Where Are Travel Prices Headed? Get Ready for Twists and Turns
Photo Credit: Pavilion of the enlightened at Ancient Siam in Thailand. Hatoriz on Visual hunt / CC BY-NC">Visual Hunt / Hatoriz
Skift Take
Domestic airfares around the world fell dramatically in May — on average. But, as with hotels, there are currently pockets of strength — and will be for months. Still, contrarian trends don't make for a nice, tidy trend line when it comes to prices.
If you think that airfare and hotel rate trends will be uniformly characterized by steep discounting as travel reopens unevenly across the globe, then guess again.
Travel businesses have pent-up demand in their favor, to be sure, but how hotels and airlines price their services in coming months will play a crucial role in travel's recovery, especially as the global economy teeters toward recession and consumer spending pulls back.
Take a look at the airlines. Yes, the airline trade group IATA reported that domestic airfares around the globe fell 23 percent year-over-year in May as airlines try to stimulate demand. But investment bank UBS found that while forward airfares in the next few weeks and months are weak in the United States, they were getting higher in Asia, and flat to heading upwards in Europe.
So regional airfare disparities are very much in play.
On the hotel front, STR data found that average daily rates in the United States fell nearly 40 percent for the wee
