, said NerdWallet’s French.
“Like inflation, point inflation is real,” she said. “Airlines and hotels regularly increase the number of points or miles (required) to book travel,” meaning that rewards can lose value if you’re on them for too long.
An overwhelming 85% of travelers told NerdWallet that they plan to put the cost of their summer vacations on credit cards, and nearly three-quarters of them said they’ll pay that cost as soon as a billing statement comes in to avoid interest charges.
But thanks to rising fares, the remaining 26% who said they expected travel-related balances would end up paying much more for their travel than they planned.
The Federal Reserve’s recent quarter-point rate hike “won’t change much” in terms of credit card rates, said Ted Rossman, a senior industry analyst for Bankrate, but after 10 consecutive hikes, “the cumulative effect is significant,” he said.
I still make travel a priority and don’t mind using a little more of my savings to keep up the level of experiences.
Marcy Schackne, Hollywood, Florida
“The typical credit card holder should soon see a rate 5 percentage points higher than in early 2022,” Rossman said. “That makes a big difference when you’re in debt from month to month, especially if you’re only making minimal payments.”
While 55% of U.S. travelers told Destinations Analysts research firm in March that travel would be a high priority for their spending over the next three months, that was 6 percentage points lower than those who said the same thing last spring. The group also noted a drop of nearly 8 points in travelers saying it’s a good time to travel, to just 30%.
Some travelers take the expense seriously.
“It’s more of a mental adjustment that everything is going to cost more,” says Marcy Schackne of Hollywood, Florida. “I still make travel a priority and don’t mind using a little more of my savings to keep up the level of experience.”
While Morning Consult found that wealthier consumers were more likely than others To scrap their travel plans, Staples said she’s seeing a lot of demand: “Summer travel requests are coming in so much that my team and I have had to decide not to accept any additional requests.”
“We certainly see the continuation of the ‘revenge journey’ after the pandemic,” she said.
