The real reason summer travel is cooling off
Industry greed is tapping the brakes on a red-hot vacation season. Here's why that's good news for you
If you're on the fence about your summer travel plans, you're not alone.
In just the last 24 hours, I've seen surveys that suggest the hot summer travel outlook is cooling. I've read stories that say the upcoming vacation season could be a bust. And I've heard from travelers who confess they're not so sure if they should go anywhere.
Even I'm having second thoughts about summer travel. And all I do is travel, so that's saying a lot.
Why is everyone suddenly down to summer travel? Don't blame COVID; most of the surveys say the pandemic isn't as much of a factor this summer, even if it's not quite over.
It could be the higher prices or the mercurial economy — or it could be travel suppliers' old-fashioned greed. I'll try to unravel it and tell you what it means for your next trip.
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Gas prices are soaring
Look at these fuel prices! They've more than doubled since November in the United States. That means the most affordable and popular kind of vacation available to Americans, a car trip, is now far less affordable.
Airfares are in the stratosphere
The average domestic roundtrip airfare is near $300, according to the U.S. Bureau of Labor Statistics. That's just about $10 shy of the all-time high recorded in April 2013.
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Hotel rates are climbing, too
If you're looking for a place to stay, be prepared to pay. Prices in most major markets are climbing into record territory. Just look at New York and Vancouver — they're pushing $400 a night on average. (Chart courtesy of Trivago.)
Red hot vacation rentals are even hotter
Vacation rentals were all the rage during the pandemic. There's no sign that demand is tapering off. As of early April 2022, vacation rates are trending 11.7 percent higher for the rest of spring and 5.9 percent higher for summer compared to the same periods last year, according to analytics company Airdna. Hot tip: Stay out of the large urban areas and head for a rural destination if you want to save money.
Here's the year-over-year change for short-term average daily rates by location type:
There is also the stock market. I've stopped looking.
If it isn't obvious, let me spell it out: We're suffering from sticker shock. We can't bear to look at our 401(k)s. At these prices, we can't afford to go anywhere.
"If you go on vacation, plan on spending at least 25 to 50 percent more than a typical trip in 2019, starting with hotels, gas and airfare," she warns.
That's no typo. She said 50 percent — as in five-zero.
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What happened here?
Why are rates really going up? Is it inflation and supply chain challenges, which is the easy answer? Or is it something else?
The easy answer — and the one travel companies want you to believe — is that inflation is causing airfares, hotel rates and vacation rental prices to spiral out of control.
But I've had some time to consider this explanation. And I'm not buying it.
I've spoken with airline executives, hotel managers and vacation rental owners about the price increases. I think there's more going on.
Yes, inflation is a factor. There's no denying that.
These are the highest inflation numbers in the U.S. since 1982, but not as serious as the almost 15 percent inflation rate we saw in April 1980.
It's not just inflation. Insiders have told me privately that they consider 2022 to be a "make-up" year. In other words, they know people want to travel now that the pandemic is on the way out. And they see an opportunity to make up for the lost profits of the last two years. They're raising rates because they can, not because they have to.
And now they've overplayed their hand. With prices like these, there's a good possibility demand will crater.
What this means for you
There are at least two possible scenarios for this summer. I'll tell you what they are and what they may mean for you.
First, inflation could be a blip on the economic radar — a temporary spike. The economy may not go into a recession and travel prices may return to Earth. There's already evidence that inflation might have peaked and that the stock market has hit a bottom.
If that happens, then you should look for relief from high prices gradually over the summer. By fall, everything will look pretty normal again.
But the second scenario is less hopeful. It involves more inflation, a stock market that continues to free-fall and an intransigent travel industry raising prices even more in hopes of recovering lost profits.
If that happens, then eventually travelers will give up and stay home — and the travel industry will have no choice but to have another fire sale. Look for bargains on airline tickets and hotel rooms if the economy goes takes a nosedive. And that could happen sooner rather than later, potentially rewarding procrastinators.
It's certainly an interesting time to be traveling. But should you postpone your trip because of all this uncertainty?
I like what reader Neil Saari had to say about that.
"It’s later than you think," he said in Friday's discussion. "So go!"
Well said, Neil.
What are you going to do?
Are all the ups and downs of pricing, the economy and the stock market keeping you home? Or are you planning to get out there and travel this summer? I'd love to hear your thoughts.
About the art
For this piece, artist Dustin Elliott was inspired by the blue open blue skies of Greece, where he is currently visiting. "The ability to expand your horizons in travel is symbolized by the soaring balloon followed by its passengers eager for adventure and leisurely abandon," he says. You can hear more from Dustin on this week’s Elliott Confidential podcast.
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