Unlike at the start of the crisis, when it looked like the pandemic would end with a festive boom, the reality has been more uncertain and bumpy. Many say it gave them a sense of urgency to lock down the “revenge trip” during this window of relative calm before it fades away again. And although the Food and Drug Administration has delayed its decision on a vaccine for children under 5, families are holding their breath and booking anyway.
“People really want to make sure they’re traveling while they can,” said Mark Matthews, chief marketing officer of Maui Seasons, a private travel agency in Hawaii where bookings have grown 65% so far. This year. “Who knows when the next variety will arrive and what it will look like? Everything is so unknown.
Pandemic patterns show consumers rushing after each wave of coronavirus, eager to splurge on flights, hotels, amusement parks and other services they had given up.
This increase in spending was most evident last summer, when households were emboldened by a lull in coronavirus infections and the widespread availability of vaccines. Subsequent rebounds have been less pronounced, although economists say they still provide a noticeable jolt to the economy.
This time around, the expected spending surge comes just as the Federal Reserve prepares to raise interest rates to curb inflation, fueled by consumer demand widely seen as unsustainable. Prices are rising at the fastest rate in 40 years, which Fed officials say is the biggest threat to economic expansion.
A new wave of spending could further complicate the Fed’s plans while raising broader questions about whether restaurants, hotels and airlines – which are already struggling to find enough workers – will be able to cope. staff in time to meet demand. To address labor shortages, leisure and hospitality employers raised wages by an average of 14% last year, making it the only sector where wage growth exceeded the inflation.
Economists say it remains to be seen how sustained or widespread a spring spending boom might be. Unlike previous reopening pushes, there are no government stimulus checks or additional child tax credit payments filling up Americans’ bank accounts. And while the economy continues to add jobs, wage growth has been largely eclipsed by inflation.
“I expect things to rebound, but in the broader context, spending has already been very strong,” said Mark Zandi, chief economist at Moody’s Analytics. “Omicron rocked the economy but did less damage than previous waves.”
Consumers spent heavily on furniture, cars and groceries in January, pushing U.S. retail sales up 3.8% even as the omicron disrupted many parts of the economy. This is on top of record holiday sales, which jumped 14% to $886.7 billion, according to the National Retail Federation. Now, as coronavirus cases decline, economists say Americans are likely to shift more of their spending from goods – such as electronics and exercise equipment – to services such as travel and leisure.
To this end, airline reservations are increasing. Hotels are filling up. And at Five Star Travel, demand for luxury cruises and European vacations peaked this week, according to Jay Shapiro, owner of the upscale travel agency with offices in Las Vegas, Honolulu and Fort Lauderdale. in Florida.
“Clients who have been away for the past few years — because they were elderly and had comorbidities — are now calling, saying, ‘We’re ready to start browsing again,’” he said. “Business has picked up tremendously, just in the last two days.”
Customers are also spending a lot more after being locked in for the winter, Shapiro said. And for the more affluent, couples who may have budgeted $25,000 for a luxury vacation before the pandemic are suddenly ready to spend three or four times that, he said. A $150,000 family vacation to South Africa is no longer out of the question for some. And many summer cruises to Europe are already sold out.
“People still have the means to spend; they just needed a catalyst, and now they have one,” said Aneta Markowska, chief economist at Jefferies, which is planning a spring break, its first in two years, in the Turks and Caicos Islands. “They’re sitting on the biggest cushion of cash they’ve seen in years – and it’s not just the rich; that’s 80% of the population.
Americans have set aside about $2.4 trillion in additional savings during the pandemic, in part because they cut dining, travel and entertainment, according to Wells Fargo. But data shows that spending on these services tends to increase rapidly as coronavirus cases decline.
Airline bookings for domestic and international travel are on the rise, according to Bank of America. Searches for flights on travel site Kayak picked up again in February, with interest in flights to the Philippines and Morocco more than doubling from a month ago.
Meanwhile, in Orlando, hotel bookings have almost fully returned to pre-pandemic standards in the past two weeks, according to the city’s tourism association.
“This is not our first rodeo. We know that when we get the chance, everyone rushes,” said Diane Swonk, chief economist at Grant Thornton. “We’re going to see quite a significant catch-up in spending as spring approaches.”
In North Carolina’s Outer Banks, demand for beach house rentals is higher than ever, according to Alexis Lowe, marketing specialist at Carolina Designs Realty, which manages about 350 coastal rental properties.
“We’re so booked this summer that we’re focused on 2023,” she said. “We filled our first weeks faster than ever. I’m pleasantly surprised at how confident people feel.
That confidence, according to many in the industry, has grown stronger over the past week. As coronavirus cases decline, a number of states, including New York, Nevada, Rhode Island and Delaware, have dropped mask mandates, and many more have signaled they will follow suit. by the end of the month.
In Massachusetts, Gov. Charlie Baker (R) announced last week that he would lift mask mandates in schools in late February, sparking a flurry of inquiries from Vacationeer, a Watertown, Mass., travel company. specializing in Disney Vacations. . Owner Jonathan de Araujo says he already has twice as many trips on the books as in 2021, and expects that figure to triple by the end of the year.
“People are back,” he said. “With all of these states dropping mask requirements, it was like a signal that things were getting back to normal. Families say, “We haven’t traveled for two years. Let’s do it now.'”
But, he says, he’s also set for another round of closures and cancellations if coronavirus cases pick up again. “There could be another spike and my clients could be like, ‘I’m not traveling right now,'” he said. “If I’ve learned anything, it’s that things change.”
After canceling a long-awaited European vacation in March 2020, Jenni Solis has finally booked another trip – albeit on a smaller scale. She plans to fly to Redwood National Park for five days in June.
“Omicron is better and I really need to get away,” said Solis, 47, an elementary school teacher in Los Angeles. “We need to relax even more than before the pandemic.”
But, she added, she is still not ready to rebook holidays to Germany, Belgium and the Netherlands, in case it gets derailed by a new variant. “I don’t want to cancel a trip like this anymore,” she said.
Andrew Van Dam contributed to this report.