Who are the latest frontline workers having to explain the dynamics of supply and demand to frustrated customers? Travel agents. As inflation keeps prices high and travel is still in robust demand, consumers are having sticker shock on everything from 3-star hotels to international flights.
Half of all consumers say they will travel this summer and stay in paid lodging. That’s up 4% from last summer (or “the summer of all summers” as it was referred to in the elated travel industry) and 9% up from 2021. The Deloitte Summer Travel Survey released this week details these trends. Also, this week, Transportation Secretary Pete Buttigieg felt bullish about the summer. He told reporters the Memorial Day holiday will register passenger numbers “we haven’t seen since before the pandemic.”
All those summer trips won’t be cheap. Hotel rates are up year over year, per STR data. International flights are more expensive due to elevated demand. Restaurants and attractions follow the pace (though it’s becoming a steadier march) of inflation. A quarter of consumers are planning on spending more, per Deloitte, primarily because travel prices increased. Consumers are adjusting by spending less on their longest trip. They’re also planning on taking fewer long trips from last year in favor of quicker getaways. Those traveling are looking to squeeze in 3.1 trips this summer, up from 2.3 in 2022.
With all those heads willing to get in vacation beds, travel & leisure advertisers are hanging out their shingles. In the past six months, cruises, hotels and destinations have spent 14% more than the prior six months, and 8% more year over year (per MediaRadar data). Cruises led spending and continue to report strong bookings for the strong 2023 they promised investors. Despite Airbnb consistently being the top spender in the category the past few years, consumers plan to book full-service hotels. For the longest trips of the summer, three out of four consumers are looking to book full-service hotels, and just one of those four looking to stay in private rentals, Deloitte reports.
Still, those numbers leave half of consumers staying home this summer. Why? Financial worries -- with 24% agreeing that travel is too expensive right now, per Deloitte. Morning Consult also confirms the biggest deterrent to traveling over the next three months is consumers’ personal financial situations. Shorter trips being planned helps stretch out consumer’s cash outlay. Americans have some other cost-saving options: domestic flights are down slightly from last year, as there is more capacity and cheaper fuel costs
The consumer appetite for travel has not waned, but they will need to get creative with their budgets. For now, that looks like a series of tradeoffs from trip length to domestic destination as they shop around. Value messaging may help fill those last few bookings and weekend getaways.