From a rise in air traffic to growing hotel prices, new studies released this week pointed to continued strong demand for travel.
Air Travel Up 8.2 Percent in July
According to the International Air Transport Association's (IATA) results for July, total revenue passenger kilometers (RPKs) rose 8.2 percent, which was an improvement on the June year-over-year increase of 5.5 percent. July capacity (available seat kilometers or ASKs) increased by 6.5 percent, and load factor rose 1.4 percentage points to 83.6 percent.
Results were given a boost by the timing of Ramadan, which fell partly in July this year but took place mostly in July in 2014, the IATA said. The holy month tends to subdue demand for air travel.
July international passenger demand rose 8.6 percent compared to the same month in 2014, with airlines in all regions recording growth, including Africa for the first time this year. Total capacity climbed 6.5 percent, pushing load factor up 1.6 percentage points to 83.5 percent.
Asia-Pacific airlines saw July traffic increase 8.5 percent compared to the year-ago period. Capacity rose 6.5 percent and load factor climbed 1.5 percentage points to 80.3 percent. The strong performance occurred despite notable declines in trade as well as slower than expected growth in China.
European carriers’ demand increased by 6.7 percent, reflecting economic recovery in the Eurozone, while capacity climbed 4.0 percent, and load factor rose 2.2 percentage points to 87.3 percent, highest among the regions.
North American airlines’ traffic rose 5.3 percent compared to July a year ago, which was more than double the 2.6 percent rise achieved in June year over year. Capacity climbed 3.5 percent and load factor rose 1.4 percentage points to 86.5 percent. Expectations for better economic performance are supporting travel demand.
Middle East carriers experienced a 19.8 percent demand surge in July over the same month in 2014 buoyed by the timing of Ramadan. Capacity rose 17.7 percent and load factor climbed 1.5 percentage points to 79.6 percent.
Latin American airlines’ July traffic climbed 8.5 percent compared to July 2014. Capacity increased by 8.0 percent and load factor rose 0.4 percentage points to 82.7 percent. Despite recessionary conditions in Brazil and Argentina, trade volumes in the region showed strong improvement during the first half of the year, providing a boost to business-related international travel.
African airlines’ traffic moved into positive territory for the first time this year, rising 4.9 percent in July over July 2014. However, the result could be owing to volatility in reported volumes, as fundamental economic drivers remain weak. Capacity rose 3.9 percent, with the result that load factor improved 0.6 percentage points to 70.9 percent.
Domestic travel demand rose 7.6 percent in July compared to July 2014. All markets showed growth with the strongest increases occurring in India and China. Domestic capacity climbed 6.5 percent, and load factor improved 0.8 percentage points to 83.6 percent.
India’s domestic demand soared 28.1 percent in July compared to a year ago likely owing to significant increases in service frequencies and improvements in economic growth.
China domestic traffic climbed 10.9 percent year-over-year. Recent developments in the Chinese economy, including deep declines in the country’s stock exchange, have increased concerns about a further slowdown in the economy.
U.S. Hotel Prices Rise 2 Percent in First Half of 2015
Hotels also showed strong signs of demand, with the latest edition of the Hotels.com Hotel Price Index showing a rise in U.S. hotel prices of 2 percent in the first half of 2015. The report also showed that, for the first time, hotel prices paid in three world regions have overtaken their pre-financial crisis levels of 2008/2009, with North America, the Caribbean and Latin America setting new records. Overall global prices, however, rose just 1 percent in the first half of 2015.
For the past three years, Hotels.com has reported a steady increase in New York City hotel prices, but this year, the Big Apple is on the decline. For U.S. travelers, prices paid in New York dropped 6 percent from $261 per night to $245 per night this year. Although New York City is still the domestic destination where U.S. travelers paid the most this year, the decline in price could be attributed to the hotel boom in Manhattan and Queens.
If U.S. travelers are looking to go East, Atlantic City, NJ, could be worthy of a few nights' stay. Hotel prices there dropped 3 percent year-over-year to an average of $147 per night.
Gaining in popularity and price are destinations in Washington, Oregon and Arizona. The Grand Canyon area made its debut on the top 50 list of popular U.S. cities for Americans this year, coming in at #45. Hotel prices in the area made a 12 percent jump, the highest increase of any U.S. destination this year. Yet for those looking to travel to the area to celebrate the 2016 Centennial of the National Park Service, average prices paid were still an affordable $117 per night.
Hotel prices in Portland, Oregon and Seattle, Washington, each increased by 9 percent this year, rising to $149 and $195 per night, respectively. It's likely that Portland's mild winter this year and the success of Travel Portland's "Portland is Happening Now" campaign at least partially contributed to this rise. As for Seattle, the city saw an increase in travel interest since the recreational sale of marijuana was legalized in July of 2014. The city experienced a 61 percent increase in hotel searches in the second half of 2014 after the law was in effect.
The three most popular international destinations for Americans saw large price drops for the first half of the year. London, which was the #1 most popular international city for Americans, saw a 7 percent decrease, bringing the nightly price paid down from $271 to $252. Paris and Rome, the next two most popular international cities for Americans each dropped by 16 percent. The declines may be a result, in part, of currency fluctuations in the area this year.
Kuala Lumpur, Malaysia, decreased by 24 percent this year. With average prices paid of $89 per night, the city was one of the best bargains in Asia. Both Hong Kong and Seoul, Korea, saw price drops at 16 percent and 13 percent, respectively.
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