Why your summer vacation is less affordable this year

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Why your summer vacation is less affordable, less convenient, and more stressful this year

The American economy this summer looks to be hot, crowded and expensive. The American consumer wants to go out and spend — particularly on things that they can do in person.

What consumers want to spend money on now is “travel, not really a big ticket, but an experience,” Costco Senior Vice President of Finance Bob Nelson said on a call with analysts. “And with everybody pent up for two years and not traveling, yes, that business has taken off like mad.”


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Major retailers have been telling investors that anything related to travel or going out is flying off the shelf, whereas consumers are now losing interest in the kinds of items many may now most associate with months of the pandemic spent at home.

“Things like exercise equipment isn’t selling as much,” he specified, also adding that purchases like barbecues are now less popular. “Everybody bought a barbecue last year because everybody was home and cooking from home.”

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The “summer economy” based around travel and leisure reflects broader currents in the American economy. Consumers tend to be in the financial and psychological position to spend, meanwhile businesses are straining to provide for them. For some, especially workers, this can mean high pay, even if balanced out against unpleasant and maybe even unsafe working environments. For everyone else, it’s high prices that do little to tamp down demand.

Americans are sick of staying home

“The recovery is exceeding my expectations. I think probably all of our expectations,” Delta Chief Executive Ed Bastian said at a conference last Wednesday. “And the challenges we have now are on the other side of the house, the operations in terms of getting all the tools and the resources and the capabilities to serve the demand the way we need to.”

“Luggage grew more than 50 percent as the world continues to reopen, and we reunite with the places and people we have missed visiting,” Target’s Executive Vice President Christina Hennington said on a recent call.

Airline executives seem to agree with the analysts that this crunch means higher prices. “It doesn’t matter what the category is. The demand is off the charts. And the only thing we can do in this environment in order to protect seats and protect inventory is pricing. It’s the only lever you have, candidly, in this market, or else we’d sell everything out,” Bastian said, predicting that prices would probably rise about a quarter during the summer, noting that “we’ve never seen anything of that scale.”

“We expect a busy summer and are concerned about the industry’s ability to handle the demand,” said Helane Becker, analyst at investment company Cowen, in a note to clients adding that, overall, leisure travel is running 30 to 40 percent above 2019 levels.

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Higher ticket prices could remain constant throughout the summer, said Becker, who suggested pricing strong through at least Labor Day.

But staffing shortages mean bumpy travel plans

Getting Americans where they want to go this summer may be trickier. Memorial Day weekend saw an increase in flyers compared with last year, but also featured a rash of cancellations and delays. Delta, one of the most affected airlines, attributed the holiday weekend struggles to poor weather and air traffic control issues.

While weather is obviously difficult to predict, Mike Taylor, the managing director of travel, hospitality and retail at J.D. Power, said that flyers can also expect more difficulties flying this summer because the airlines have little resiliency in their staffing. Many pilots retired during the pandemic, Taylor explained. While airlines have been trying to woo some back, it takes time to certify them again — and it’s not cheap either.

This means that delays due to weather can radiate throughout the system as airline staff are stretched thin and run up against mandated limits on work hours. It also means pricier tickets.

“It’s going to be a lot more crowded, there will fewer choices than there has been in the past, the airlines are going to fly fewer aircraft,” Taylor said. “The lack of airplanes in the sky and surging demand: That combination means higher prices.”

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And even if tourists and vacationers are traveling by car, they can’t expect much relief. Gas prices are being squeezed by two factors — oil prices have shot up since the Russian invasion of Ukraine and are now almost $115 a barrel; meanwhile, the United States’ refinery capacity took a hit during covid and never got back to its full level. With these two factors dragging down supply, there’s also resurgent demand. Gasoline demand is about 2 percent higher in 2022 than at this point last year, according to an analysis of Energy Information Administration figures by GasBuddy Petroleum Analyst Patrick De Haan.

The hospitality industry is struggling to find workers

Once you arrive at your vacation destination, things won’t be easy either. Businesses, especially in the service industry, say they are struggling to hire. Whether it was unemployment benefits, stimulus checks or workers moving away, many business owners say they can’t find workers, even as the health and economic situation has changed massively over the past two years.

Data from Indeed’s Hiring Lab has shown decreased interest in seasonal employment among American workers. “Foreign workers could fill that gap,” said AnnElizabeth Konkel, an economist at Indeed.

States and businesses that rely on seasonal work have been furiously lobbying the federal government to expand existing visa programs. The Biden administration in March released 35,000 more H-2B visas, which can be used for temporary or seasonal work. The governors of New Hampshire, Maine and Utah, all major tourism destinations, have asked the Biden administration to speed up processing of visas that are often used by camp counselors and other seasonal workers.

“Every business wants to meet consumer demand. If consumer demand is still going strong, they’re going to have to meet that and make sure they have enough staff,” Konkel said.


Employers are reaching for new kinds of employees — who have less experience

But that’s easier said than done. Marilyn Schlossbach, who owns several restaurants in Asbury Park, New Jersey, said that while she’s been able to return to somewhat normal staffing levels for back-of-the-house employees, she’s struggled, along with her fellow business owners, to hire workers that require more training, experience and the ability to deal directly with customers.

“What we are getting are underqualified people who have never worked in the industry or have no experience in hospitality,” Schlossbach said.

In 2019, she said she probably had 60 percent more staff than she does now, while serving almost 30 percent more customers last week from last year’s Memorial Day weekend. “We’re severely compromised, it’s challenging, everybody is overworked, and it’s just the beginning,” she said.

In response, Schlossbach said she has increased wages 30 percent to attract the necessary workers. But when everyone else is doing it, prospective employees have many options. “People know that you can pretty much write a ticket to a job anywhere if you have a little bit of skill set because everybody is hiring,” she said.

Seasonal workers are also not immune to the broader trends of the economy. Businesses in areas that attract massive seasonal inflows and require temporary surges of labor have noted that high housing costs make attracting workers, who typically are in the service industry, more difficult. “The challenge we face is there’s no affordable housing to house these people where they come,” Schlossbach said. Housing is already expensive in the areas tourists like to flock to, and in many cases, it’s precisely those areas that have seen housing costs go up thanks to covid-era moving.

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In vacation areas across the country, business owners have identified this lack of affordable housing as a major obstacle, which has led some businesses that can afford it to go out and build it themselves.

Consumers might be willing to put up with it

The combination of return-to-normal summer travel with understaffed bars and restaurants has led to some predictable unpleasantness. Tables turn over slower, sections of a restaurant might be closed off because they don’t have the wait staff to serve them, menus may be truncated, and certain items might be unavailable because of supply chain issue or high food prices. It could be a waiter or bartender’s first day — and more than once, as the buyer’s market for staff means jobs can change quickly.

The economy of the 2010s — where prices grew slowly, items shipped easily all over the globe, and there was a standing reserve of unemployed or marginally employed labor that made anyone with a job reluctant to leave or ask for more — is dead. For some, this means more opportunities and higher pay. But for vacationers, it may mean more aggravations.

“Most of [our customers] are patient, not all, we’ve had some incidents in the past couple weeks,” Schlossbach said. “It’s surprising to me that people cooped up who can now go out and see family and friends can’t just sit there and be grateful. Enjoy the summer, it’s over before we know it.”

Thanks to Lillian Barkley for copy editing this article.

  • Matthew Zeitlin
    Matthew Zeitlin

    Domestic Economics Reporter

    Matthew Zeitlin is an economics reporter at Grid focused on the domestic impact of major stories such as coronavirus, the supply chain and economic volatility.