Have Airfares and Hotel Prices Finally Peaked?

Finding an affordable flight or hotel was nearly impossible this summer. Experts fill us in on what we can expect for fall, holiday, and 2024 travel.

airplane parked at gate

Temporary relief from sky-high airfares is here—but for how long?

Photo by Unsplash

Earlier this year, the cost of flights had reached some of the highest levels they had been in years as swarms of travelers embraced revenge travel with a fervor, flaunting their willingness to pay exorbitant prices for flights to just about anywhere as everyone played the game of postpandemic travel catch-up. What we didn’t know as we handed over our credit cards with a whatever-it-takes resolve was that some degree of relief was on its way.

In July, airfares fell for the fourth month in a row, according to the U.S. Bureau of Labor Statistics’ Consumer Price Index. And that downward trend has made airfares much more affordable—at least for now.

“With pent-up demand getting released, as well as more transatlantic flights being added” air travel is “renormalizing,” says Katy Nastro, travel expert at flight deal tracking service Going.com. “Typical seasonal changes where we see higher prices during peak seasons, and lower prices during shoulder or off-peak seasons are very much back in play.”

Going.com reports that demand for Europe travel in particular peaked in April and has been falling ever since. The softening demand comes as transatlantic flight capacity continues to build back up “adding downward pressure to fares,” according to Going.com. Data provided by aviation analytics company Cirium reveals that the number of airline seats available between the United States and Europe over the next three months is up 15 percent compared to October through December 2022 in large part because aircraft deliveries that were put on hold during the pandemic are finally starting to ramp back up and get injected into the network.

And at least some airlines have admitted that bookings this fall are softer than they originally thought they would be. Frontier Airlines last week updated its earnings guidance to reflect a “significant unexpected change in the booking trajectory,” adding that “in recent weeks, sales have been trending below historical seasonality patterns.”

One of the factors at play, according to Going.com, is the rebirth of budget airlines, with several low-cost carriers having entered the mix since the pandemic, including Breeze Airways and Norse Atlantic Airways. (The latter now offers transatlantic flights from eight U.S. cities.) These lower-cost players bring additional competition to the marketplace, releasing some of the demand buildup while simultaneously adding downward pricing pressure.

As the summer travel craze cools off, the resulting drop in demand just as supply is increasing means that airfares for autumn have decreased nearly 30 percent across the board from peak summer prices, according to travel booking site Hopper. Average Europe airfares from the United States are now $728 round trip, compared to an average of $1,058 round trip this past summer, Hopper notes. And domestic airfares have dropped about a third since the summer, too, and are averaging $211 round trip versus nearly $300 round trip.

Going.com has identified round-trip fares as low as $267 to Dublin and $310 to London from the United States. “We’re even seeing some stellar fares now for travel next summer. The bottom line: If sticker shock kept travelers from going to Europe this summer, they should get their passports ready because prices are falling, and we expect to see a whole lot of cheap fares to Europe in the next few months,” Going.com reports.

Hotel rates have also cooled off a bit, according to Hopper, though not as significantly as airfares. Hopper reports that average hotel nightly rates are down 5 percent when compared to summer highs, with the current national average being $196 per night. Some destinations have seen bigger drops, however, including Orlando, where hotel rates are down 10 percent from the summer, and San Diego, where they have decreased 20 percent over the past month. And some cities have seen rates actually go up this fall when compared to summer, including New York City, Houston, Los Angeles, and Washington, D.C.

"[Hotel] occupancy and pricing are trending downward for the next three months until we encounter our next peak season—the winter holidays,” says Nastro.

Will the downward trend continue into the holidays—and beyond?

Those looking to travel over Thanksgiving and Christmas may not find the same deals that have been cropping up this fall, but according to Hopper, the fares should at least be less painful than they were during the Thanksgiving and Christmas travel periods last year. In a new report released on Wednesday, the booking site reports that Thanksgiving airfares are averaging 14 percent below what they were this time last year and 7 percent below 2019 prices.

Flights during the Christmas period are currently averaging $52 less per ticket (or down 12 percent) from this time last year, according to Hopper.

But with jet fuel prices on the rise, currently averaging $3.15 per gallon, or 50 percent more than the summer low of $2.09 per gallon, “travelers should expect holiday airfares to rise as well, with fewer deals available at the last minute than last year,” notes Hopper.

The site advises travelers to book holiday travel sooner rather than later and to lock in both Thanksgiving and Christmas flights by October 14 to get the best price.

As for domestic hotel rates for Thanksgiving, Hopper reports that they are currently averaging $206 per night, and for the Christmas time frame they are averaging $233 per night. Those looking for a good deal and who are heading to a U.S. city for the holidays may want to wait, however. “If you’re flexible with where you stay, you can save as much as 25 percent by booking at the last minute on the day of or day before your stay,” reports Hopper.

But that last-minute mentality won’t work for vacation destinations such as Mexico, Hawai‘i, or Florida. Travelers should book their holiday stays in sought-after sunny locales at least three weeks in advance to obtain the best rate.

As we look to 2024, and what to expect after the new year, the outlook is much less clear.

American Airlines cited the rising price of oil as a growing concern in its updated earnings guidance last week.

“Fuel prices have increased considerably,” American stated, adding that it will also need to factor in the higher costs of its new pilot contracts.

The costs being absorbed for those higher fuel prices could ultimately be passed down to travelers, according to travel industry analyst Henry Harteveldt, president of Atmosphere Research Group.

“Overall, demand seems to be softening, but higher oil prices translate into higher jet fuel prices, which airlines claw back through higher fares and selling fewer seats at the lowest fares,” says Harteveldt.

Mike Arnot, spokesperson for Cirium, notes that as airline capacity continues to grow in 2024, “fares in theory should come down” next year.

He adds, “There will be more seats available for purchase, and the postpandemic bump the airlines received in 2022 and 2023 for domestic and transatlantic flying will have tapered—although the price of fuel and additional labor costs from new contracts could still pinch passenger pocketbooks.”

The bottom line, says Harteveldt, is that anyone who finds a good airfare this fall should nab it while “luck is clearly on their side.”

Michelle Baran is a deputy editor at AFAR where she oversees breaking news, travel intel, airline, cruise, and consumer travel news. Baran joined AFAR in August 2018 after an 11-year run as a senior editor and reporter at leading travel industry newspaper Travel Weekly.
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