Roughly 70% of Americans to change their summer vacation plans due to cost

Ted Rossman, Bankrate Credit Card Senior Industry Analyst, joins Yahoo Finance Live to discuss how inflation and increasing travel costs are impacting consumers’ summer vacation plans, travel demands, and ways to save money on travel.

Video Transcript

BRAD SMITH: What’s becoming known as revenge travel may hit a snag ahead of the summer season. Higher operating costs for the experience economy– airlines, accommodation, and activities even– mean travelers are encountering higher prices to reach and enjoy their destination away from home. So here with more on the economic implications and how consumers can even navigate the financial reality is Ted Rossman, who is the Bankrate credit card senior industry analyst, joining us here this afternoon.

All right, so first and foremost here, the findings of this study particularly were interesting because it’s saying that people plan to take fewer trips as a result and are traveling a shorter distance. What implications does that have for a leisure and hospitality space that was still trying to chart its full comeback post-pandemic?

TED ROSSMAN: Potentially big ramifications if it happens. So here’s what people told us. About 6 in 10 say they’re planning summer vacations. And about 70% of them say that they’re making changes. So maybe they’re taking fewer trips, they’re traveling shorter distances, they’re picking cheaper activities or accommodations.

The thing is, though, that I think we need to take some of this with a grain of salt, as in for a while now, consumer sentiment has been a lot worse than the actual data. We’ve seen that with spending on goods and increasingly spending on services. The airlines are reporting really strong demand. And I think that there is a lot of pent-up demand as we hopefully continue to move away from the pandemic. So I’m just not so sure. I think when push comes to shove, a lot of people might be traveling, inflation be darned.

RACHELLE AKUFFO: And so, Ted, when we look at some of the reasons that people were deciding not to travel, say, over the past year– people had COVID concerns– you had various lockdowns in different countries. But now we’re seeing costs topping the list, though. How concerned are you about how that’s going to affect some of these airlines and some of these deals that people were really hoping for?

TED ROSSMAN: You’re right the cost is the biggest hindrance, although that was true also in a 2019 survey that we did even before the pandemic. Now I think some of this is emblematic of the K-shaped recovery. I think there are a lot of upper and even a lot of middle income households that are better off financially. And they do have all this pent-up demand and they’ve saved more, and they’ve paid down debt. I know inflation is a legitimate worry. And it’s definitely a problem.

But I also think that pent-up demand is really strong. A lot of people are in a position where they’re working, their incomes are up, their debt to income ratio is pretty low. There may be a middle ground here, too. People may travel, but not go as far or not do it up as big as they otherwise would have. I think people should do something. I don’t like all this vacation time that goes unused. I think that’s unfortunate.

DAVE BRIGGS: So, inflation has obviously driven the prices of plane tickets through the roof, $100 more than it was a year ago. It’s actually more, though, than pre-pandemic. Right now, the average ticket, $358. $320, prepandemic. And hotel rooms much of the same– they are making up for those massive losses during the pandemic. The question being with both airline tickets and hotel rooms is, once jet fuel comes back down, will those ticket prices come back down? And the same goes for hotels. Do you think those prices will come back down, say, a year from now, or this is a new norm?

TED ROSSMAN: I would predict more of a leveling off than a truly coming down. I think that’s, oftentimes, the way these things go, especially with really high demand. But all news is local. We definitely see leisure travel, specifically domestic leisure travel, being really strong. Business travel has been slower to recover. International has been slower. So that’s another summer travel tip. I think it’s going to be hard to find a deal if you’re going to, say, Florida, California, Hawaii.

But maybe if you kind of zig when others zag, I mean, if you’re comfortable going international, or also maybe business cities like New York, for example. I mean, there’s a lot of touristy stuff in New York as well, but it’s been slower to bounce back from the pandemic without as much business demand. I wonder if a city like that might offer a little more of a deal potential.

BRAD SMITH: I’m not sure how you got the data on my searches, Ted, but good job. I think for consumers going forward from here, too, and the types of experiences that they’re looking for, in addition to the locations that they’re going to, to really engage with those experiences, how can consumers navigate what the added cost for ticket prices beyond just getting to that location are, but what they’re going to need to be ready to spend once they are there on the ground and trying to live their best lives?

TED ROSSMAN: Yeah, I think budgeting is key here, planning ahead. A lot of people have been planning trips on really short notice the past couple of years. That often costs more, unless maybe you think backwards and sort of let the deals dictate where you go. I mean, if you’re truly flexible, maybe you’re open-minded and you can find a deal. I would also look to our credit cards. Sign-up bonuses are high. Use those points and frequent flyer miles to fuel a free trip. You may be sitting on a stockpile of rewards that you don’t even realize that full value. Those are some ways to stretch your dollar further.

BRAD SMITH: Ted Rossman, Bankrate credit card senior industry analyst. He always brings back it to credit cards for us. Ted, we appreciate it. Thanks so much for the time.

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