Summer Travel Prices Could Drop 40%
As Memorial Day kicks off start of summer travel season, Travelzoo (NASDAQ: TZOO) predicts Americans will see best travel offers in years this summer. The combination of low oil prices, a strong dollar, cheaper airfares and the impact of global events such as the Zika virus and instability in Europe, means Americans can expect to spend up to 40% less than last year on summer vacations.
Travelzoo's staff in the U.S. sees five trends in the market:
1. Lower Airfares
Travelers are seeing the lowest flight prices in seven years. Prices have declined 12% from 2015 and over 20% from two years ago. Lower oil prices have decreased airline-operating costs, while major carriers have dropped fares to compete with budget carriers that are adding more routes.
2. International Impact of Strong Dollar
The strong dollar means Americans can spend less to travel internationally. According to the National Trade and Tourism Office, U.S. outbound travel in January 2016 (the most recent data available) rose 9% year over year.
In January 2016, American travel to Canada increased 19% year over year. With the Canadian dollar trading at US$0.76, Americans effectively get a 24% discount on everything, including hotel stays, meals and activities, when they cross the northern border.
The strong dollar is also translating into deals across the pond. There is more pressure on international destinations to lure U.S. travelers with deals as many Americans will travel domestically this summer. A Travelzoo survey conducted in early April found that 80% of respondents are foregoing plans to travel abroad and are instead considering destinations within the U.S. Hotels in cities like Paris and London are offering deals as a means to incentivize travelers to rethink their plans.
3. More Deals in Europe
The recent wave of terror attacks in Paris, Brussels and Turkey has also impacted tourism in the region. Hotel consultancy MKG Hospitality reported that Paris occupancy rates in April were down 11% year over year, with 30% of the city's rooms left vacant. Hotels and tourism boards are trying to entice tourists with lower rates and other incentives. In France, the state railway operator, SNCF, is offering discounted tickets on its trains while hotels are offering discounts of up to 30%. In Turkey, meanwhile, prices are down by more than 40% with 5-star hotel rooms available for less than US$50.
4. Increased Availability of Caribbean and Mexico Vacations
Travelers are rethinking their plans in the wake of the Zika virus, and that has impacted tourism in the Caribbean and Mexico. A February Travelzoo poll found that 30% of travelers were changing their plans to avoid Zika-impacted destinations. Many hotels, resorts, vacation packagers and cruise lines are offering steep discounts in an effort to overcome the Zika stigma.
Summer is always a time when Travelzoo staff see bargains to the Caribbean, Mexico and Central America but this year, we are seeing especially strong offers, especially in more posh islands like Anguilla, where we don't typically find deals.
5. Lower Prices and Stronger Demand for Asia
Lower airfares are translating into savings for vacations of more than 35% in Asia and Australia. China vacation prices are some of the lowest we've seen in years. You can go on an eight-night escorted vacation to China, including breakfast and air, for under $850. That was unheard of until recently.
Source: Hospitality Trends / May, 26 2016
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