For travelers gearing up for their first holiday trips since pre-pandemic, prepare for sticker shock.
Airline tickets are up. Gas prices in the US are higher than ever this time of year. Rates for hotel rooms and rental cars have increased by 12% and 46% respectively compared to 2019.
The good news is that airfare, gas and hotel room prices are down from record highs earlier in 2022, but they are still among the highest ever for this time of year. Only rental car prices are lower than what travelers paid at the end of last year, although they are still well above pre-pandemic levels.
Here’s what will cost travelers more this holiday season:
As air traffic came to a near standstill in 2020 due to the pandemic, U.S. airlines cut staff through early retirement and buyout packages. Most airlines now have headcounts approaching pre-pandemic levels, but the number of flights and seats available has not returned to that level.
Data from aviation analytics company Cirium shows that the number of scheduled flights for November and December is down 15% compared to the same months in 2019. Many of those missing flights were previously flown by smaller regional airlines serving smaller airports, and some of those airports have since completely lost service. However, even with a higher percentage of flights on larger aircraft, the number of available seats has fallen by 3.5% compared to the same period in 2019.
A spate of Covid cases in late 2021 depressed holiday travel demand, but this year is positively robust, according to the airlines and industry experts.
“Holiday travel has come back as strong as ever, and holiday travel is why that has recovered,” said Scott Keyes, founder of travel site Scott’s Cheap Flights. “So many people wanted to travel during Labor Day and the Fourth of July, and as we’ll soon see, during Thanksgiving and Christmas.”
And that combination – strong demand and a tight supply of seats – means high rates.
The average airfare is up about 40% from 2021, with leisure travelers paying an average of $289 for a one-way trip, according to an airfare tracker compiled by Wall Street analysts at Cowan.
But it’s not just compared to pandemic prices that rates are higher.
Travel site Hopper says airfares have gone up 7% compared to the same period of 2019, and are 17% higher when comparing prices for those who waited until a week before Thanksgiving to book a flight.
“Vacation travel is definitely more expensive than we’ve seen in previous years,” said Hayley Berg, Hopper’s chief economist.
Of course, most holiday travelers never get on a plane — they drive. AAA’s estimate is that 49 million people will travel by car on vacation, compared to 4.5 million who fly. And for those drivers, gas prices are way off bigger concern than plane tickets.
The good news is that the price of a gallon of regular gas nationwide is well below the June record of $5.02. AAA reports that the average on Sunday was $4.67, down 27%. And prices continue to fall — the average price is down 11 cents per gallon over the past week.
But prices are still 8% higher than last year at this time. The price of gas is usually at the lowest point of the season at the end of the year, often just before Christmas.
Even with the annual increase in holiday travel, the amount of driving in November and December is usually well below the summer driving season. And numerous factors are pushing global oil and gasoline prices to historic highs this year. Chief among these is the Russian invasion of Ukraine, which led to sanctions against Russian oil. US refining capacity, which fell during the pandemic, has yet to recover.
The average price of a liter of gas on Sunday is 46% higher than the average price on Nov. 20 over the past 20 years, according to data from OPIS, which tracks gas prices for AAA.
Hotel prices are also more expensive than ever at this time of year. The Consumer Price Index, the government’s main inflation gauge, shows the cost of accommodation away from home hit a record in May, and the October average, the most recent available, is just 2% lower than that peak.
Prices are 6% higher than a year ago and 12% higher than in October 2019. While CPI does not provide dollar averages for the prices it tracks, Hopper estimates the average hotel room rate at $189 over Thanksgiving weekend and $218 over the weekend . Christmas week.
Again, strong demand and reduced supply – some hotels have not survived the pandemic, others are still struggling to find the staff they need to fully reopen – are driving up prices.
Car rental companies cut their fleets during the early months of the pandemic and sold the cars they had to raise money. With automakers still not at full production due to a shortage of parts needed to build cars, including computer chips, it has taken some time for car rental companies to replenish their fleets to meet demand.
The good news is that October CPI data shows car rental prices are 3.5% lower than last October, and 15% lower than the June 2021 record. Still, rental cars are 46% more expensive than they were in October 2019.