Next Stop for US Vacationers: Anywhere But Here

(Photo by yousef alfuhigi on Unsplash)
(Photo by yousef alfuhigi on Unsplash)

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Amber waves of grain, purple mountain majesties, fruited plain — been there, done that.

Americans are booking overseas vacations en masse, which is great for international-serving airlines and hotels, but not so much for their forlorn domestic counterparts.

Americans Abroad

Around the end of 2022, when much of the world declared a victory of sorts over the pandemic, Americans started planning their next trip. But instead of the Jersey Shore, or Disney World, or Discount Lion Safari, they were targeting the UK, Europe, and Asia.

That surging demand meant airlines and hotel chains could charge more. CNBC reported that international flights are averaging $962, up 10% from last year, and European hotel room rates are up nearly 14%, averaging $150 per night. Groups catering to overseas travel are reaping the benefits:

  • For the second quarter, Marriott reported revenue per available room rose nearly 40% in its international markets. Meanwhile, Europe’s biggest hotel chain, Accor, announced plans to open 1,200 more hotels across multiple regions in the next five years to keep up with international demand.
  • Delta Air Lines and United Airlines have expanded their international services in recent months. In July, United posted record quarterly earnings with international flights accounting for 41% of its revenue.

“Our international system is just performing outstandingly,” Andrew Nocella, United’s chief commercial officer, said on an earnings call. “There’s not, like, a single part of the globe, a single part of the network that’s not working.”

It’s Quiet, Too Quiet: While Marriott is thrilled about its international success, in the US and Canada, 2Q revenue per available room rose just 6% year-over-year. And average domestic flight costs have actually fallen: round-trips are down 11% from last year, and 12% from 2019, CNBC reported. Airlines like Jetblue and Southwest, which mostly service the US, Latin America, and the Caribbean, saw minimal revenue growth in their latest earnings. But if you still haven’t seen Mount Rushmore or Old Faithful, you might find a relatively cheap deal.