What to expect in summer travel 2018
Friday, April 13, 2018
Have you made any travel plans for the summer? If not, it is probably a good time to do so.
As a matter of fact, it is now also a good time for business operators in the hospitality and tourism industry to revisit their existing summer plans and make adjustments if necessary. But first, let's check what we can expect in this year's summer travel season.
Positive growth can be expected due to the following reasons:
- The unemployment rate continues to fall, with an estimation of going below 4 percent by the summer. Companies located in areas with low unemployment rates have already voluntarily increased hourly wages and/or add more benefits to their staff members. The improving economy will encourage more people to travel.
- Minimum wage is also on the rise. Many areas across the nation have set a schedule to raise the minimum wage (e.g., to $15 an hour by 2020 in Los Angeles). Meanwhile, workers at the major airports serving the New York City are pushing to increase their minimum wage to $19 an hour by the fall of 2023. People may hence spend more on trips as they are expecting to get more income in the near future.
- Many hotels and restaurants have made innovative changes in service operations with the aid of technology, helping them offset some of rising labor costs while keeping the price at a reasonable level.
- Hotel chains are getting bigger through acquisitions and mergers, which allows the big players to lower some of the overhead costs and offer more diverse products.
- Reinvented and improved loyalty programs are beginning to take effect, encouraging more loyal customers to travel over the summer. The most recent update by the Hilton Honors Program features several significant upgrades to ensure the hotel's frequent travelers stay happy.
Meanwhile, there are a few concerns that deserve our close attention, including:
- Gas prices are on the rise, reaching the highest point in recent years.
- Prices for hotels, restaurants and airline tickets are going to increase as employers pass some of the rising labor costs to customers and with a higher gas price.
- Worker shortage has become a big challenge facing the restaurant and hotel industry, which is normally the case when the unemployment rate is low.
- For years, foreign investments, especially the ones from mainland China, have shown great interest in the hospitality and tourism sector. Even though China has slowed down its overseas investments, there are still many new hotels and restaurants in the pipeline that are ready to open for business. Tougher competition is expected as more inventory is added to the market.
- The competition among Airbnb, online travel agents (OTAs), hotels and other travel companies is going to heat up as Airbnb strives to become a megatourism company. Airbnb also debuted two new brands/products recently, which could become an even bigger threat to hotels.
- The uncertainties from the global market, such as the possible trade war between China and the U.S., add additional concerns to travelers as they make plans for summer travel.
Will more Americans travel in the summer then?
It is likely that more people will travel in the summer as the economy continues to improve even though there are still some uncertainties in the market. I, however, am not sure if people are ready to spend a lot more on summer travel. Facing the record high gas price in recent years, I also believe short road trips will remain a popular form of travel as consumers are trying to lower their travel expenses.
Overall, do you feel more positive or negative about the market? What do you expect from the hospitality and tourism industry this summer?
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