The Wealth Gap Hits Summer Travel



Skift Take

The summer travel season is highlighting the increasing wealth divide between the haves and have-nots.

Traveling to Paris for the Summer Olympics is not optional for Jeremy Fain. 

The CEO of AI marketing group Cognitiv and former collegiate swimmer is heading to France to take in the opening ceremonies and the action in the pool at the Olympics. To do so, he and his partner are spending almost twice what they spent last summer, but it’s worth it for them.

“The Olympics are almost a once in a lifetime experience, so splurging is not a hard decision,” Fain said in a written interview. “To see the events live, such as beach volleyball under the Eiffel Tower, is something we would never be able to do during a regular summer.” 

But “once in a lifetime” doesn’t come cheap.

“With the flights and the Olympics tickets alone, it’s a small fortune for a week of events,” Fain acknowledged.

Fain, from New York, is one of the millions of Americans poised to set travel records this summer when they hit the road or take off for far-flung destinations. It already started this past week, when more than 3 million air travelers filed through TSA checkpoints on July 7. 

But not everyone’s out there spending, jetting off to Europe and otherwise having a good time. Economic conditions are keeping many Americans closer to home for their vacations. A Bank of America travel survey published in May found that a higher percentage of households with annual incomes under $75,000 said they do not have plans to go away.

The summer travel season is highlighting the increasing wealth divide between the haves and have-nots in the U.S. as persistent, if slowing, inflation eats away at spending power. 

According to CoStar, in the first five months of 2024, luxury hotel occupancy was up 1.8% compared to a year earlier, while economy hotel occupancy was down 3.4%.

“We’re seeing a bifurcation by hotel class,” Jan Freitag, national director, hospitality analytics, at CoStar told Skift last month. “The higher-end traveler and, therefore, the higher-end hotels are showing robust growth in demand and room rate. But the same cannot be said for the lower end of the market.”

The divide is clear in the results of major airlines as well. Those investing heavily in their premium services and serving high-end fliers are thriving while budget carriers are struggling. 

Camping Over Hotels

A Newsweek poll published on July 4 found that 44% of respondents won’t be traveling anywhere in the next three months, with 53% saying they would have gone on vacation had the cost of living been cheaper. Of those that are heading somewhere, about 64% sought out cheaper destinations, means of travel and accommodations.

Debbie Davis, an engineering project manager for Integrated Water Services who lives in Colorado Springs, is one of those cutting back. She and her husband and two daughters went camping for three days in Grand Junction last month, and later this month she plans to stay in-state and go camping again while in Durango for four days. 

“I could get a hotel for part of that time but I’m already spending $550 just on a car rental and probably the hotels are going to be stupid expensive so we’ll just stick with camping,” Davis said. 

Last summer, the family forked over thousands of dollars for a trip to Florida that included a stop in the Keys and a visit to Orlando and Universal Studios. 

“Normally, we would have taken a big trip,” she said. “Not this year.”

Davis, like many other Americans, is facing a continued high cost of living. Annual inflation in the U.S. reached 3.3% for the 12 months ending in May. 

Though the overall cost of travel dropped 2% in May from a year earlier, it was up 12% compared to the same month in 2019, according to NerdWallet’s Travel Price Index. Hotels, on the other hand, have managed to maintain prices higher, with Skift forecasting continued strength for 2024.

While Fain was willing to pay the price for the unique experience of watching the Olympics in Paris, even he’s not totally immune to sticker shock and is grateful not to have to pay for a hotel room or Airbnb.

“We have friends who have an apartment in Paris, so we will be staying there while they are on vacation anywhere but Paris,” Fain said. “Even with the free place to stay, this will be a very expensive trip.”



Source link

About The Author

Scroll to Top