LOS ANGELES (NewsNation) — Despite recession fears and inflation, Americans are going on vacation.
The number of people going through U.S. airports hit pandemic-era highs last weekend, and those records are almost certain to be broken over the Memorial Day holiday weekend.
While inflation has many households stretched thin, economists say Americans are willing to splurge on travel. The lure back to the skies to kick off summer includes lower airfares.
AAA predicts that 37 million Americans will drive at least 50 miles from home this weekend, an increase of more than 2 million from Memorial Day last year, but still below pre-pandemic numbers in 2019.
With more travel comes greater expense. There are high hopes for an economic boost, and strong indications of that possibility are at airports across the country as the summer travel season kicks off.
Travelers plan to spend more this weekend, in part due to lower airfare, according to a Hopper survey.
“We surveyed travelers on the Hopper app and nearly 80% of people are spending more than they spent last year on travel,” said Lindsay Schwimer, consumer travel expert at Hopper. “Prices are actually down 20% from what we saw last year — that’s nearly $100 off prices that people paid for domestic trips versus summer 2022.”
Hopper predicts that average domestic airfares will peak next month at $328 for a round-trip ticket, which is down from last summer’s record of $400, but 4% higher than in 2019.
There are some last-minute deals on domestic flights, Hopper also found, but international fares are at their highest in more than five years, with prices to Europe up 50% from a year ago.
For the travel industry, the big question is how long consumers can keep paying for airline tickets and accommodations while they try to deal with stubborn inflation, news about layoffs and bank failures, and fears of a recession.
The 37 million Americans AAA expects to travel by road this weeken is a positive sign for restaurants and hotels as well as another jolt for the economy.
The average rate for a U.S. hotel room last week was $157 a night, up from $150 in the same week last year, according to hotel data provider STR. And the average daily rate for other short-term rentals, such as those on Airbnb and Vrbo, rose to $316 last month, up 1.4% from a year ago, according to AirDNA, which tracks the industry.
There is a bit of good news for drivers, however.
The national average for a gallon of regular was $3.56 at midweek, down from $4.60 at this time last year, according to AAA. Renting a car is also cheaper than a year ago, when some popular destinations ran out of vehicles. Travel company Expedia said larger inventories have allowed companies to rent more cars at lower prices.
Cruises are also making a comeback. Several major cruise lines are reporting more full sailings.
In some cases, cruise lines have had to cancel some trips for travelers due to overselling.
Industry executives have said consumers are favoring the experience of travel over other types of spending, but some analysts see cracks in the strong demand for travel that began in early 2022.
Bank of America analysts say data from their credit and debit card customers showed a slowdown in spending in April, as card use fell below year-before levels for the first time since February 2021. They say spending on hotels, which rebounded relatively early from the pandemic, dipped this spring, while the late-recovering cruise industry is still steaming ahead — card spending on cruises rose 37% last month, although from very low levels a year ago.
The Associated Press contributed to this report.