The costs of summer holidays are exorbitant

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The combination of revenge travel, reduced capacity and inflation will send summer vacation costs skyrocketing – and we may have only seen the beginning of it.


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Journey of revenge in a post-COVID world

The term “revenge travel” refers to the accumulation of travel demand following wasted time spent locked down during the shutdowns, restrictions and testing or vaccine requirements that have limited travel over the past two years. With the return of schools to in-person learning, family holidays have again been pressed during the summer months, in particular: (late) June, July and August.

The travel industry has been screaming about this for two years and it’s definitely there. Some of the hardest places to visit during the pandemic like new york on the east coast, San Francisco — the whole state of California, in fact — on the west coast, and states like Hawaii are waiving their requirements for proof of vaccination, recall, or even a negative test result.

It’s not just domestic travel that’s seeing huge demand. International travel is back with European airlines like Air France gearing up for a busy summer with big flight schedules to the United States.

Air France US timetable

Revenge trips are real, and revenge trips will not only affect summer vacations, but those who find themselves traveling again for work.

Inflation doesn’t help

Current reported inflation (which does not include food or oil costs!) is at its highest level in 40 years and stands at around 7.5% according to estimates, currently costing Americans an extra $276 per month. In line with these figures, airline prices have increased by around 7% year-over-year. However, these increases are historic as they occurred during the omicron outbreak (almost 1 million new cases/day for a few weeks) and occurred during a limited travel period with high levels of restrictions. These increases are not facing forward, as is the direction of this position.

For those who could avoid crowded planes and exorbitant prices, road trips are no refuge. Pain at the pump drove the national average price of regular gasoline to nearly $4/gallon. If oil price estimates ($150/bbl) materialize, gas at $6/gallon is a real possibility, even in states where such a notion seemed impossible until now.

summer-vacation-revenge-travel-oil-gas

The displacement capacity is less

American Airlines does not have enough 787s to run the international schedule it was planning, although its decision to retire the A330s and not remove the 757s/767s from storage (yes, there would be cost and time to do so, but the 787 shortage has been a known problem for over a year.) Qatar won’t be flying an A350 anytime soon. Generally, fleets remain smaller than pre-pandemic levels and despite strong demand, airlines have been reluctant to expand operations after some of the worst two years in many of their histories.

American Airlines Boeing 767-300ER
American Airlines Boeing 767-300ER

Hotels are also filling up, creating a shortage and driving up prices. State parks are always busy in the summer, but due to demand, some require reservations. A resort my agency purchased for a client this week has all of its overwater bungalows booked weekly for two years in a row. Another I tried had no availability at a similar property until late October…in the Caribbean…during hurricane season. Then it is full again until 2023.

There are simply fewer planes, fewer pilotsfewer flight attendants, for what could be the busiest summer travel season American travelers have ever experienced. It’s not hyperbole.

Maybe not seen the worst

Summer has never been a time for value-driven travel, but the conflicts in Ukraine have not factored into this demand-driven increase. In the unlikely but eminently desirable event that the war in Ukraine were to end now, tensions would remain high around the world as security concerns and protectionist statuses could not be reduced. Unfortunately, there is very little chance (at the time of this writing) that a reprieve will come to the Ukrainian people anytime soon.

There is also an element of human psychology at play. The world’s population is depleted. Escalating tensions just as COVID concerns (but not deaths) have begun to ease will make even more travelers yearn for recreation. Once these travelers realize they have to schedule horseback riding or hiking trails in parks like Yellowstone, not because of social distancing, but because of overcrowding and capacity limitations, there is no shield against this storm.

Is this a good time to mention that business travel is also coming back? In November, CNBC predicted business travel spending would be poised to jump 37% from 2020. This was before most of the COVID restrictions ended, so it’s likely that number will increase further. For families, that means even fewer seats on planes and fewer hotel beds available to sleep in.

Car rental will also add to the travel hell that is approaching us this summer. Microchip shortages have shut down automakers around the world for weeks. Brands like Ford and General Motors struggle with dealers on the premiums they add to the list price! The used car market is up 45% since before the pandemic So car rental agencies that held dwindling inventory of vehicles already have another incentive to sell the cars they own at an unbelievable price.

What I see both in my personal trips, my business trips as well as through the agency is that the costs are exploding and this has in no way dampened demand. It is an economic paradox.

Conclusion

Summer is one of the only times to visit attractions for many families, but this year many will be deducted from the well-deserved summer vacation. There are points of interest with no capacity restrictions, such as the Grand Canyon, but many will find that there is not enough supply for travel demand and that the price increase does not deter travelers enough . If you haven’t booked your summer trip yet, get ready for world-class prices and small-town produce.

What do you think? Have you seen these increases in travel costs? Are you still planning to get away this summer?

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