Is Inflation to Blame for High Travel Prices? – FlyerTalk

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Are you paying more for airfare and hotels because of inflation? New analysis suggests it could be one piece of a larger issue for flyers.

If you find yourself paying more for airfare and hotel accommodations in 2023, inflation could be a factor in it – but not the entire reason.

 

New analysis from Bloomberg suggests a combination of factors, including available capacity, are to blame for higher travel prices.

 

Capacity Across Providers Creates Demand for Limited Availability

As pilots at American Airlines and Southwest Airlines petition for better wages, it is only one part of an overall industry strain. A combination of missing personnel and late deliveries of new aircraft are reducing available seats and driving prices upwards.

 

According to flight tracking app Hopper, the average round trip flight between the U.S. and Europe costs $1,032. The price is 24% higher than before the pandemic, and 35% more than the same time in 2022. A break from international prices isn’t coming anytime soon, as Hopper predicts airfare will increase over the next five years.

 

Capacity isn’t just affecting the aviation industry. Hotels are also driving their pricing upward, due to a combination of more demand and limiting the number of rooms available. Data from hospitality analytics company STR shows lodging prices rose by 10% in the first three months of 2023 compared to 2022.

 

Analysts credit the increased pricing because of higher leisure travelers compared to business travel. With more vacationers in airports and hotels, weekend dates remain in highest demand.

 

It remains an area of concern for the Federal Reserve, because the hospitality industry requires a higher amount of labor than other industries. Economists worry that until inflation cools and the labor market slows, flyers will pay more for travel and hospitality into the busy summer months.

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