Travel is undeniably good for the globe. Despite its negative consequences, it brings people together, fosters understanding, and enriches lives. When safe and comfortable travel is accessible to all, the world becomes a smaller, more interconnected place. It allows people from diverse backgrounds to experience new perspectives, build empathy, and create memories that transcend borders. This is why it is crucial that travel remains within reach for everyone, not just those with trust funds or corporate expense accounts.
Post-2008 recession, airline prices dropped, and hotel rates became more reasonable, making travel more accessible to the masses. However, the COVID-19 pandemic and subsequent inflation have dramatically altered this landscape, raising the question: Is travel once again becoming the domain of the wealthy?
The Surge in Hotel Prices
The pandemic has had a profound impact on hotel prices worldwide. In the U.S., hotel room prices surged by 25.1% over the past year. Globally, Europe experienced an 11% year-over-year growth in hotel prices. Asia, on the other hand, witnessed significant growth, with some destinations seeing up to a 19% increase in the first half of 2023 alone. These increases are not just numbers; they represent a tangible barrier for many would-be travelers.
Skyrocketing Airfares
Air travel, once a symbol of modern accessibility, has seen a dramatic rise in costs. Plane fares rose by 44.1% in 2022, marking the largest increase since the late 1980s. You may say, “that was because of Covid” but figures since then paint a very different picture. “Two words, corporate greed explains what’s happened”, according to Derek Jones, a travel blogger. Business class fares in particular, have seen substantial hikes, with some routes experiencing prices doubling in recent years. Upgrading from premium economy to business class can now cost at least 75% more. This surge in airfare costs is a significant deterrent for many, pushing long-haul travel further out of reach for the average person.
Dining Out: A Luxury?
The cost of dining out has also seen notable increases. Full-service restaurant prices have risen by 8.2% over the past year, while limited-service restaurants saw a 6.7% rise. These increases outpace the overall inflation rate, which was 6.4% over the same period. For travelers, dining out is an integral part of the experience, and these rising costs add another layer of financial strain.
The Impact of Inflation
Inflation has been a driving force behind these rising costs. The Consumer Price Index (CPI) in the U.S. rose by 8.5% in March 2022 compared to the previous year, the fastest increase since 1981. This inflationary pressure has permeated every aspect of the travel industry, from accommodation to airfare to dining. But is something more at play, is inflation simply a convenient scapegot?
The Phenomenon of Revenge Travel
Post-pandemic, the concept of “revenge travel” has driven a surge in travel demand. People are eager to embark on trips that were delayed by the pandemic, leading to increased prices due to heightened demand. Domestic travel is recovering quickly and is expected to represent 70% of travel spending by 2030. This surge in demand has also contributed to the rising costs, making travel less accessible for many. However, it is also a testament to the value people place on travel. They have voted with their pocketbooks, showing a willingness to pay more for the experiences they missed during the pandemic. This dynamic of supply and demand is a natural economic response, but it also highlights the growing divide in travel accessibility.
Changing Consumer Behavior
Younger generations, particularly millennials and Gen Z, are traveling more and spending a higher share of their income on travel compared to older generations. Baby boomers, while willing to spend on comforts like nonstop flights, are more likely to forego experiences to save money. This shift in consumer behavior underscores the growing divide in travel accessibility.
Overview of Corporate Influence on Travel Costs
There’s an old saying, “Never let a crisis go to waste.” And travel companies have definitely transitioned deftly to gift wrap new costs, fees and increases with a bow to pass onto consumers.
In recent years, there has been significant discussion around the impact of corporate practices, often referred to as “greedflation”, on rising travel costs. This phenomenon is particularly evident in the airline and hotel industries, where profits have surged past pre-pandemic levels.
Airline Profits: The airline industry has seen a substantial increase in profits. In 2019, the industry reported operating profits of $26.4 billion. By 2023, this figure had risen to $40.7 billion, and it is expected to reach $49.3 billion in 2024. This sharp increase in profitability suggests that airlines have been able to leverage higher demand and possibly increased fares to boost their bottom lines in excess of inflation and increased traffic.
Hotel Group Profits: Similarly, hotel groups have experienced significant profit growth. For instance, InterContinental Hotels Group (IHG) reported a 23% increase in operating profit in 2023 compared to 2022, totaling $1,019 million. Additionally, their global revenue per available room (RevPAR) was up 13% compared to 2019. NH Hotel Group also saw a net recurring profit of €126 million in 2023, which is €23 million above 2019 levels. These figures indicate that hotel groups have not only recovered from the pandemic but have also surpassed their previous profit margins.
The substantial profit increases in both the airline and hotel industries suggest that corporate practices may be contributing to higher travel costs for consumers. While increased demand and operational costs play a role, the significant profit margins indicate that companies are capitalizing on the current market conditions to enhance their profitability. That’s capitalism, but are we approaching the price gouging? If you’re booking travel now, you probably think so.
Conclusion
Should we feel ashamed because we’re still traveling while many others are being priced out of something they also love? We hope not and we hope to continue helping to inspire millions of people to travel. But things have definitely changed.
The data paints a clear picture: travel costs have surged post-pandemic, driven by inflation and increased demand. Hotel prices, airfares, and dining costs have all seen significant increases, making travel less accessible for the average person. As we navigate this new landscape, it becomes increasingly evident that travel is once again becoming the domain of the wealthy. The democratization of travel that we witnessed in the early 21st century is being eroded.
But we must remember that travel is not just a luxury; it is a vital part of human experience. It opens minds, fosters connections, and builds a more empathetic and understanding world. Ensuring that travel remains accessible to all is not just about fairness; it is about enriching our global community. We must strive to keep the doors of exploration open to everyone, not just those with deep pockets. The world is better off when more people can experience its wonders, and we must work to make that a reality once again.
