Combine revenge travel, reduced capacity, and inflation is going to make summer vacation costs sky high – and we may have only seen the start of it.
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Revenge Travel In A Post-COVID World
The term “revenge travel” refers to the build-up of travel demand following lost time spent cooped up during lockdowns, restrictions, and testing or vaccine requirements that limited travel during the last two years. With schools returning to in-person learning, family vacations have been once again squeezed into the summer months, specifically: (late) June, July, and August.
The travel industry has been shouting about this for the last two years and it’s most definitely here. Some of the toughest places to visit during the pandemic like New York City on the east coast, San Francisco – the entire state of California, really – on the west coast, and states like Hawaii are rolling back their requirements for proof of vaccination, booster shots, or even a negative test result.
It’s not just domestic travel experiencing huge demand. International travel is back with European airlines like Air France are gearing up for a heavy summer loading flight schedules to the United States.
Revenge travel is real, and revenge travel won’t just affect summer vacations but those who find themselves once again traveling for work.
Inflation Isn’t Helping
Current reported inflation (which does not include food costs or oil!) is at a 40-year high and comes in at about 7.5% according to estimates, costing Americans an extra $276/month at the moment. In line with these figures, airline prices have risen about 7% year on year. However, those rises are historical as they took place during the omicron outbreak (almost a million new cases/day for a couple of weeks) and occurred during a limited travel period with high levels of restrictions. Those increases are not forward-facing as is the direction of this post.
For those who might avoid packed planes and sky-high prices, road trips are no refuge. Pain at the pump has increased the national average price of regular gasoline to nearly $4/gallon. If ($150/bbl) oil price estimates come to fruition, $6/gallon gas is a real possibility even in states where such a notion seemed impossible heretofore.
Travel Capacity Is Lower
American Airlines does not have enough 787s to run the international schedule it was planning on, though its move to reitre A330s and not pull 757s/767s back from storage (yes, there would be costs and time considerations for doing this, but the 787 shortage has been a known issue for more than a year.) Qatar isn’t going to be flying any A350s any time soon. Generally speaking, fleets remain smaller than pre-pandemic levels and despite significant demand, airlines have been reticent on growing operations following some of the worst two years in many of their histories.
Hotels are filling up too creating scarcity and sending prices still higher. State Parks are always busy in the summer, but due to demand, some are requiring reservations. One resort my agency shopped for a client this week has all of its overwater bungalows booked every week for two years straight. Another I tried didn’t have availability in a similar property until the end of October… in the Caribbean… during hurricane season. Then it’s full again into 2023.
There are simply fewer planes, fewer pilots, fewer flight attendants, for what could possibly be the busiest summer travel period American travelers have ever known. That’s not hyperbole.
May Not Have Seen The Worst Of It
Summer has never been a value-driven time to travel but strife in Ukraine has not been priced into this demand-led increase. In the unlikely but eminently desirable event that war in Ukraine was to cease right now, tensions would remain high throughout the world failing to reduce security concerns and protectionist statutes. Sadly, there’s very little chance (at the time of writing) that a reprieve comes any time soon to the people of Ukraine.
There’s a human psychology element at play too. The global populace is worn out. Escalating tensions just as COVID concerns (though not deaths) have begun to ease will have even more travelers yearning for recreation. Once those travelers realize that they need to schedule horseback riding or hiking trails at parks like Yellowstone not because of social distancing but because of crowding and capacity limitations that there’s no shield from this storm.
Is now a good time to mention that business travel is returning too? Back in November, CNBC forecasted that business travel spending was poised to jump 37% from 2020. That was prior to most COVID restrictions ending so it’s likely that number will increase further. For families, that means still fewer seats on planes, and fewer available hotel beds to sleep in.
Car rental will also add to the travel hellscape approaching us this summer. Microchip shortages have left auto manufacturers around the world shut down for weeks at a time. Brands like Ford and General Motors are fighting with dealers over premiums they add to the sticker price! The used car market is up 45% since before the pandemic so car rental agencies that held dwindling vehicle inventory already have yet another incentive to sell the cars they own at an astounding premium.
What I am seeing both in my personal travel, business travel as well as through the agency is that costs are through the roof and that has in no way tamped down demand. This is an economic paradox.
Conclusion
Summer is one of the only times to visit attractions for many families, but this year many will be priced out of a much needed summer vacation. There are points of interest without capacity restrictions, like the Grand Canyon, but many will find there is not enough supply for travel demand and increasing prices is not sufficiently deterring travelers. If you haven’t booked your summer travel yet, prepare yourself for world-class prices and small-town products.
What do you think? Have you seen these increases in travel costs? Are you planning to get away this summer anyway?
They should be sky high. It’s supply and demand. The entire market works this way :). Let’s pray the airlines recover even with high fuel prices.
Not going anywhere near Europe with this mad man Putin in control. I find amazing that people say “I need to travel.” Yes, I love to travel but I don’t need to. Won’t put my family in danger and won’t overpay. Plenty to do where I live in the summer.
Putin is a mad man for protecting his borders and following through on his promise that Ukraine will not be allowed to join NATO and put missiles on Russia’s border? This war exists because too many globalist politicians and commentators call Putin a crazy man instead of acknowledge his choices are rational.
Yes, Putin has made a significant and tragic mistake in invading Ukraine.
Protect his borders? Aside from Russia having the largest nuclear arsenal globally and a first-use doctrine, he could have done this without invading Ukraine, or shelling civilians. I.e. by shifting military assets towards Western Russia.
Avoide Ukraine joining NATO? He could have done this with a less belligerent rethoric, a more accomondating diplomacy, and an adherence to the foundational norms of international politics and human decency. Plus his frozen conflict tactic prevents Ukraine’s participatin in NATO as NATO treaties are very clear on this and European NATO countries have no appetite for a Ukraine in perpetual conflict to join their alliance.
His choices are -not- rational, even under the assumption of his stated reasons. Russia will not be able to control Ukraine indefinitely, as Ukrainians are deeply opposed to his reign. While Ukraine shares a deeply interconnected history with Russia, it is different culturally, linguistically, and politically.
His invasion has made Russia’s external security situation worse due to subsequent and significant NATO buildup and Europe’s rediscovery of military force (there are serious considerations in German defense circles of acquiring a nuclear capability comparable to France & UK, Germany invests significantly in its military (about time), making it the third biggest defense spender globally, Nordic countries are on their way to join EU Defense & NATO while also increasing their defense budgets).
Additionally, Russia’s geostrategic position in Europe will not have improved one bit even if he controls Ukraine’s eastern part with access to the Black Sea: Turkey, a NATO member, controls who enters the Black Sea. Most northern mediterranean states are NATO members. NATO has a significant presence in the Black Sea through Romania, Bulgaria, and Turkey – all NATO states. Similarly, the Baltic Sea is mostly dominanted by NATO or NATO affiliated states, and as noted, the northern Baltic states consider joining NATO, significantly worsening Russia’s strategic position and creating a continous NATO-Russian border many times longer than the Ukraine-NATO border. The only reliable non-frozen access to oceans now is in the pacific, far away from major shipping lanes and in immediate vicinity of China.
Moreover, he will make himself into a vassal of China as they are by far the more potent military, economic, and political power, and the only friend of note left. Russia won’t be able to act with impunity against Chinese interests, and they are many and often contrary to Russia’s interests. I’d wager that India will also reduce their reliance upon Russian military technology, further depriving Russia of a significant market. Add to this the growing economic and diplomatic isolation of Russia, and Putin will have succeded to turn Russia – a once great nation – into another North Korea under China’s thumb. Congratulations.
Flew out of DEN today and it was chaos. I have not seen anything like it in years. If this spring break is any indication the summer will be madness.
TPA, LAS, MIA and AUS were all packed this week. Americans don’t care about the prices.
The only determination is if they are charging travel on cards they have no intention of paying or if they saved the government money over the past few years.
Either way I agree the airline stocks are a great investment until this all crashes in our faces.
Seems like people are over this whole covid thing.
EU economy fares are still cheap until around memorial day weekend. Happy hunting, I will probably pass (work stuff)
This is where living in a large city comes in handy (one of many times). My family wants to have a gathering in Southern California this summer and from Chicago I have many options for flights on just about any airline I choose, all at what I consider reasonable prices. However my family in western Tennessee have terrible flight options all with either extremely high prices, terrible connections, or both.
Car rentals on the other hand are higher than what I’m paying in Hawaii earlier in the summer
You call $1.05 per litre ($4/US gallon) a high pump price? In Europe you’d pay almost double but then, here we try and discourage private car use in favour of more sustainable alternatives.
The majority of Americans (USA) don’t live in highly urbanized environments, period. It’s not just that our transportation system isn’t geared toward mass transit, it’s that population density and culture makes private autos a necessity.
Very little about the way we live is conducive to riding rails or busses. The average American works 25 km from home. We shop for large quantities of groceries once-weekly. Large, easy-to-navigate road networks exist to begin with. Most of us have places to park private vehicles, etc.
I’d love nothing more than a bus route, metro, or light rail line that runs within a half a mile of my home, but that simply doesn’t exist for most of us here. Where I live, a stop like that would only service a thousand people versus tens of thousands.