NEW YORK — Travel numbers are expected to reach record highs during Independence Day as consumers take advantage of lower prices on airfare, gas and hotels.
AAA expects a record number of people to hit the roads and head to airports during the week of Saturday, June 29, through Sunday, July 7. The motorcycle club predicts that about 70.9 million people plan to travel, the highest number since the pandemic began.
The hot travel forecast comes amid broader concerns that consumers are becoming more cautious about spending beyond essentials, a key factor in a cooling economy. Inflation has eased significantly from its 2022 peak, particularly for travel and vacation costs.
“With the summer holidays in full swing and working from home becoming more flexible, more Americans are taking longer trips around Independence Day,” said Paula Twidale, Senior Vice President of AAA Travel.
The forecast, coupled with encouraging financial updates from cruise lines, bodes well for an industry that would normally suffer as consumers cut back on optional items and services.
Airports are seeing record numbers of travelers this summer. The Transportation Security Administration screened nearly 3 million people at U.S. airports on June 23, a record high. The agency expects the number of air travelers to top 3 million sometime during the July 4 holiday week.
Consumers continue to feel pressure from inflation on a wide range of goods, but travel-related items such as airfare and hotel costs have fallen significantly from a year ago. Hotel room rates were 1.2% lower in May than a year ago, according to recent government inflation data. Those costs have fallen since the beginning of the year.
Gasoline prices, which can have an outsized impact on consumers' budgets, also fell from a year ago. Regular gasoline prices last week averaged $3.43 a gallon, down 13 cents from a year ago, according to the U.S. Energy Information Administration.
Delta Air Lines, American Airlines, Marriott and Hilton are likely to be the biggest beneficiaries of consumer travel demand this summer, Morgan Stanley said. Still, the “rising tide of demand should continue to lift all boats,” the report said.
Cruise lines are also poised to benefit. Carnival recently raised its profit forecast for the year, saying that bookings for 2024 are the best ever in terms of both price and occupancy. It said total customer deposits hit a record high of $8.3 billion during the fiscal second quarter and it expects capacity to grow 4.8% in 2024. Rival Royal Caribbean also raised its forecasts for the year.
