It’s been a buyer’s market for travel since the start of the pandemic. But that’s about to change.
The average roundtrip domestic airfare dropped 15% last year, to $302, according to the Bureau of Transportation Statistics. Hotel rates plummeted 21%, to $103, lodging data from STR found.
But the era of cheap travel will end soon, experts predict. The only questions are, when will it be over – and how long do you have to book a low price?
People like Glen Fisher want to know. In January, he found an incredible deal to fly business class from Denver to Rio de Janeiro on United Airlines ($1,290) and rooms at the JW Marriott on Copacabana Beach for $105 per night. A Hertz rental at the airport cost just $14.95 per day.
“I don’t think we will ever see these prices again in my lifetime,” says Fisher, a risk engineer from Castle Rock, Colorado.
He’s probably right.
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It’s a wacky travel recovery
Prices have already started to rise again as more people get vaccinated. But it’s an odd recovery. The increases are not happening consistently, and fortunately, there are still opportunities for deals if you know where to look.
“Inventory is becoming tighter with each passing week,” says John Lovell, president of Travel Leaders Group, a travel agency consortium. “And with the tremendous pent-up demand for travel, we anticipate modest pricing increases throughout the rest of 2021.”
How is this recovery different from previous ones? Take domestic airfares, for example. The booking site Hopper analyzed airfares and found that while they were still down about 20% from a year ago, they are already trending upward.
Adit Damodaran, an economist at Hopper, said he expects fares to continue climbing this spring and reach 2019 levels later this year. “The strongest increase will probably happen in late spring and early summer 2021, once the vaccine is more widespread,” he says.
But the rebound is following a zigzag course. Andreas Haefner, an aviation industry analyst with M2P Consulting, is tracking the airline industry’s recovery. He says the pace of the increases depends largely on where you’re flying. The earliest traffic will return for domestic flights is this spring. If you’re flying to Europe, things won’t start looking normal until this winter. And he doesn’t expect things to rebound for flights to Asia until January or February of 2022 at the earliest.
“Between now and then, fares could still drop,” he says.
The end of cheap travel is ‘nonlinear’
The same thing goes for hotels. “The industry’s recovery will be nonlinear – meaning some sectors will rebound faster than others, driving prices up in staggered fashion,” says Steve Bertogli, a deal expert at Travelzoo. The best deals will be in cities with a lot of hotel inventory. Those include Orlando, Chicago, Boston and Washington, D.C.
On the other hand, resorts in many areas of the United States are doing well and not discounting a lot, says John Niser, director of the international school of hospitality and tourism management at Fairleigh Dickinson University in Teaneck, New Jersey.
“Many destinations close to metro areas, such as the New Jersey shore, are booked for the summer, and holiday rentals are hard to find right now,” he adds.
Should you book now?
For travelers, it’s a question of when to book. Do you buy now and lock in a good deal? Or do you wait in anticipation of more aggressive sales, as travel companies try to lure customers back? I put that question to numerous travel experts, and they all said the same thing: If you find a deal now, book it.
“I think sooner is better for sure, in terms of getting the best deals,” says Lauren Doyle, executive vice president at The Travel Mechanic, an Ensemble Travel Group-affiliated travel agency. She still sees some terrific deals on resorts and cruises. And at least for now, the cancellation terms are generous. That means if you decide to cancel, you can get full credit and avoid penalties.
The real trouble is just over the horizon in early 2022. What happens after prices return to normal?
“I foresee a swing from offering travel bargains to lure guests to charging more post-pandemic to recoup some of their heavy losses,” says Jaimie Michaels, editor of MagicGuides.com, a Disney travel planning website. “I think the travel industry will slowly ramp up as 2021 wears on, but 2022 will see a massive explosion in prices.”
That doesn’t sound good unless you’re a Disney shareholder. But there’s a clear takeaway: Book now before travel gets expensive. Because it will.
Tips for booking travel after the deals
Don’t rush – and take precautions. The go/no-go travel decision may be more complex than ever, says David Dausey, an epidemiologist and provost at Duquesne University in Pittsburgh. “In some regards, it looks like a good time to travel because rates of COVID-19 are decreasing overall,” he says. On the other hand, there’s the threat of new variants. His advice: Consider the risks of travel carefully. “The best way to travel is to avoid mass transit, when possible,” he says.
Read the fine print. “Check the escape options,” says Kevin Vance, owner of Vance World Travel in Mentor, Ohio. Airlines and hotels made their change policies more consumer-friendly after the pandemic. They allowed easy changes and eliminated change fees that travelers hated. But check the policies carefully. When travel returns, so will the old change policies.
Be open to alternative accommodations. “One way travelers can almost guarantee savings is to look at off-market properties for local stays,” says Emir Dukic, CEO of Rabbu, a rental platform. His company’s market research suggests rural properties, and one-bedroom properties in hotel-heavy areas, are seeing the least market demand.