Article written by John S. Kim, CEO of Sendbird.
COVID-19 has put the travel industry on a roller coaster and now inflation is threatening to keep the trip going. After two years of empty hotels and airports, travel has risen again. Adventurers have taken advantage of amazing deals and luxury experiences designed to bring consumers back to roads, skies and waters en masse. Then suddenly, after so much money had been siphoned out of the travel industry for months, the free fall ended and brands hit by the pandemic tried to make up for their losses with higher fares and room rates. Consumers were more than willing to pay.
Let’s take airlines for example. In its April 2022 report, the Adobe Digital Economy Index showed that in March 2022, domestic flight bookings were up 28 percent from pre-pandemic levels (compared to March 2019). And in the first three months of 2022 alone, consumers spent nearly half of their 2021 total for the year — and that’s before travel appears to heat up for summer.
Six in 10 Americans are planning at least one trip this summer, according to the U.S. Travelers Association’s latest monthly travel report, and they have places to go. AirDNA, a short-term rental company, noted that 58,000 new rental properties were added to the market in January 2022, the largest increase in supply in a month since the start of the pandemic. There are currently 1.5 million listings available nationwide, the highest ever.
In addition, the World Travel and Tourism Council (WTTC) has updated its economic modeling, predicting that US travel and tourism will exceed pre-pandemic levels by 6.2 percent. This will amount to nearly $2 trillion in US gross domestic product. Outside the US, the council’s data shows summer 2022 bookings in Europe have already exceeded 2021 levels by at least 80 percent.
It is clear that American consumers are thinking about travel. But aren’t we hitting another roller coaster top, a new high, before we take another big jump?
Will inflation ease the hype?
Before travelers can fully enjoy and explore their travel options, they have to contend with higher prices for flights, gasoline, hotel stays, and even food—not only because brands seek to make up for lost time, but also because that soaring inflation. Over the past year (April 2021-April 2022), inflation rose from 4.2% to 8.3%, raising fears of a recession that could have a significant impact on future travel spending.
A recent Bankrate.com poll shows that almost seven in ten people will change their plans in one way or another due to inflation. However, this does not mean that all bets are off. The study continues to show that demand may outweigh price. So what can a brand do to prevent another free fall during the peak tourist season? This can ensure that the experience is worth the investment.
Attention conquers the day