Travel costs have risen, but travelers aren’t canceling their plans just yet

Summer travel talk certainly isn’t what it used to be.

Instead of sun, sand and surf, many travel discussions now focus on inflation, rising fuel costs and flight cancellations, a situation that could derail a much-needed 2022 summer travel comeback.

Travel conversations on Twitter dropped 75% from April to May, while discussions about gas prices and travel — half of which were negative — increased 680% on the website from the winter months to spring, according to the company. social media analytics Sprout Social. .

However, despite potential problems ahead, the outlook for summer travel remains strong, industry insiders said, with many travelers saying they are concerned but undecided about their future plans.

Are travelers canceling plans?

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

He said the company has not seen higher cancellation rates this summer.

“In recent months, global concerns about shortages, sanctions and higher costs have economists sounding the alarm,” Thornton said. “Despite the increase in costs, travel bookings have more than doubled.”

David Mann, chief economist at the Mastercard Economic Institute, said higher prices won’t deter travelers this summer, especially in parts of the world that have recently reopened, such as the Asia-Pacific.

“Think of it literally as a pressure cooker where you’re lifting the lid and steam is coming out hot,” he told CNBC’s “Squawk Box Asia” in May. Inflation “does matter, but it only happens after we’ve had some of that pent-up demand released.”

A new survey shows that Singaporeans, for example, are unwilling to sacrifice their summer travel plans in 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 in the past, according to a Tripadvisor Travel Index released in May.

Almost two in three Singaporeans said they would be willing to spend less on dining out and clothing to finance their travel as well.

Conversely, travel elasticity may be less robust in countries where pent-up demand has spread some, such as Europe and North America.

According to a March survey published in the Country Financial Security Index Report, nearly a quarter (23%) of Americans indicated plans to cancel or postpone travel plans in response to inflation.

However, Americans are expected to travel in large numbers this summer. More than half (55%) say they are traveling for the Fourth of July holiday, according to a survey by travel website The Vacationer — an 8% increase over last year’s survey, the company said.

Changes, not cancellations

“More people are adjusting their plans to accommodate price increases and additional costs, rather than canceling [travel] absolutely,” said Eric Bamberger, senior vice president of hospitality at marketing technology company Zeta Global.

Demand for “pampering” trips, such as spas, is increasing, while interest in “educational” trips to museums and national parks has decreased by more than 50%, according to a Zeta Global company representative.

Car rentals are on the decline, with rental rates falling fastest in the United States in places where gas prices are higher, such as California, Oregon and Washington, according to Zeta Global.

Still, “hotels are on fire,” Bamberger said. “Some hotels in Las Vegas are at 95% occupancy, and this past Memorial Day was the best day ever on record – revenue-wise – for many of the major US hotel chains.”

‘I’ll still travel’

Rising costs are impacting travel spending this summer, with 74% of US consumers actively looking for ways to save on travel, according to Zeta Global. Nearly one in four say they are looking for cheaper transportation, hotels or vacation destinations, according to the company.

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

“We all know there was a lot of austerity and underspending during Covid on services and travel,” he said. “So far it seems to be showing that people are interested in spending – and if anything, spending more.”

When asked about reports that people are opting for cheaper holidays, he said: “We haven’t done that so far … especially in the middle and upper end of the market.”

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

“If anything, maybe travelers take away a little bit of their ambition — where they were going or where they were staying — but they’re still going to travel,” he said.

‘Gangbusters’ Summer

Marriott CEO Anthony Capuano said the company, which operates in nearly 140 countries according to its website, is now seeing strong demand not only from leisure travelers but also from group and business travelers. .

“We think the summer is going to be gangster,” he told CNBC’s “Squawk on the Street” in May. “We feel good about this summer.”

After two consecutive months of negative demand, interest in business travel to the United States surged 365% in May, according to Zeta Global, which tracks website usage as well as location and transaction data from credit cards and loyalty program purchases.

According to Zeta Global, business travel is growing faster among younger travelers than older, high-end travelers.

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International travel interest from Americans also increased in May, he said, with interest in going to Asia, Europe and South America up more than 200% from the previous month, according to the company.

That was before the Biden administration lifted pre-departure Covid test requirements to enter the United States, a move expected to kick-start travel in and out of the U.S.

“Removing the testing requirement eliminates a source of stress for travelers that may have held them back,” said Expedia Group Head of Global PR, Melanie Fish. “We expect demand to only increase from here.

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