Prepare to pay up for summer vacation

We’re all finally going on a summer holiday. That’s the hope anyway.
Evidence of a recovery in leisure travel is mounting, but we’ve been here several times before. There is still a risk that our wanderlust is curbed by the emergence of a new variant, an escalation of tensions in Ukraine or a surge in living costs. For now, though, consumers in both the US and Europe are desperate to pack their bags again.
The UK’s ending of all testing for fully vaccinated travellers arriving in the country has driven a surge of bookings. Demand from sun-seeking Brits is one of the reasons TUI AG, the world’s biggest package tour operator, expects activity for this summer to be close to pre-pandemic levels. Greece, Turkey, the Dominican Republic, Jamaica and Mexico are already the most popular destinations for British holidaymakers.
At Thomas Cook, now reinvented as an online travel agent, weekly bookings out of the UK since the start of this year are three times the average in 2021. The revival is broad, spanning trips to Turkey, where weekly bookings are six times higher than last year, to weekend breaks in Venice and Rome, which are up to five times higher.
As more countries shed their high-risk status and ease restrictions, TUI is seeing demand pick up across all of Europe, including in Scandinavia, the Netherlands, France and Germany — the latter being the company’s joint biggest market alongside Britain in terms of both customers and sales. Germans are booking trips to vacation in Spain (hello, Majorca) from as early as next month.
Americans are also keen to get away again. Destination Analysts, a data provider that has been polling US travellers, found excitement about taking a leisure trip in the next 12 months to be at its highest since the start of the pandemic.
It’s little wonder then that hotel operators Marriott International Inc. and Hilton Worldwide Holdings Inc as well as Airbnb are seeing
vacation travel rebound. Airbnb said bookings in January being made for the summer were up a quarter from the equivalent period in 2019.
And Expedia CEO  Peter Kern told that summer 2022 was shaping up to be “the busiest travel season ever.”
But airlines, hotels and tour operators shouldn’t get too carried away.
There is a danger that the virus takes another worrying turn, or that consumers are reluctant to travel too far afield because of the tensions in Ukraine. Bookings remain volatile amid the uncertain geopolitical climate.
The biggest risk to the sector, though, may be inflation. With households spending more on everything from food and gas to TV subscriptions, families will have less money left for a vacation. Add in higher borrowing costs, and the nascent recovery could stall. Squeezed household budgets tend to hurt purchases of big-ticket items — like a pricey getaway — first. Bookings are still being made much closer to planned departure dates.

—Bloomberg