Goodbye Sicily, Hello Sarasota. The Post-Pandemic Travel Boom Is Over

Published Aug 14, 2024, 8:00 PM

That White Lotus-inspired trip to Sicily. The Instagram-perfect Joshua Tree glamping holiday. A party weekend in Miami. Ever since the first lockdown restrictions were lifted in 2021, Americans have been spending big on travel. But a recent slew of weak earnings from companies like Delta and Expedia suggest that the post-pandemic travel boom is finally over.

In today’s episode, Bloomberg tech reporter Natalie Lung tells host Sarah Holder that from airlines to Airbnb, companies are reporting weaker-than-expected demand for summer travel. So does that mean now is the perfect time to book a last-minute vacation? Depends on where you’re game to go.

Read more: Flights, Hotels and Parks Are All Flashing Travel Warning Signs

Bloomberg Audio Studios, podcasts, radio news. Skyscanner has this option that says explore everywhere and I just need to input my location. Okay, just put JFK.

This is Bloomberg reporter Natalie Lung. She told me that recently she's been paying a lot of attention to the travel website skyscanner.

And then it shows everything from the cheapest to the most expensive, and the next cheapest one outside the US is Canada as well as Puerto Rico. So sounds good to me. Yeah, yeah, how cheap is cheap? So let's see for San Juan is one hundred and fifteen dollars. I think it's a one stop flight and.

I'm seeing some four star hotels.

Yeah, sounds like a pretty good deal.

Natalie said she has been browsing skyscanner to find herself some cheap vacation options. She's been using it for work. Really.

I cover tech for Bloomberg in New York, so I cover a couple of companies, including in the travel space like Airbnb, Expedia, as well as the gig economy, uber Lyft and dating apps. So a lot of my coverage span across everything that people use on a daily basis.

And recently Natalie noticed people were using travel booking sites like skyscanner differently than they used to. People weren't looking for white Lotus inspired holidays in say, Sicily or Hawaii. They were looking to go well anywhere.

I spoke to Skyscanner and they were saying they consistently saw people putting everywhere as their destination. So this sort of speaks to Okay, people are holding out for deals, and it's not that they're not traveling. They're still on a travel but they are looking for the perhaps a lower star rated hotel or like a cheap of property.

They'll go anywhere for the right price. Yes, that focus on keeping travel costs down seems to mark a big shift from the way people were thinking about travel when COVID lockdowns first lifted, and it got Natalie thinking, is the post pandemic travel boom coming to an end? Today? On the show, Americans are back to spending less on travel. They're trading in extravagant post COVID trips for budget friendly deals. We look at what that means for everything from airlines and hospitality to your next vacation. I'm Sarah Holder and This is the big take from Blueberg News. At this point, the time we spent trapped at home living in a COVID pandemic might feel like it all blurs together, but Natalie says it's pretty easy to pinpoint exactly when the post pandemic travel boom started and where in twenty twenty one everyone was in Florida. That was right around the time COVID vaccinations first rolled out to the general public, and if you weren't a Florida person.

They went to a lot of national parks that say Joshua Tree in California, and even Gatlinburg or Pigeon Fortune like Tennessee.

People were eager to get out, and the travel companies Natalie covered, including Expedia and especially Airbnb, found that feeding that travel frenzy was a very good business. Last year, Airbnb saw record setting profits every quarter.

It was like not anything like they've seen before before the pandemic, and so that was really obviously welcome. After they lost almost all their business during the pandemic.

After lockdowns lifted, there was so much business hosts could barely keep up.

Airbnb hosts in particular added a lot of supply to feed that pentup demand.

Back then, Natalie spoke to one woman who tried to cash in on the trend.

So I actually talked to a host who found a home in Orlando because she was hoping to get like Disney, you know, travelers.

But since then, not as many people were clamoring to visit the Magic Kingdom or Epcot.

And she said it was just no activity for the month of August, and overall revenue in that Orlando area like dropped like six point four percent.

And it wasn't just Florida recently, people just haven't been traveling like they.

Used to other areas, like the places where I talked about in Tennessee near Dollywood was down like eight point seven percent. So like, actually, if we look at earlier this year, in the past twenty two to twenty three months, a lot of US airbnbs saw their earnings drop, and so that sort of speaks to the changes in travel patterns.

And that's led investors, especially to sour on Airbnb. Last week, the company reported its earnings and w learn of slowing demand that sent share prices down by thirteen percent, its biggest dip in nearly two years. Adding to Airbnb's woes are a series of local restrictions that have limited the number of short term rentals or even banned them entirely. But aside from Airbnb, some hotel chains like Hilton, have said they've also noticed increasing cost consciousness among their customers. Some have tried offering promotions in the hopes of luring deal seekers.

Some hotels, while they're not, you know, cutting prices on moss, but they are offering some more perks, such as, you know, if you stay for two days, they'll offer another night free, as well as perhaps issuing more like loyalty perks for their program members.

And then there are the airlines. The most recent data shows that fares from the US to Europe slumped seven point five percent in business class and nine point two percent in economy from a year earlier. That's led everyone from United to Delta to Spirit to lower their financial targets and slow plans to expand.

So you saw a lot of airlines actually slashing prices because one of the things that they did was adding more airplane seats in anticipation of that coming back of travel. But now this sort of demand has not been as high as they hoped, and they don't have that price power anymore. So, definitely, tic kits are coming down, and that's affecting some of their earnings.

Overall, it seems many of us aren't traveling as much this summer, and certainly not as far. According to the Conference Board, the share of Americans planning to go on a trip abroad in the next six months is at the lowest level since the end of twenty twenty two, and growth in new US passport applications and issuances slowed in twenty twenty three after a post pandemic search. So, Natalie, why is this happening? What are experts telling you to explain all this like?

From the number's point of view, even though all the numbers are, you know, bigger than it was then in twenty nineteen, it's just not growing as the same clip as it did after the pandemic, and that sort of growth rate, by calculation is going to slow down and moderate. So that is what we're seeing so far.

How much does inflation and economic pressures and a slow down in consumer spending generally have to do with this change in the travel industry we're seeing.

Right, So, let's say people's pandemic savings have slowly been deepleting because of the up spending they've done in the past few years, and with wage growth and jobs growth slowing, this is definitely eating into people's discretionary spending and how they make choices on where to spend that money.

But even if consumers are feeling less flesh, that doesn't mean people have stopped traveling entirely. Coming up after the break, if people are essentially spinning the globe and looking for deals, where are they going? And can I come to? After a post pandemic flurry of activity, the rapid growth in consumer travel is finally slowing down. Bloomberg's Natalie Lung says that's partly because people don't have quite as much money to spend on vacation these days. But not everyone is staying home. They're just finding new budget travel hacks.

So people are getting smarter. So for airbnbs in like let's say, rural smaller towns where you can find multi bedroom properties, they have been able to offer like a lower price per bedroom, So if you're traveling with a group of friends to a smaller town, you might be able to find a better deal there. And actually that's helped drive group travel up. As one of the fastest growing categories for Airbnb. So that's another interesting point where hosts are definitely sensitive to and they've been building an adding more houses there too.

Another big change, people are becoming more flexible about when they want to fly.

They're willing to fly at a different time to get a better deal. A lot of people say they travel during shoulder season, so that's in between the peak seasons to sort of get those deals earlier and sole some hotel excecutives might have seen July as their peak season, but now it's moved earlier to maybe June, and that's why that might have influenced sort of that you're on you change when you look at, you know, last year's July.

Does all of this mean this is the perfect time to book a trip to a place that used to be really over touristy or crowded or expensive.

Maybe, like, at least from some of the data, we're seeing a lot of coastal destinations in Florida cutting prices, so maybe you might find a cheap stay or you know, a cheap ticket there.

But Natalie did say some places and some types of travel are still booming. Cruises have remained popular as has Las Vegas. In fact, the Wind Casino Company recently reported its best second quarter profit in the company's history. But those are the outliers, and even when CEO said the company was paying very close attention to customer behavior. So, Natalie, Summer is ending soon, sadly, what's the next big travel season that will give us a sense of the health of the travel industry and what do experts expect to see then?

So people are looking at the fall travel season and so far from the conference calls and you know, earnings reports, executives are saying that travel is going to still moderate. It's not as strong as before, even with Airbnb noting that people are not making those Thanksgiving and Christmas trips so far yet, and that speaks to the price sensitivity that people might be having there holding out for deals.

How has reporting all this changed the way that you're thinking about travel.

I'm definitely going to be more savvy and you know, seeking out different destinations for travel. Maybe it's a place I've never considered for travel before, but if there's a good, well priced tour or well priced stay I can find, I would be open minded to go there.

Searching Skyscanner for everywhere. Yes, this is the Big Take from Bloomberg News. I'm Sarah Holder. This episode was produced by David Fox. It was edited by Aaron Edwards and Tim Annett. It was mixed by Blake Maples. It was fact checked by Adriana Tapia. Naomi Shaven and Kim Gittelson are our senior producers. Our senior editor is Elizabeth Ponso. Nicole Beemster Bor is our executive producer. Sage Bauman is Bloomberg's head of podcasts. If you liked this episode, make sure to subscribe and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks so much for listening. We'll be back tomorrow, do you s y d.

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