Everyone is relieved to see more people traveling again, if only because it marks the restoration of some semblance of normalcy after nearly two years of living in the midst of COVID-19. Of course, there is a disadvantage to so many people hitting the roads and heading to the planes, which is that things become more expensive as demand approaches supply again.
According to recent studies, the cost of practically every component of travel is climbing. According to the Travel Price Index of the United States Travel Association, travel-related prices increased 14.4% in October compared to the same month the previous year.
The price of visiting places is going up, up, up and that’s troubling, especially since some families will have to decide whether they want to travel or pay off debt. Many people want to have both of those options but, due to inflation, that just isn’t possible right now.
Rental car and truck rates have risen the most since January 2021, now standing at 64 percent more than they were at the start of the year. The cost of renting a car climbed by 5.2 percent from May to June alone. Hotel rates are also increasing following a modest decrease in May. They grew the greatest from month to month, increasing 7.9% from May to June. They’re currently up 19.8 percent from January 2021.
Meanwhile, food like beef, pigs, and eggs are more expensive these days if you eat out or go grocery shopping while on vacation. Uber, Lyft, and Airbnb pricing are also on the rise, despite not being mentioned in the BLS report.
However, airline tickets probably are the most noticeable victim of inflation, at least to the general public. The cost of flying has risen since January 2021, although not as much as the cost of housing and car rentals. They increased by 2.7 percent from May to June, and are now 15.4 percent more expensive than they were at the start of 2020.
The Industry’s Role
Aside from inflation, the travel sector has had a role in the price increase. Americans were ready to travel again after a year in quarantine. As more people were vaccinated and limitations were relaxed, some people were eager to leave.
Travel was on the verge of a resurgence as early as March 2021. Americans were planning trips, credit card spending on planes and hotels was up, and airports were seeing their busiest weekends since before the outbreak.
Per the various surveys conducted by travel firms and companies, wealthy millennials are the generation most likely to spend their accumulated savings on travel this year, fueling the travel boom. Among all other generations studied, this age had the highest rate of luxury bookings, according to the data. Young tourists are flying long distances to beaches, cities, and even cruises, whether it’s on a domestic or international route.
It’s all excellent for the economy, which desperately needs such spending to recover, especially the hospitality sector. While a stronger economy may be one of the benefits of increased travel demand, the negative is that Americans may have to pay more for it. It creates an ongoing cycle: the more people who want to travel, the more expensive it becomes.
And, of course, inflation exacerbates all of these issues because hotels, airlines, and other travel companies will be forced to hike prices and do more to stay afloat, especially since they, too, want more money after being shut down and impacted by the virus for so long.
The Ongoing Impact
It’s still unclear whether inflation is a one-time effect of the reopening or a long-term issue. Travel inflation, on the other hand, may not be going away anytime soon. The fact that car rentals have had the most steady and highest demand suggests that not everyone is yet comfortable traveling in public. It’s an indication that, once they’re ready for more public transportation, we’ll see a bigger increase in airline and hotel spending — and prices.
That is to say, you will be paying a lot more to fly, drive, and relax in the months ahead due to inflation.