How inflation impacts summer travel: Consumer getting 'savvier,' CEO says
Americans will still travel despite high gas prices with ‘behavioral changes’: AAA exec
AAA Senior Vice President of Travel Paula Twidale says Americans will continue to travel ahead of the Memorial Day weekend despite high gas prices but with ‘behavioral changes.’
It has been more than two years since Americans canceled their summer travel plans because of the coronavirus pandemic and the associated lockdowns, but now that people are traveling again consumers are faced with another challenge – soaring inflation.
The CEOS of two travel companies told Fox News Digital that while the economic backdrop is shifting consumer behavior, demand for summer travel is still incredibly strong.
Priceline CEO Brett Kellers said even though inflation sits near 40-year highs, "travel is robust" and this summer is still going to experience "a busy travel season."
He noted that "the prices across all of the categories of travel, whether it’s airline tickets, hotels, rental cars, etc. have gone up so dramatically over the last few months that consumers are having to rethink the type of travel they are willing to take."
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"They are trading down their behavior to still enjoy travel," he argued.
Keller provided the insight as the latest inflation data provided by the Labor Department revealed that inflation cooled on an annual basis for the first time in months in April, but rose more than expected.
Inflation for April hotter than expected
FOX Business’ Cheryl Casone reports on the highly anticipated consumer price index report moments after the Labor Department posted the data.
The Labor Department said last month that the consumer price index, a broad measure of the price for everyday goods including gasoline, groceries and rents, rose 8.3% in April from a year ago, below the 8.5% year-over-year surge recorded in March. Prices jumped 0.3% in the one-month period from March.
Those figures were both higher than the 8.1% headline figure and 0.2% monthly gain forecast by Refinitiv economists.
According to the data, airline fares surged as more people began to travel with prices soaring 18.6% in the one-month period and 33.3% over the past year, marking the steepest one-month increase since the inception of the report in 1963.
Consumers hoping to take a driving trip this summer are faced with record high gas prices.
On Friday, the national average for a gallon of gas was $4.76, a fresh record, according to AAA.
Keller warned that if prices continue to soar over the next few months "consumers are going to make tradeoffs that may involve not taking certain types of trips at all."
The Points Guy founder and CEO Brian Kelly also said that he believes "prices will continue to soar throughout the summer."
He noted that despite the inflationary backdrop, "the consumer is very aggressive when it comes to booking travel and the numbers show it."
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Hayley Berg, lead economist at mobile travel app Hopper, said demand for summer travel is still "strong," noting that "demand has grown 50% faster since the start of the year compared to the first four months of 2019."
Berg noted that although prices are higher this summer, over the last three weeks Hopper has seen domestic airfare prices flatten out after climbing steadily the past few months.
Domestic airfare is currently averaging $404 round-trip, up 40% from $288 this time last year and 26% from $322 round-trip in 2019, according to Hopper, which noted that international airfare is also seeing a 35% boost from the same time last year and 17% from 2019.
Hotels are currently averaging $204 a night nationally, which is 34% higher compared to the same time last year, the data further revealed.
People are ‘ready to travel’ even as prices soar: The Points Guy
Brian Kelly, founder and CEO of The Points Guy, offers tips on how to save money on airfare as prices continue to rise amid increased demand for travel.
Kelly noted, "the number one thing consumers are concerned about is now the cost of travel, not COVID for the first time in two years."
"People are just having to be more savvy," he added.
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He also said more people have been booking all-inclusive vacations this summer "so they can keep at least one aspect of the trip under control" and recommended going where the U.S. dollar is strong as a way "to battle inflation."
"Now consumers are paying $900 a night for normal hotel rooms in Miami when you can go to Portugal for the same price as a flight to Miami and the U.S. dollar goes a lot further," Kelly said.
Hopper noted that demand for summer 2022 travel is primarily for domestic destinations, with 65% of bookings to destinations in the United States, which is an increase of 16% compared to 2019.