Where Does the Travel Industry Stand as Summer 2021 Kicks Off?
About the author: Lamar Watson, CFP®, is a Fee-Only Financial Advisor in the Washington, D.C. area that works with clients virtually across the country. Lamar's work with his clients focuses on budgeting, employee benefits, paying down debt, buying their first home, and investing. Lamar is the Founder of Dream Financial Planning, a virtual Fiduciary Financial Planning firm specifically designed to help young professionals and minorities take control of their finances and fulfill their dreams. Feel free to schedule a complimentary consultation to learn how we use the DREAM Financial Planning Process ™ to help our clients achieve their goals.
The travel industry has begun to see growing demand now that summer is here. However, not all travel will be the same, as much of the demand is directly related to the COVID-19 vaccine and reduced CDC restrictions. Instead, industry trends have emerged based on individual comfort levels as they apply to different modes of travel.
Below we will explore some of the factors that have contributed to an increase in travel and how different industries are responding to it.
COVID-19 Vaccine and Traveler Comfort
The trends that impact individual willingness to travel can be directly tied to two factors. First is the administration of the COVID-19 vaccine. In fact, according to the CDC, approximately 39 percent of the U.S. population was fully vaccinated as of May 2021.1 Second is the CDC’s reduced travel restrictions within the United States for those who are fully vaccinated.2
Both of these factors inform the types of travel people are willing to take. According to a study from Deloitte, 54 percent of travelers are comfortable staying in a hotel, compared to 44 percent taking a flight or 35 percent attending an in-person event.3
With this in mind, let's examine some of the impacts these trends have had on specific sectors of the travel industry.
Since the new year, interest and comfort in flying have steadily increased from 29 percent to 44 percent of individuals.3 Furthermore, the number of individuals passing through TSA has gone up significantly, from around 100 thousand people a day in April 2020 to over a million people a day in April 2021.4
Comfort and the increased number of travelers have also affected the way airlines are beginning to respond. For example, Delta Airlines stopped blocking off the middle seat of their flights at the beginning of May 2021.5
Though this information shows a growing level of comfortability in airline travel, it must be compared to previous years to help gauge where the industry is at. For example, over 2 million people passed through TSA a day in 2019.4
Another big difference to consider is domestic versus international travel. As of April 2021, 36 percent of individuals plan to fly domestically, while only 21 percent plan to fly internationally.3 This, along with the data above, indicates that individuals are becoming more accustomed to the idea of flying, but would be more comfortable with a flight within the United States.
Avoiding large crowds and staying isolated makes a road trip an ideal alternative. However, individuals may find this difficult or more expensive than expected. Some car rental companies sold portions of their fleets in response to economic challenges created by COVID-19.6 Furthermore, the Bureau of Labor Statistics reported a 16.2 percent increase in car and truck rental costs for April 2021.7 Rental cars are an in-demand item, and you should be prepared to pay a premium on them this year.
However, this does not mean that road trips are out of the question. Around 49 percent of individuals plan to book a hotel in the next three months.3
Cruises remain the least likely to see improvement during summer. Not unsurprisingly, only 19 percent of individuals plan to take a cruise in the next three months.3 This, coupled with the challenges of 2020, means the cruise industry may continue to face economic difficulties throughout the remainder of 2021.
The travel industry is recovering from the economic downturn of 2020. And though the industry is experiencing growing demand as we near a post-pandemic world, it is nothing close to what it was in 2019 and prior years. Those planning to travel should remain up-to-date on guidance from the CDC and review the U.S. Department of State’s information and travel restrictions before finalizing their plans.
The growing demand for travel will impact the prices of everything from plane tickets to car rentals and hotel stays. The exact amount will depend on the location and time of your trip. Be sure to enforce CDC safety restrictions, and keep the information above in mind as you plan your summer vacation.
Dream Financial Planning Process ™
Whether you're managing student loan debt, starting a family, or considering buying your first home, the DREAM Financial Planning Process™ is tailored to the unique needs of busy professionals in their 30s and 40s. This process focuses more on short-term goals while you grow and evolve in your personal and professional life. If you're looking for guidance on Financial Planning, optimizing employee benefits, budgeting, student loans, and managing your 401k or investments, we can help.
With uncertainty surrounding the economic stability of our country, it's okay to have fears and anxieties surrounding your own savings and investments. The most productive course of action from here is to reach out to Dream Financial Planning (or whoever your trusted advisor might be) and discuss your options. It's easy to have knee-jerk reactions when it feels like the bottom is falling out, but it is imperative to make decisions using research-backed data and a level head. If you'd like a Complimentary Review and risk assessment of your investment portfolio, feel free to send me an e-mail.
In my July Newsletter, I discuss how to avoid a surprise tax bill. There's also a U.S. News and World Report article where I share a few tips to help you financially prepare for starting a family. If you're planning to build your dream home and/or need a construction loan, that's covered too.
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