From Airlines to Hotels: It’s Getting More Expensive to Travel

From Airlines to Hotels: It’s Getting More Expensive to Travel
Passengers board an American Airlines flight in New York to Charlotte, N.C., on May 3, 2020. (Eleonore Sens/AFP via Getty Images)
Andrew Moran

It's getting more expensive to travel in today’s economy, with inflationary pressures affecting airlines, hotels, and the tourism sector.

A recent survey from market research firm Destination Analysts found that 93 percent of U.S. travelers intended to take at least one leisure trip in the next 12 months. But will costs affect the quality of their vacation?

The same survey found that inflation and gas prices continue to be an issue for travelers. Close to one quarter (24.7 percent) reported that the recent inflation trend prompted them to cancel an upcoming trip, while more than half (55.8 percent) said higher consumer prices would cause them to rethink budgets for upcoming travel.

In March, airline fares surged at an annualized rate of 23.6 percent, according to the Bureau of Labor Statistics (BLS). The cost of rooms in hotels and motels advanced by 29 percent year-over-year last month. Car and truck rentals soared by 23.4 percent.

Consumers are feeling the effects of rising gasoline prices and strengthening travel demand. But the developments haven't deterred people from enjoying foreign destinations.

Last month, bookings climbed by 12 percent, and online spending on airfare increased by 28 percent, new data from Adobe show.
 A room at the redesigned Mayfair Hotel in downtown Los Angeles. (Courtesy of The Mayfair Hotel)
A room at the redesigned Mayfair Hotel in downtown Los Angeles. (Courtesy of The Mayfair Hotel)

But inflation is still adding to ticket prices, eroding consumers' purchasing power.

“Consumers have seen online prices for physical goods rise now for 22 consecutive months, per the Adobe Digital Price Index, and inflation is becoming more prominent for services as well,” Vivek Pandya, lead analyst for Adobe Digital Insights, said in a statement.

“The unleash of pent-up demand has been a major driving factor, as the desire for air travel is coming back more aggressively than anticipated.”

It's been a balancing act for many airlines trying to keep a lid on costs while remaining competitive.

Delta Air Lines lost $940 million in the first quarter, driven by soaring jet fuel prices and labor costs, its first-quarter earnings report highlighted. However, the company said travel demand has remained strong this year as bookings and revenues have increased. The airline also reported that approximately 2 million people on average board U.S. planes per day.

If consumers choose to travel by automobile or truck instead, that will also be costly.

In addition to $4-per-gallon gasoline prices, the cost to rent a car has been surging in recent months.

Rental-car businesses have warned about shortages of vehicles to rent. From supply-chain constraints to increasing demand for these cars, travelers should prepare to pay higher prices, especially in the more popular vacation hot spots, such as Florida or Hawaii.

Current conditions in the car rental market have many consumers employing several cost-saving measures, such as taking advantage of travel credit cards, using car-sharing services, and calling companies directly.

Finding a place to rest during these leisure adventures could be ultra-expensive, or perhaps not as comfortable as travelers had been accustomed to before the pandemic.

The average nightly price of U.S. hotel rooms is $119, according to the Census Bureau. This is up from $93.75 at the end of 2020.

But shrinkflation may be a new trend forming in the industry.

In an opinion piece published on The Hill, Gene Marks, founder of The Marks Group, a small-business consulting firm, spotlighted shrinkflation changes he has experienced at hotel chains.

"Rooms are being cleaned less often and, in many cases, only on request. There are fewer towels in the bathrooms. Oh, and I’m noticing that more and more hotels are replacing those individualized bottles of shampoo and body wash with industrial sized ones that other guests are sharing," he wrote. "If you forget your toothbrush, you may be able to get a free one at the lobby desk ... or, depending on the hotel, you’ll have to pay for it at the shop."

Still, even with these expensive developments being ubiquitous in the travel and hospitality industry, a majority of U.S. adults say they plan to travel this summer, according to a new report from the Out of Home Advertising Association of America (OAAA), the national trade association for the entire out-of-home (OOH) media ecosystem.

In the study titled "OOH Consumer Insights and Intent–Q1 2022," 85 percent are expecting to travel this summer. What's more, respondents revealed that they would take more vacation time than they did in 2021, and nearly half (48 percent) plan to take two weeks or more in vacation time.

The survey's findings also highlighted that Americans are comfortable taking all forms of public transportation, such as flying, driving, and ride-sharing.

"These findings confirm the good news that Americans are ready to get out and about," John Gerzema, CEO of The Harris Poll, said in a statement. "Whether they are on-the-road, on public transit or flying, all modes of transportation will be seeing an uptick."

Did the accumulation of pent-up pandemic-era savings allow consumers to cushion the blows from price pressures in travel? Or are people seeking to leave the COVID-19 public health crisis behind?

“Despite concerns about inflation and gas prices potentially impacting trip volume, Americans’ strong excitement for travel sustains. While today’s traveler is still trending towards shorter, closer to home and more carefully planned trips than before the pandemic, they are more motivated to travel than ever,” Destination Analysts stated in its latest insights study.

Andrew Moran has been writing about business, economics, and finance for more than a decade. He is the author of "The War on Cash."