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Travel costs are up but travelers aren’t canceling their plans yet

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Summer travel talk sure is not what it was.

Slightly than sun, sand and surf, many travel discussions now center on inflation, rising fuel costs and flight cancellations, a situation which could derail a much-needed 2022 summer travel comeback.

Travel conversations on Twitter decreased 75% from April to May, while discussions related to gas prices and travel — half of which were negative — climbed 680% on the web site from the winter months into the spring, based on the social media analytics company Sprout Social.

Yet despite the potential problems ahead, the outlook for summer travel stays strong, said industry insiders, with many travelers saying they’re concerned but undeterred about their upcoming plans.

Are travelers canceling plans?

No, said James Thornton, CEO of Intrepid Travel, a Melbourne-based travel company which focuses on small group adventure vacations across the globe.

He said the corporate hasn’t seen higher cancellation rates this summer.

“In the previous few months, global concerns about shortages, sanctions and better costs have had economists sounding alarms,” said Thornton. “Despite the rise in costs, travel bookings have greater than doubled.”

David Mann, chief economist on the Mastercard Economics Institute, said higher prices won’t stop travelers this summer, especially in parts of the world which have recently reopened, similar to Asia-Pacific.

“Consider it literally like a pressure cooker where you might be lifting up the lid and the steam is coming out hot,” he told CNBC’s “Squawk Box Asia” in May. Inflation “does matter, but that is only after we have had a few of that release of the pent-up demand.”

A latest survey indicates Singaporeans, for instance, aren’t willing to sacrifice their summer travel plans within the face of rising costs. Despite 77% indicating they were either “extremely” or “very” concerned about rising costs, nearly 40% more people plan to travel this summer than within the last, based on a Tripadvisor Travel Index released in May.

Nearly two in three Singaporeans said they’d be willing to spend less on dining out and clothing to fund their travel too.

Conversely, travel resiliency could also be less robust in places where pent-up demand has dissipated some, similar to Europe and North America.

In accordance with a March survey published within the Country Financial Security Index Report, nearly 1 / 4 (23%) of Americans indicated plans to cancel or delay travel plans in response to inflation.

Still, Americans are expected to travel in large numbers this summer. Greater than half (55%) say they’re traveling for the Fourth of July holiday, based on a survey by the travel website The Vacationer — an 8% increase over last 12 months’s survey, the corporate said.  

Changes, not cancellations

“More persons are pivoting their plans to accommodate price hikes and extra costs, slightly than canceling [travel] altogether,” said Eric Bamberger, senior vp of hospitality on the marketing technology company Zeta Global. 

Demand for “pampering” travel, similar to spas, is rising, while interest in “educational” travel to museums and national parks is down by greater than 50%, based on a Zeta Global company representative.

Automotive rentals are declining, with rental rates dropping the fastest in the US in places where gas prices are highest, similar to California, Oregon and Washington, based on Zeta Global.

Nevertheless, “hotels are on fire,” said Bamberger. “Some hotels in Las Vegas are at 95% occupancy rates, and this past Memorial Day was the most effective ever recorded day — revenue-wise — for most of the top hotel chains within the U.S.”

‘Still going to travel’

Rising costs are affecting travel expenditures this summer, with 74% of American consumers actively trying to find ways to avoid wasting on travel, based on Zeta Global. Nearly one in 4 say they’re searching for out cheaper transportation, hotels or vacation destinations, based on the corporate.

But Expedia CEO Peter Kern told CNBC that other travelers are able to spend more to travel.

“Everyone knows there was plenty of pent-up savings and underspend during Covid on services and travel,” he said. “To date it appears to be bearing out, that individuals are thinking about spending — and if anything, spending more.”

When asked about reports that individuals are choosing cheaper vacations, he said: “We’ve not that up to now … particularly in the center and upper end of the market.”

Kern said if inflation starts to affect travelers, he agreed they’ll likely change, but not eliminate, their plans.

“If anything, perhaps travelers take a bit bit off what their ambition is — of where they were going or what they were staying in — but they’re still going to travel,” he said.

‘Gangbusters’ summer

Marriott CEO Anthony Capuano said the corporate, which operates in nearly 140 countries based on its website, is now seeing strong demand not only from leisure travelers, but in addition from group and business travelers.

“We predict the summer goes to be gangbusters,” he told CNBC’s “Squawk on the Street” in May. “We feel great about this summer.”

After two consecutive months of negative demand, business travel interest in the US increased by 365% in May, based on Zeta Global, which tracks website usage in addition to location and transactional data from bank card and loyalty program purchases.

Business travel is increasing faster amongst younger travelers than older, senior-level ones, based on Zeta Global.

Goodlifestudio | E+ | Getty Images

International travel interest from Americans also rose in May, it said, with interest in going to Asia, Europe and South America up greater than 200% from the month prior, based on the corporate.   

That was before the Biden Administration dropped pre-departure Covid test requirements to enter the US, a move which is predicted to kickstart travel into and out of the U.S.

“Removing the testing requirement eliminates a source of stress for travelers which can have been holding them back,” said Expedia Group’s Head of Global PR Melanie Fish. “We expect demand will only grow from here.” 

 

 

 

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