Inflation hits the travel industry in a big way as airfares are estimated to rise 48% in 2022
In the last two years, airfares went down (-36%) like a rock falling off a cliff as COVID hit. This year was the rebound as airfares are estimated to rise an amazing 48%. I have never seen airfares this high in my 35 years in the business. This year has basically been a perfect storm as the airlines dramatically cut capacity and the traveling public went bonkers as they moved to travel the world after being holed up in their houses for the past two years because of COVID. This is the perfect way to validate how a shortage of supply (airplane seats) added to a massive buildup of demand (travelers) causes prices to go up dramatically until an equilibrium is reached of supply = demand and then prices moderate. I think that will happen in late fall or this winter.
Hotel prices have gone up almost 20% this year with more to come next year – If you thought rising airfares were bad, hotels are close behind on increasing prices this year. GBTA is estimating hotel prices will rise almost 20% this year and an additional 8% next year. I guess inflation is catching us from all angles and travel is just one piece of the pie that can’t avoid rising energy prices, wages, and inflation around every corner.
I just returned from a weekend in Branson, MO, and saw the destruction COVID had on this tourist mecca – I had not been to Branson for 20 years but spent this past weekend there. We had a great time visiting musical shows, Showboat Branson Belle, and the iMax theater to watch Top Gun Maverick. There must have been 100 country music shows you could visit during your stay. The one thing that stuck in my mind after our visit was the devastation COVID had on Branson as dozens upon dozens of motels, restaurants, shows, and tourist shops sit boarded up and empty. These were all mom-and-pop businesses that could not outlast the two-year shutdown of COVID. Branson, probably more than any other town, faced the wrath of COVID. I understand Branson had a strong summer and I hope it will rise up to its former glory.
This was my first stay in a hotel that did not clean my room daily and I hated it – I guess you can call me old-fashioned but I prefer that my hotel room be cleaned daily. Many hotels short on staff want to cut financial corners and are cutting daily room cleaning. My guess is that it costs $10 to $15 to clean my hotel room. If I am paying $189 a night for the room I should get complimentary room cleaning. A vacation should be time to relax and refresh not having to hunt for clean towels and make my own bed. I feel better now getting that off my chest.
The travel industry moving toward buy now/pay later financing model for vacations – If you buy a major kitchen appliance today that costs $2500 you will most likely be offered a way to buy it now and pay for it over time with an easy buy now/pay later financing plan. That financing model is slowly moving into the travel space and more and more companies are adding the option to travelers who want to travel now and pay later. In a recent forum on the new travel trends, many predicted this financial model will soon take off. CLICK HERE to read more.
More and more cruise lines eliminating vaccination and testing requirements – Carnival and Princess have become the latest cruise Lines’, following Norwegian Cruise Line’s lead, to announce they will no longer require vaccinations for cruising after September 6. Several days ago Norwegian Cruise Lines announced they were eliminating the requirement of vaccination to take a cruise and their reservations shot up like a rocket. I think this will finally allow the cruise industry to enjoy the benefits of a hot travel market now that they have lifted the vaccination mandate.