The expected boom in summer travel should be a much-needed boost for firms favored by many as re-opening trades, but a shortage of workers appears to have caught the travel industry by surprise.
Hotels across the US are battling significant staffing shortages, ride-hailing apps such as Uber and Lyft are still losing drivers, and airlines are finding themselves in a pilot deficit from a rapid rebound in air travel. It remains to be seen whether the travel industry will be able to capitalize on the surge in travel demand as prices continue to soar.
Related ETFs: Invesco Dynamic Leisure and Entertainment ETF (PEJ), US Global Jets ETF (JETS), ETFMG Travel Tech ETF (AWAY)
Travel Set to Rebound From Pandemic Lows
With summer right around the corner, the travel industry is preparing for a boom that should bring demand back near pre-pandemic levels. Just last weekend, passenger volumes at US airports climbed to 1.7 million, a record high in the pandemic according to the TSA.
That number should only continue to rise. A recent survey of 1500 consumers by PredictHQ found that 73% of Americans plan to travel within the next three to six months. Further, AAA travel is expecting 37 million people to travel for Memorial Day weekend, up 60% from last year’s record lows. 2.5 million of those traveling are expected to use airfare over the weekend, a surge of nearly 600% from the previous year.
Hotel bookings have been another strong indicator for the travel industry’s recovery. CEO of Intercontinental Hotels Keith Barr has recently forecasted the surge in bookings to outstrip supply in the short term.
Luxury hotels are leading the resurgence, as US google search interest for the phrase “luxury hotels” is at the highest level since 2006. In turn, spending has increased, with Skift reporting 61% of travelers expecting to spend more on their vacation this year than they usually would.
The dramatic boost in travel is sending industry prices to record highs. Yesterday, the US Labor Department reported a drastic rise in the CPI, with both hotel and airfare costs posting sharp upticks. Prices at hotels and motels saw a record month-over-month increase of 8.8%, while airfare prices jumped 10.2% over that same period.
Hotels Begin Battling Staff Shortages
It’s not all good news for the hotel industry, though. A staffing shortage is causing headaches for hotel executives trying to hire workers to meet the sudden rebound in demand.
After a lackluster jobs report in April, worsening labor shortages across the hospitality sector are worrying analysts. Though leisure and hospitality was one of the only bright spots in last week’s abysmal private payrolls data, adding about 331,000 jobs, US hotels remain 600,000 workers short of pre-pandemic levels…
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