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.
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.
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.
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?