Travel demand strong as airfares drop: Hopper Economist

Post-pandemic "revenge travel" continues to go strong; 27 percent of US adults are willing to go into debt to travel, according to a Bankrate survey. Hopper Lead Economist Hayley Berg joins Yahoo Finance's Wealth! to discuss current travel trends.

Berg reports that demand remains strong, especially on higher-priced transatlantic and transpacific routes. Buoying this trend, the economist notes travelers are seeing better prices: fares for transatlantic routes to Europe are down 10% year over year, while domestic airfare is down 3% year over year.

Pushing off milestones like buying homes and children, Gen Z and millennials are spending an increasing percent of their wallets toward travel, Berg adds.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

Editor's note: This article was written by Gabriel Roy

Video Transcript

- Well, revenge travel continues to go strong. 27% of Americans willing to take on debt just to travel this year. That's according to a Bankrate survey. I got a chance to speak to Delta Airlines CEO Ed Bastian about the demand that he's seeing for travel. Here's what he had to say.

ED BASTIAN: I entered the year with a little bit of caution on the transatlantic given how strong last year's transatlantic was, the revenge travel that we-- we all saw many people going to Europe almost at any price. I thought it might-- might cool down just a touch-- hasn't cooled at all.

We continue to see the strength of the transatlantic demand for the spring and summer continue, which is great. We're flying even higher level of capacity this summer than last. And we expect our overall pricing levels are going to remain largely the same.

- Joining us now is Hayley Berg, Hopper's Lead Economist. Hayley, I just want to start off with your reaction to what you heard from the Delta Airlines CEO.

HAYLEY BERG: You know what we're seeing here at Hopper is very much in line with our friends are seeing over at Delta. Demand remains strong, especially on some of these higher-priced routes, transatlantic and transpacific.

Customers are willing to pay a little bit more, but we are not seeing price increases year over year, which is fantastic. In fact, transatlantic routes to Europe are down in price, about 10% year-over-year. Domestic airfare is down about 3% year-over-year. So on the whole, for those travelers, whether they do have to take out debt in order to travel or not, are seeing better prices than what they have.

- Yeah, and it was particularly interesting within the airline fares index within the March Consumer Price Index. It actually declined 4/10 of a percent. So an interesting stat. One of the areas that we did see a decline in the report, at least, one of the indexes there, how do you think that Americans-- people who are traveling more broadly are evaluating what that spend looks like now versus even a year ago?

HAYLEY BERG: What we have heard from consumers no matter who we ask, any age range, is that they are continuing to prioritize expenditure on travel among younger generations, Gen Z, Millennial, that percent of their wallet going towards travel is even increasing as they tighten their belts with higher interest rates.

So with these younger generations who have pushed off milestones like buying homes, having children, they might be pushing those off even more given interest rates and focusing on travel expenditures. So we expect this demand to remain strong and continue as these generations age, build wealth. They're going to be continuing to spend on travel.

- Hayley, I'm not going to lie. I see a lot of people posting their trips on Instagram. I say, all right, do I need to add it to my Pinterest board? Do I need to just save it in my own Instagram and whatever the case may be.

You get some inspo. You get some tips. You know how to plan and book better, perhaps. What impact have you seen from some of the data over at Hopper into how social media is impacting the broader experience economy and especially the travel component?

HAYLEY BERG: Social media has had a huge impact on how people plan and book travel. You know, a report we're putting out in just a couple of weeks is going to reveal some of the data we have around how Gen Z, in particular, looks at travel.

And they actually use video social media like TikTok seven times more than older generations when they in the planning phase. And most of them research on social media before they book a trip, whether it be a hotel, a flight, even a rental car.

So social media is the new battleground of where brands are going to be attracting consumers who want to book their travel. But on the flip side, social media is very curated. And younger generations, they're looking for authenticity.

So a lot of these off the beaten path destinations that offer something a little more unique, something you might not have seen on Instagram, are becoming increasingly popular, as well.

- All right, I want to know the average height of the people that are traveling to Nice, France for $885. You can add me. I don't care. Hayley Berg, Hopper's Lead Economist, thank you so much for taking the time.

HAYLEY BERG: Great to be with you.

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