U.S. summer travelers can expect long lines, higher prices as COVID restrictions ease

© Reuters. FILE PHOTO: A military helicopter flies past the skyline of San Diego, California October 7, 2014. REUTERS/Mike Blake

By Doyinsola Oladipo

(Reuters) - With more U.S. travelers expected to take to the skies and the roads this summer as COVID restrictions ease, unbridled demand will strain capacity in the leisure and travel industry and push prices even higher.

Airlines, hotels, rental car companies and booking sites all reported a surge in demand for their services in the latest batch of company earnings. But at the same time. many of those companies face a tight labor market and limited volume as they scramble to restart and expand operations after more than two years of depressed demand due to the pandemic.

Tripadvisor said travelers should expect inflation to impact all areas of travel purchases in 2022, and booking now versus later can mean locking in better prices.

Hilton Worldwide Holdings (NYSE:HLT) Inc plans to continue to reprice hotel rooms "every minute of the day" to limit the impact inflation has on its business, CEO Christopher Nassetta told investors on Tuesday.

"As demand has picked up, we have certainly been able to do that and we expect that we will continue to be able to do that," he said on the company's earnings call.

Hilton's average daily rates in the United States were 36.4% higher in the first quarter of 2022 compared to the same period in 2021. Average daily rates across hotel companies in the U.S. were up approximately 37.7% in the first quarter of 2022 when compared to the same period in 2021, according to hotel industry data from Smith Travel Research Inc.

The price of flights this summer are also trending higher, according to travel search engine Skyscanner. Round trip flights within the U.S. will cost $302 per traveler on average, which is 3% higher during the same period pre-pandemic. Long and ultra-long-haul international flights are up to 20% higher than 2019, costing on average $797 and $1182 respectively.

Other segments within the travel industry are facing supply constraints and labor shortages as leisure and business travelers also return.

Car rental firm Hertz Global Holdings (OTC:HTZGQ) reported it averaged about 481,000 vehicles during the first quarter of 2022 compared to a pre-pandemic level of approximately 700,000 vehicles.

"There's little question that as demand moves even higher in the summer season, you'll see [utilization] stress further," said Hertz CEO Stephen Scherr, adding that the available supply of vehicles is limited and needs to be managed very carefully.

Staffing woes have also marred operations in recent weeks at carriers such as Alaska Airlines and JetBlue, forcing them to cut summer schedules to avoid further disruption.

Travel booking app Hopper said domestic airlines are currently scheduled to operate at between 75% to 95% of their 2019 summer capacity from May through August.

The Transportation Security Administration (TSA) continues to host hiring events in an effort to increase staff ahead of anticipated summer travel and the return to pre-pandemic passenger volumes, according to a statement from the agency.

The TSA in March said the return of (fiscal year) 2019 passenger traffic levels would return in (fiscal year) 2022, a year earlier than previously projected and an increase in staff will help ensure that the "traveling public does not experience excessive wait times."