If you’re a frequent traveler, you may have noticed the wildly fluctuating prices of flights and hotels in the past few years. This is largely to do with some of the unique conditions caused by the pandemic and international travel restrictions, with efforts to boost flagging tourism meeting the consequences of reduced travel to form an unpredictable up- and-down in costs depending on regional factors.
Whether or not these fluctuations will continue depends on a number of factors, some related to ongoing impacts of the pandemic and some completely unrelated, so let’s take a look at what may be going on.
Government support for tourism
Some parts of the world reliant on tourism were able to prop up tourism-related businesses with government support. This allowed those businesses to ride out the months in which their regular income suffered, and meant they were able to continue relatively as normal once travel opened up again. By supporting these businesses, governments were able to keep their prices at nearer to pre- pandemic levels, and there were even reductions in prices in some areas during the period of time in which travel was allowed but not back to normal levels. But in some cases, there was no support, and this led to the closure of many tourism related businesses, which leads to our next issue…
Supply and demand
Where supply of tourism-related business has been reduced, the demand for those remaining resources is high, meaning the remaining businesses can increase their prices and keep them elevated, knowing that travelers with sufficient funds will pay them.
In some regions, this has vastly increased the prices across the board for any and all services from transport to hotels, food, excursions and anything else you can think of that is part of the travel and tourism ecosystem.
Sustainability goals
As sustainability issues continue to push to the forefront of any and all areas of life, travel and tourism is particularly under scrutiny. This is because air travel is one of the largest polluters in the world, and reducing it is seen as a desirable goal by many.
This is likely to have an impact on flight prices in the coming years, both as a way to discourage frequent air travel, and as a knock-on effect of the additional measures airlines must take in order to meet emissions goals or compensate for their carbon footprints.
Sustainability is also impacting travel trends, with many travelers consciously opting to fly less, to choose other forms of long distance transport, or to visit places closer to home that they would not normally visit. These changes of route on a mass scale are also changing the landscape in terms of which destinations are popular and which are becoming less so. This, in turn, is causing fluctuations in prices across all impacted regions.
Lack of available labor
The travel and tourism sectors were hit so hard during the pandemic and lockdowns that many people in those industries found other lines of work and have not returned to the sector. This has led to under-resourcing across the board, reducing businesses’ capacity to accommodate the number of people they were able to before.
As capacity reduces, demand becomes higher, and prices inevitably follow.