After enduring a tumultuous summer travel season, Americans are again ready to take to the skies this upcoming holiday season, despite inflation, higher interest rates, and soaring demand keeping prices steadily elevated.
For most American travelers who will be taking a trip, either domestically or abroad, the increase is attributed to many rescheduled trips impacted by the pandemic, plus a pent-up demand resulting in revenge travel.
Despite red-hot inflation and travel-related concerns such as flight delays or cancellations, travel demand remains above previous years' estimates this holiday season.
About half of Americans – 47% – said they are planning to travel this holiday season, an increase from previous estimates of 33% according to PwC’s annual Holiday Outlook.
With travel making a strong recovery after the majority of countries have scrapped some of their last remaining pandemic-related travel bans and restrictions, financial challenges are still causing some hesitation for many Americans.
In the same PwC survey, respondents cited that higher gas prices (74%), increased travel costs (68%) and expensive lodging (58%) rank among their biggest concerns for their upcoming holiday. Yet, travelers will be enduring the painstaking cost of traveling this holiday, as 74% said they look to spend the same or more compared to last year.
Even though Americans are eager to vacation again for domestic or international travel, a Bankrate survey found that about 8 in 10 polled cited making changes to their holiday plans due to inflation.
With costs up across the board, Americans are changing how they travel and where they look to go for the holiday season. Airfare prices, which are up roughly 33.4% since the start of the year, have many now considering driving instead of flying. Consumers are also looking to tap into their credit cards and credit-related benefits more this season as many of them look to ward off inflationary pressure.
According to David Steward, CEO of Guide To Europe, “the strong return of travel was never intended to be without a slew of challenges, yet many consumers had a misperception of what those challenges were supposed to be. In this case, we’re seeing higher prices for nearly everything, from tickets, hotels, car rentals, to cultural experiences due to higher inflation and ongoing consumer demand.”
Guide To Europe is a digital and online travel platform specializing in European travel and holiday bookings. Since its founding, it has partnered with close to 750 airlines globally to promote international recognition for European-based travel.
Americans planning to travel in the coming weeks leading up to the end of the year will endure several challenges, leading many to second-guess their preparations.
Domestic Travel Holds Strong
For most Americans looking to travel in the upcoming months, domestic trips remain a popular choice, even with gas prices still at an all-time high.
The average price per gallon remained elevated at $3.913 as of October 2022, still slightly higher than the average price for the same period last year, according to AAA.
Yet, the high price of gasoline and other travel-related expenses won't stop Americans migrating across the country in droves; many hoping to spend the remainder of the holiday season with family and relatives.
New data released by the U.S. Travel Association estimates that Americans will spend around $1.05 trillion on travel this year; though a sharp increase from 2020 and 2021, this figure is still 16% below estimates and around 10% under pre-pandemic levels of 2019.
Though it marks a strong recovery for the American tourism sector, which was hardest hit by the pandemic, domestic travel spending is still projected to remain $46 billion below the Travel Association’s estimates.
New data from TripAdvisor’s 2022 Fall Travel Index indicate that Las Vegas, Nevada; NYC, New York; Orlando, Florida; Honolulu, Hawaii and Lahaina, Hawaii, are the top five travel destinations for Americans this upcoming fall season.
While domestic travel remains a strong choice for the majority of those that are set out to travel this holiday, financial pressure could leave many of them cutting their trips short, with some completely canceling together.
Traveling Abroad Is Still on the Books
In the aftermath of a tumultuous summer travel season that saw U.S. carriers canceling 128,948 flights between January and July this year, experts predict that American travelers will continue to take to the skies, hoping to spend their holiday season abroad.
The reason for the ongoing demand from consumers is divided among three buckets.
First, many travelers are rescheduling trips and holidays due to cancellations or restrictions that occurred throughout the height of the pandemic.
Secondly, travelers are taking more trips and booking more holidays to make up for time and experiences lost due to COVID-related lockdowns and travel bans, a trend that has since become known as “revenge travel.”
Finally, with the escalation of remote and work-from-home scenarios, Americans are taking advantage of the digital nomad lifestyle, which has grown in popularity in recent years.
Yet the pent-up demand for international travel, against the backdrop of broader economic uncertainty, has led to higher prices.
According to figures from the Labor Department, the Consumer Price Index (CPI) saw inflation racing 8.3% in August, up from the month before and higher than expected.
With inflation at a 40-year high, companies are set to pass the majority of the higher costs onto consumers in a bid to curb ongoing price increases. For Americans looking to go abroad, this means their holiday will now cost them more than what it did last year, or before COVID.
Estimates by CWT and the Global Travel Association (GBTA) found that travel costs will remain elevated for the remainder of the year, with further hikes expected in the new year.
Their data suggest that airfares will rise by 48.5%, with another 8.5% expected for 2023. Hotels and lodging will jump by 18.5% this year and go up by another 8.2% next year. Car rentals are also experiencing steep price hikes, with prices up by an estimated 7.3% this year alone.
There’s a lot to consider for the handful of Americans who are ready to travel again. It might seem as if their dollars are getting them less than they used to back home. But the strong dollar performance against other major currencies, including the British Pound, Euro, and Japanese Yen, has already sent Americans abroad in droves as they look to take advantage of stronger buying power.
While the dollar does give American travelers a bit more leverage, it doesn’t always mean that they are booking longer stays or doing more. The cost of living crisis keeps many from revisiting their budgets amid soaring consumer prices.
With travel now on track to make a full recovery in the coming months, macroeconomic challenges are making it harder for some to take advantage of special travel packages. That leaves some revaluating their financial position before planning and booking a potential trip abroad.
Now or Never
The last two years of restrictions have driven Americans to travel more than ever before. In the coming holiday months, we could see domestic and international travel rebound, despite red-hot inflation and rising travel costs.
For many travelers, it’s now more a question of “when” rather than “if” as they continue to remain resilient against the backdrop of broader economic slowdown and hardships.
With the peak of the travel season now in the rearview, the upcoming holiday months could perhaps put many travelers in another chaotic travel period as airline carriers and airports try to prepare for what could be revenge travel 2.0.
This article was produced and syndicated by Wealth of Geeks.
source https://wealthofgeeks.com/holiday-travel/
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