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Summer Travel Demand Is Driving Up Costs

Americans are yearning to travel this summer. Monster crowds are predicted, as travel restrictions ease and travelers are shrugging off hesitation fueled by the delta and omicron variants of the COVID-19 virus. According to data from the U.S. Travel Association, approximately 90% of U.S. travelers plan to take a trip in the next four months, and 35% expect to travel more this summer than last.

The big bounce-back
In terms of spending, research shows that across the board, travelers are willing to spend more in 2022 on travel than in 2021. Personal finance website ValuePenguin recently surveyed travelers and determined 53% say they will spend $3,000 or more on travel; whereas only 39% spent that amount last year.

Bottom line? You should expect to pay more this summer. If you’re planning to pack your getaway bags, prepare for ‘inflation vacation’ sticker shock, as these factors are triggering rising summer travel costs.

BOOMING AIR TRAVEL
The eagerness to travel is showing with how full planes are this year. Airlines still aren’t back to 100% yet, but capacity near or at 100% has become the norm. The number of flights is exploding with more than two million Americans flying each and every day.

Traditional business traveler flights are surging, too—settling back into their pre-pandemic share. Plus, a marked shift to more ‘bleisure travel’ (business trips that include a weekend) has grown to 38%—a 23% increase from 2019. Internationally, fares are also up from 2019, but only 5-10%.

The result? As more vacationers and employees prepare to fly, airlines are starting to substantially reduce their domestic travel lowest fare/advanced purchase inventory in favor of higher fares and last-minute pricing. Prices for domestic airline flights have risen 47% since January, with the July 4 holiday expected to be the most expensive summer weekend to fly.

Airlines are blaming the steeper fares on jet fuel costs that roughly doubled in price over 2019, according to travel site Hopper. “We have more travelers looking to book fewer seats, and each of those seats is going to be more expensive for airlines to fly this summer because of jet fuel,” says Hopper economist Hayley Berg.

PACKED LODGING
Whether you’re flying or driving, higher costs loom once you reach your destination. Soaring gas prices are hitting new record highs. Hotels and house rentals are quickly booking up in advance of the summer season. AirDNA, which tracks the cost of vacation rental properties such as VRBO and Airbnb, notes that costs have increased 33% since last year.

Between May 15 and 21, 2022, the average hotel room price was $151 according to hotel industry data firm STR. That’s a 13.4% increase over 2019, although some online firms say prices are increasing even faster for summer travel bookings.

RENTAL CAR WOES
Supply chain issues led to months of car rental companies unable to restock their fleets. As a result, the price of rental cars and trucks climbed more than 10% annually as the global chip shortage continued to limit the nation’s supply of vehicles.

RISING FOOD COSTS
For the restaurant industry, supply chain issues and challenges have increased food costs and shortages of main ingredients. According to The Consumer Price Index, food away-from-home is costing 7.2% more than last year. That’s putting a squeeze on restaurants nationwide.

Consumers suffer a double whammy as we see more restaurant owners raising prices to make up for cost-sensitive patrons who are cutting back on eating out, and at the same time, the rising food prices are cutting into the restaurateurs’ margins.

STAFFING ISSUES
For those determined to travel, it’s an open question whether airlines, airports, hotels and other travel businesses will be able to handle them. Travel and hospitality jobs—especially pilots—were purged at the height of the pandemic, as travel slowed to a crawl. With large numbers of Americans taking trips for the first time since the start of the pandemic this summer, airlines and hotels often don’t have the capacity to meet demand, driving prices higher.

What you can do
A smart traveler is a happy traveler. To keep costs down, you may want to make some adjustments to your travel plans.

Choose dates wisely—Waiting until the end of summer can save travelers money. Experts believe the cheapest month to fly this year will be August. Typically during the summer, airlines’ average ticket prices are usually the highest on Fridays and the lowest on Tuesdays.

Be economical—Take fewer or shorter vacations or adjust your travel budget.

Be in the know about rentals—Check out automotive site MotorBuscuit for money-saving tips for car rentals.

Be safeAARP claims a big factor at play for travelers, understandably, is safety. With many regions of the world making quarantine changes at last minute, prepare to make quick adjustments. Fortunately, many air carriers and businesses are implementing flexible cancelation policies. Don’t be afraid to take advantage, and change your plans if necessary.

Be loyal—Many gas stations, rental car companies, hotels and airlines have loyalty programs that will give discounts. Did you take advantage of your frequent flyer miles? Getting a credit card with cash back and rewards you can redeem for travel is also a smart idea.

Be smart and get help—Former DIY travelers are starting to use travel agents. With so many changing travel restriction rules, people are turning to professional help.

Let Us Know Before You Go
Let Tower know your travel plans before you go so we can help protect your Tower debit and credit cards against theft or unauthorized card use. Tower monitors your card activity 24 hours a day. If we notice suspicious activity on one of your cards, we’ll need a way to contact you while you’re on the road—just to confirm if the activity is authorized. You can also set up account alerts and credit card SmartControls™ in Home Banking and our Mobile App.

Complete a Travel Notification Form. Forms for your Tower credit and debit card are located in Home Banking under Additional Services and in our Mobile App under More. You can also call the Member Service Center at 301-497-7000 or 866-56-TOWER.

On your trip, if you receive a message from a Tower representative about possible unauthorized card use, please respond to our phone call as soon as possible. For security reasons, we may place a temporary hold on your card if we do not hear from you. If you find that your card has been temporarily suspended, simply call us to remove the hold.

Resources: AP News, CNBC International TV, The Dallas Morning News, Newsday, npr

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