LOS ANGELES (NewsNation) – Americans are taking vacations despite recession fears and inflation.
The number of people passing through US airports hit the highest level since the pandemic last weekend, and those records will almost certainly be broken over the Memorial Day holiday weekend.
As inflation squeezes many households, economists think Americans are willing to splurge on travel. The incentive to get back in the skies at the start of summer includes lower airfares.
AAA predicts 37 million Americans will drive at least 50 miles from home this weekend, up more than 2 million from last year’s Memorial Day but still below pre-pandemic numbers in 2019.
With more travel comes higher costs. Hopes for an economic recovery are high, and as the summer travel season begins, there are strong signs of it at airports across the country.
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According to a Hopper survey, travelers plan to spend more this weekend, thanks in part to lower air fares.
“We surveyed travelers about the Hopper app and found that nearly 80% of people are spending more on travel than they were last year,” said Lindsay Schwimer, consumer travel expert at Hopper. “Prices are actually down 20% compared to last year — almost $100 less than summer 2022.”
Hopper predicts that average domestic fares will peak next month at $328 for a round-trip ticket, down from last summer’s record $400 but up 4% from 2019.
Hopper also noted that there are some last-minute deals on domestic flights, but international fares are at their highest in more than five years, with prices to Europe up 50% year-on-year.
The big question for the travel industry is how much longer consumers can afford to pay for airline tickets and accommodation as they struggle to cope with stubborn inflation, news of layoffs and bank failures and fears of a recession.
The 37 million Americans expected to travel by road this week bode well for restaurants and hotels and another boost for the economy.
According to hotel data provider STR, the average price for a US hotel room last week was $157 per night, up from $150 the same week last year. And the average daily rate for other short-term rentals, such as Airbnb and Vrbo, rose to $316 last month, up 1.4% year over year, according to industry-tracking AirDNA.
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However, there is good news for motorists.
According to AAA, the nationwide average for a gallon of regular soda was $3.56 midweek, compared to $4.60 this time last year. Renting a car is also cheaper than a year ago, when some popular destinations ran out of vehicles. Travel company Expedia said higher inventory levels have allowed companies to rent more cars at lower prices.
Cruises are also making a comeback. Several major cruise lines are reporting higher occupancy rates.
In some cases, cruise lines have had to cancel some voyages for travelers due to overselling.
Industry executives have said consumers prefer the travel experience to other ways of spending, but some analysts are seeing cracks in the strong demand for travel that began in early 2022.
Bank of America analysts say data from their credit and debit card customers showed a slowdown in spending in April as card usage fell below year-on-year levels for the first time since February 2021. They say hotel spending recovered relatively early The pandemic has eased this spring, while the cruise industry, which has been late in recovering, is still flat out — cruise card spending rose 37% last month, albeit from a very low level a year ago.
The Associated Press contributed to this report.
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