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How inflation may disrupt your next vacation

One area it hasn’t touched: airfare

(iStock/Washington Post illustration)
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Inflation is after your travel budget.

The cost of just about every aspect of travel rose last month — with airfare the major exception — and experts say short-term relief is unlikely. For the long term? It’s anyone’s guess.

According to the U.S. Travel Association’s travel price index, which draws from Department of Labor data, travel prices rose 14.4 percent in October compared to 2020.

Overall inflation in the United States jumped 6.2 percent compared to last year, the largest annual increase in about 30 years.

The biggest drivers for price increases in travel: motor fuel, which was up nearly 50 percent in October compared to 2020, and hotels and motels, up more than 25 percent. Also increasing: food and alcohol away from home, transportation costs such as taxis and Ubers, and recreation services such as admissions to sporting events and concerts.

Prices for travel are increasing along with prices for just about everything else, but experts say travel is hit especially hard because demand has increased so much compared to last year.

Tori Emerson Barnes, executive vice president of public affairs and policy at the U.S. Travel Association, said the skyrocketing increases reflect the lows that travel prices reached in 2020, when few people were venturing out. She said it is more fair to compare this year’s prices to 2019 — but travelers are still paying more than they did before the pandemic.

Travel was cheap when no one was traveling. That era is over.

Travel prices were up 6.2 percent in October 2021 from the same time in 2019. Motor fuel is almost 23 percent higher, lodging is up 5.5 percent, food away from home costs 9.3 percent more and alcohol away from home is almost 6 percent higher.

Still, Barnes points out that overall inflation rose 7.5 percent compared to 2019, more than travel prices.

One main category that is bucking the inflationary trend: airfare, which is down 4.6 percent compared to last year and 24 percent compared to 2019. Air travel hasn’t reached pre-coronavirus levels, and many business travelers, who typically pay more in airfare, are still grounded. Intracity public transportation such as mass transit and taxis was the only other category that dipped slightly compared to 2019, by a little over 1 percent.

As demand for travel continues to increase — especially going into the busy holiday season — the potential for a price break in the near future doesn’t look great.

More flights and higher prices: The travel ban lifting may affect your vacation, too

Nationally, gasoline cost an average of $3.41 a gallon Thursday compared to about $3.33 a month ago and $2.12 a year ago.

Barnes said travel businesses that were hit hard by the pandemic are also dealing with increased costs.

“They’ve already lost money for so long; at some point, they’re going to have to increase their prices to be able to compete and to be able to stay afloat,” she said.

John Horn, professor of practice in economics at Olin Business School at Washington University in St. Louis, said several factors will determine the future of inflation in travel: whether gas prices keep going up; whether more people in hospitality jobs quit; and whether business travelers come back.

He said if there’s a “continued exodus” from service sector jobs as demand for hotels and restaurants continues to rebound, that could force prices up. And if business travelers don’t return, companies might increase prices for leisure travelers to make sure they can cover their own costs.

“I think through this holiday season we can pretty much forecast that there’s probably going to be higher prices,” Horn said. “Next summer, I don’t know. There are too many unknowns.”