NewsHolidays abroad tell us something about the American economy

    Holidays abroad tell us something about the American economy

    PARIS – Forget Emily.

    These days, a whole flood of Americans is in Paris.

    People spent 2020 and 2021 either cooped up at home or traveling sparingly and mostly within the continental US.

    But after the COVID-19 Travel restrictions were lifted for international travel last summer, Americans are heading abroad again.

    “This year is really crazy,” says Steeve Calvo, a tour guide in Paris. Photo Jessica Chou for The New York Times

    Although domestic leisure travel is showing signs of calm – people are still vacationing in large numbers, but hotel and flight prices are easing as demand pears strong but not insatiable – travel abroad is back with a vengeance.

    According to the first data, Americans get on planes and cruise ships to travel to Europe.

    According to AAA estimates, international travel reservations for 2023 increased by 40% from 2022 to May.

    This figure is still 2% lower than in 2019, but is a sharp increase at a time when some travelers are being held back by long delays in passport processing amid a record number of requests.


    Travel and cruise bookings are expected to eclipse pre-pandemic highs, with especially strong demand for holidays in major European cities.

    Paris, for example, experienced a huge increase North American tourists last year compared to 2021, according to the city’s tourism office.

    Expected air arrivals for July and August of this year increased another 14.4%, to nearly 5% above the 2019 level.

    “This year is really crazy,” says Steeve Calvo, a Parisian tour guide and sommelier whose company, The Americans in Paris, has been organizing tours of Normandy and the French wine regions.

    Calvo attributes part of the increase to the recovery after the pandemic and another part to the TV shows and social networks.

    “I’ve never seen so many people in Paris wearing red berets,” she explains, noting that the signature hat of the heroine of the popular Netflix series began turning up among tourists last year.

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    Other newcomers are eager to take coveted photos for their Facebook pages. Instagram.

    “In Versailles, the Hall of Mirrors, I call it the Selfie Lounge“, Calvo said, referring to a famous room in the palace.

    Strong travel booking numbers and anecdotes from tour guides match what companies say they are experiencing:

    From airlines to American Express, corporate executives report a sustained demand of flights and vacations.

    “The industry’s constructive landsce is like nothing we’ve ever seen,” said Ed Bastian, CEO of Delta Air Lines, during an investor day on June 27.

    “The trips are going from strength to strength, but they will continue to go from strength to strength because we still have a huge amount of demand waiting“.

    Data from the Transportation Security Administration shows that the average daily number of passengers passing through checkpoints at US airports last month was 2.6 million, up 0.5% from the June level. 2019, according to an analysis by Omair Sharif in Inflation Insights.

    And at many foreign airports, the explosion of American vacationers is palpable:

    The customs lines are packed with American tourists, from the charles de gaulle from Paris to heathrow From london.

    The latter recorded 8% more traffic from North America last month than in June 2019, according to airport data.


    In an odd way, the uptick in foreign travel may be taking some of the pressure off the inflation US.

    International flight prices, while rising on some routes, are not a large part of the US Consumer Price Index, which is dominated by domestic flight prices.

    In fact, airfares as measured by inflation fell sharply in June from the previous month and are down nearly 19% from a year ago.

    This is partly because fuel is cheer and partly because airlines are putting more planes in the sky.

    Many pilots and air traffic controllers had been laid off or retired, so carriers struggled to keep up as demand began to pick up after the initial drop in the pandemic, triggering a sharp rise in prices in 2022.

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    “Last year we did not have enough places,” says Sharif, who explains that, although personnel problems persist, so far this year the supply situation has improved.

    “The planes are still completely full, but there are more planes“.

    The influx of tourists abroad is dampening the demand for hotels and tourist attractions in the United States.

    International tourists haven’t yet returned to the United States in full force, so they don’t quite make up for the surge of Americans heading abroad.

    Domestic travel isn’t in free fall — records were probably broken on July 4 weekend, according to AAA — but tourists are no longer so insatiable that hotels can keep jacking up room prices indefinitely.

    US out-of-home prices rose 4.5% through June, much less than the 25% annual increase for hotel rooms last spring.

    Even in disneyworld there is room for manoeuvre.

    Even if it’s not inflationary, the rise in foreign travel highlights something about the US economy:

    It’s hard to keep American consumers, especially the wealthy, in check.

    From the beginning of 2022, the Federal Reserve is raising interest rates to cool growth.

    Officials have made it more expensive to borrow money in the hope of creating a domino effect that cuts demand and forces companies to stop raising prices so much.

    Consumption slowed down in this context, but it has not collsed.

    Federal Reserve officials have taken note of this, noting at their last meeting that consumption had been “stronger than expected,” according to the minutes.

    This resistance is due to the fact that many households continue to enjoy a solid financial situation.

    People who travel abroad tend to be wealthier, and many benefit from a rising stock market and still-high house prices that are starting to seem surprisingly immune to interest rate movements.

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    Those without large stock or real estate investments are experiencing a strong job market, with some still holding onto extra savings accumulated during the pandemic.

    And it’s not just vacation destinations that are feeling the urge:

    Consumers continue to spend on other services.

    “There’s one last boost in spending,” says Kathy Bostjancic, chief economist at insurer Nationwide Mutual.

    It could be that consumer resilience helps the US economy avoid a recession as the Federal Reserve battles inflation.

    As has been the case with US hotels, a leveling demand without collsing could allow a slow and steady moderation of price increases.

    But if consumers continue to be so voracious As companies discover they can still charge more, inflation could continue.

    That’s why the Federal Reserve keeps a close eye on spending.

    Bostjancic believes that consumers will retract starting in the fall.

    They are cutting back on their savings, the job market is cooling off, and it may take time for the Federal Reserve’s rate hikes to have their full effect.

    When it comes to many types of travel, the end is not yet in sight.

    “Despite the economic difficulties, the demand for leisure travel in the summer is very strong,” says Mike Daher, head of the Transportation, Hospitality and Services area in the United States at the Deloitte consultancy.

    Daher attributes this to three factors:

    People miss travel; social networks attract many to new places; and the advent of remote work allows professionals – “what we call ltop chargers,” according to Daher – extend the holidays working a few days from the beach or the mountains.

    Calvo is riding the crest of the wave, taking Americans on tours that show Paris’ shared history with France and driving them by minivan to Champagne.

    “I have no idea if it’s going to last,” he says.

    c.2023 The New York Times Company

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    Source: Clarin

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