The travel industry is emerging from hibernation, fueled by rising coronavirus vaccination rates, new CDC guidelines, and restless consumers who are ready to hit the highways—and the skyways—once again.
“The desperation to travel is real,” said Erin Murray, vice president of marketing for Points, a leading loyalty program consulting firm.
If you’re eager for your own getaway, we’ve got you covered. This story kicks off “Our Money’s on Travel,” a series to help you plan 2021 travel. Other pieces will cover budgeting, saving, and using credit card rewards to fund your dream trips. First, here’s a glimpse into what the industry pricing and availability trends are, and what you should know before you book.
- Rental cars are hot, and air travel is becoming more popular as COVID-19 vaccinations rise and CDC travel recommendations relax.
- 2021 travel will be mostly domestic with some nearby tropical exceptions, such as Mexico and the Caribbean.
- Airline and hotel prices won’t be spectacularly high or low as travelers venture out. Costs shouldn’t soar with increased demand, but deals may be hard to find.
- Travel credit cards and loyalty programs continue to help consumers earn rewards and perks with non-travel transactions to keep consumers engaged while they navigate the new travel world.
Road Trips Are Hot, Flying Feels Safer, and Cruises Are Paused
Last summer, restless consumers turned to road trips and local staycations to get out of the house safely. That option will be popular again this year.
“Everyone’s comfort level with travel is different right now and while some may be ready to get on a plane, others continue to embrace road trips and we anticipate this trend will stick around for the near future,” said American Express Travel President Audrey Hendley in an email.
In fact, road trips are so trendy right now that rental car reservations are hard to come by in states like Florida, Arizona, and Hawaii. Rental car companies reduced their vehicle fleets last year to cut costs during the pandemic, and now that demand has picked up, some are falling behind, which is making rental cars a hot—and pricey—commodity.
Meanwhile, air travel is increasing. The daily number of travelers passing through an airport security checkpoint surpassed 1.5 million for the first time since March 2020 just over a year later on March 21, 2021. Since then, the Transportation Security Administration (TSA) has consistently clocked at least a million travelers passing through its checkpoints each day.
Deloitte Insights has been tracking how people are feeling about and planning for travel during this recovery period and the findings are increasingly positive.
“There is more openness to longer trips and flights,” said Ramya Murali, a principal with Deloitte focused on travel and hospitality industry data analysis. “As we look at the beginning of 2021 with vaccination rates improving and the prospect of more on the way, hotel occupancy also looks as good as it did this time two years ago.”
While airline and hotel business resumes, many major cruise lines such as Royal Caribbean, Celebrity Cruises, and Disney Cruise Lines have voluntarily suspended most or all of their sailing trips until at least June. The latest wave of cancellations follows months of postponed or cancelled trips in 2020. Guidance from the CDC on April 2 still recommends that everyone avoid cruises because of the risks of contracting COVID-19.
Vaccinations, Travel Restrictions Set Itineraries
This new era of travel is largely driven by the coronavirus vaccine. “When we look at the different areas of travel, almost all have shown what we would call a ‘vaccination effect,’” said Stephen Rogers, managing director of the consumer industry research center for Deloitte Services. “As soon as vaccinations came online, we saw an interest in travel and intention to travel among consumers go up, and it’s been climbing ever since.”
Rising vaccination rates led the CDC to relax its guidance for travelers after months of advising people to refrain from taking non-essential trips. Unvaccinated people are still advised to stay home.
However, international travel remains curtailed. While some countries have started welcoming vaccinated travelers (such as Iceland, Mexico, and parts of the Caribbean), many borders are still closed or tightly restricted. Travel advisories vary, so if you’re interested in traveling outside the U.S., refer to the CDC and U.S. Department of State resources to better understand your options.
Even if you’re vaccinated, you may have to follow COVID-19 testing requirements before and after your departure, depending on where you’re headed. International travelers may also need to self-quarantine for several days upon arrival. The CDC has outlined measures for U.S. domestic and international travelers, and if you’re traveling to another country, be sure to check its requirements, which may add extra time and costs to trips.
Planning Ahead Feels OK Again … Is It Safe to Book?
When the travel industry screeched to a near-halt last spring, many travelers faced canceled trips, travel vouchers instead of cash refunds, and uncertain future travel plans. Instead of booking trips well in advance, many travelers waited until the last minute to book just in case plans were flipped upside down. That trend has begun to reverse.
Starting last fall, several major travel providers including Delta Air Lines and Hilton rolled out more flexible trip cancellation and change policies to give wary consumers an option if plans had to change later. Those softer policies—many of which are now permanent—are empowering travelers to try planning ahead once again.
“While we continue to see customers booking last-minute trips within the 30- to 60-day window, we’re also seeing a new trend emerge that we are calling ‘book now, figure it out later,’” Hendley, of Amex Travel, said.
Waived change fees are the most common new flexible travel perk offered by major U.S. airlines, though the policies vary and rarely include the most affordable tickets.
Hotels are also more accomodating now, as major brands (such as Hilton, Marriott, Hyatt, and Choice Hotels) have done away with change and cancellation fees for many reservations. That said, policies still vary depending on where and when a stay was booked. For example, Hyatt is allowing travelers to cancel or change most reservations up to 24 hours before arrival for no extra cost, except for reservations made at some resorts and residence clubs.
New airline and hotel cancellation policies may not apply to trips booked through a third-party website (such as Expedia or Kayak), or by a travel agent. Review the fine print before booking a trip so you know what you’re signing up (and paying) for.
Will Increased Demand Require Early Booking?
Despite the “travel boom” hype, industry experts say consumers shouldn’t feel rushed to nail down a trip they want to take this year or early next.
“Business travelers aren’t coming back at the pace that leisure travelers are, so there should still be open seats on airlines, upgrade options, and hotel suites available that were historically taken up by business travelers,” Murray, of Points, said.
On top of those gaps, there’s space for airlines and hotels to offer more seats and rooms after dialing back last year. Like many other things, flight and hotel capacities haven’t returned to normal yet. Delta only recently announced that it will stop blocking middle or aisle seats on its flights starting May 1, for example.
“In a normal summer, airlines couldn’t really add more supply,” Brian Sumers, senior aviation business editor for Skift, said. “This summer, if things start looking better, they have room to add supply.”
That said, a surplus of dirt-cheap reservations isn’t likely.
“Airlines are flying into the unknown this summer,” said Jay Sorensen, president of product, partnership, and marketing practice for IdeaWorksCompany, an airline and travel industry research and consulting firm. “Everyone expects business to be very robust but I think airlines will be cautious when it comes to how much capacity they add. I think they will align supply very closely with demand and if that’s the case, big bargains won’t be part of that equation.”
Deals May Be Rare, But Demand Won't Make Prices Skyrocket
If interest in travel is quickly rising and supply doesn't keep up, one might assume that travel costs may start climbing this year—but not so fast. “[Travel providers] are in an interesting place where they are trying to attract the customer but also not overshoot,” said Deloitte’s Murali. “It’ll be some time before they feel like they can increase rates.”
As travel providers try to find a new sweet spot with ticket and reservation costs, the prices you see when planning your first “back-to-travel” trip will likely vary.
“If you look at summer airfares heading into July and August, you might see higher prices than you expect,” Sumers said. “Some of those prices might just be testing the water. Airlines like to avoid selling out all flights before they raise the price for last-minute ticket seats.”
This new environment means old money-saving booking tricks you may have once followed—such as buying tickets about three months in advance or on a Tuesday—aren’t relevant anymore. Travel providers can’t use last year, or even this spring, as benchmarks for flight or hotel stay pricing, and it’ll be some time before new seasonal norms are established.
Traveling to large cities like New York City and Atlanta may offer some savings this year. The economies of major metropolitan areas around the country were hit hard by the pandemic and airlines and hotels may encourage tourists to return with lower prices, according to Murali.
Easier Access to Elite Status, Extra Card Perks Remain
Last year, travel rewards card issuers and airline and hotel loyalty programs scrambled to offer travelers value while they spent so much time at home. Many of those offers have since been extended through or bolstered for 2021.
All of the major U.S. airlines—American Airlines, Delta, JetBlue, United, and Southwest—are offering frequent flyers more ways to earn or maintain elite status that aren’t limited to the number of flights taken or miles flown. That means when travelers start flying again, they’ll have access to perks such as seat upgrades and waived baggage fees. Hotel loyalty programs have also offered customers additional perks for a limited time, such as double points on eligible Marriott Bonvoy hotel stays or a 50% reduction in elite status qualification requirements for World of Hyatt members.
Such offers will likely stick around even as travel picks up steam. It’s not realistic to expect travelers to fly 15-20 times this year to maintain their status, for example, but airlines need those travelers to keep coming back.
“They want to keep that audience very happy, so they won’t do anything to change those things right away when they know full well there is very little way to maintain status organically in the current environment,” Murray, from Points, said.
Many travel rewards credit cards also stepped up their offers during the pandemic, and some deals have rolled into 2021, giving cardholders extra ways to stockpile rewards for near-future trips. For example, the Hilton Amex cardholders can get extra points and statement credits on dining purchases each month through the end of the year.
If you’re eyeing a new travel rewards card, it’s a good time to snatch up a sizable offer. Several flexible travel rewards cards are advertising new-cardholder bonuses worth over $1,000, including Chase Sapphire Preferred and the Capital One Venture Card. There are some very generous airline- and hotel-branded card offers once you meet the new-cardholder spending requirements, too, such as the 125,000-point bonus offered by the IHG Rewards Club Premier card or the 100,000-mile bonus from the brand-new United Quest Card.
More to Come
There’s a lot of 2021 travel buzz right now, but the broad-scale return to travel—and the world’s new version of normal—has only just begun.
“I think now as we are further into it, there is a pretty clear understanding that there is no return to 2019,” Murray said. “We are operating in a totally different world.”
We’re following along, and the Our Money’s on Travel series will help you plan and pay for travel in 2021 and beyond.