Fears of inflation and recession have not slowed consumer travel

Persistent inflation and higher interest rates have strained many household budgets, and consumers are shying away from some purchases such as home improvement projects or apparel. But millions of U.S. consumers aren’t giving up their vacations.

A Deloitte survey from last month found that 50% of respondents planned to take a vacation that includes paid lodging during the summer, up from 46% last year. In a sign of strong demand, the Transportation Security Administration screened close to 10 million people over Memorial Day weekend, slightly more than the same period in pre-pandemic 2019. And American Airlines this week raised its adjusted earnings forecast for this quarter, thanks to strong demand and cheaper fuel.

Many travelers are seeing some relief when they book airline tickets or fill up the tank before a road trip, at least compared with last year.

Prices for airline tickets, for example, were down 0.9% in April from a year ago, according to the latest federal inflation read.

And yet, consumer spending has begun moderating overall but “the categories that are holding up the strongest are the travel categories,” said Jason Gaughan, head of consumer credit card products at Bank of America.

Capacity constraints due to shortages of aircraft and pilots have affected airline growth and kept fares elevated for months.

International travel has roared back this year as countries around the world lift pandemic restrictions. But there’s still plenty of demand for domestic destinations that dominated travel during the pandemic. That’s especially true because airlines have ramped up capacity to Europe and other international destinations, but bargains are hard to find during the peak late spring and summer months.

Airfare to Europe is averaging $1,167 round trip this summer, up 36% from last year, Hopper data showed.

Lodging also has been more expensive this year, even within the U.S. Hotel occupancy averaged 60.6% from January though April, with per-night average rates of $152.68, according to hotel data firm STR. That’s up from 63% occupancy and average nightly rates of $130.05 during the same period in 2019, and up from 58.4% occupancy and average rates of $141 a night last year.

But there are vast differences between some destinations because of changing travel patterns. Nightly hotel rates for Maui, Hawaii, have increased more than 53% since 2019 to $535.90, the biggest percentage increase in the U.S., according to STR. Meanwhile, hotel rates in the San Jose and Santa Cruz areas of California are down nearly 17% from 2019 to $171.52 as business travel in tech and other sectors still hasn’t recovered to pre-pandemic levels.