It’s summer travel season – here’s what you need to know – On Watch by MarketWatch

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Jeremy Owens: Hello and welcome to On Watch by MarketWatch. I’m Jeremy Owens. I hope everyone had a fun Memorial Day weekend, which is commonly seen as the kickoff to summer travel season. Throughout the next few months, many people will be able to travel long distances because they’ve saved and scrimped, but that doesn’t mean you have to blow out your budget on the trip. Today we want to talk about summer travel, how to avoid junk fees from airlines, what areas are hot and what time of the summer to target for the best prices. Then financial face-off returns for a classic summer travel debate. Should you rent a vacation home or secure a hotel room? MarketWatchers, Venessa Wong and Aarthi Swaminathan will take on that topic and I will decide a winner. Plus we’ll take a quick look at the news stories we’re watching right now and how they’ll affect your wallet. First, let’s bring on Venessa to talk summer travel.
I didn’t travel over the Memorial Day weekend. It was a bunch of barbecues and movies with friends and family for me, and the big reason for that is that I’ve been planning a different, more expensive vacation with my family and this is a dynamic playing out all across the world for families and individuals. Economic readings and corporate earnings suggest Americans are trying to avoid some spending right now in order to afford fun trips this summer. So I asked senior personal finance reporter, Venessa Wong to join us this week to talk about some tips and tricks for making your summer trip tons of fun without going far into debt.
Well, Venessa, it’s summer travel season. And what we’ve seen in terms of consumer spending habits is we are all willing to spend on travel this summer, and there’s some thought that some of the discretionary spending changes we’ve seen the past couple of months, Starbucks, McDonald’s CEOs, talked about how people are kind of skipping out on some of the spending they’ve been doing. Some of that might be to save for this summer travel season. Have you seen that? Have you heard anything about that so far?

Venessa Wong: Yeah, there is a lot of pent-up demand for travel. People are obviously still recovering from all of the pandemic related lockdowns. A lot of trips were delayed. I think people are finally feeling like travel is safe again. However, prices are obviously very expensive right now for basically everything. So I think people who are hoping to make those trips have been trying to find a way to make travel fit within their budgets, even if it means a simpler trip or a slightly pared down trip. A lot of people are, for example, driving for their vacations this year instead of flying. We are still seeing however, greater interest in travel with higher income consumers who obviously have a little bit more flexibility with their money than moderate and lower income people.

Jeremy Owens: Yeah. And when you’re planning a summer trip as I’ve been doing already, I just nailed down most of mine. I still have a couple hotel rooms and things to figure out for parts of it, but the biggest input and the thing you really have to lock down first is airfare. And you’ve had a couple of stories come out about how airfare is looking this summer. It looks like it might be slightly cheaper than last summer. Part of that is getting rid of junk fees, but you’re still going to run into a lot of fees. Kind of talk to me about where that’s headed right now and what we’re experiencing as we’re trying to buy airfare.

Venessa Wong: Yeah. KAYAK did a study and I had to rub my eyes because I didn’t believe it because everything has become more expensive, right, but what their study shows is that flight prices are down this summer compared to last year, so domestic fares are down about 13%. International flights out of the US are down by about 3%, so that’s like the best news I’ve heard for consumers in a really long time.

Jeremy Owens: Yeah, well, let’s make sure to say that KAYAK is trying to sell airplane tickets, so there should be a little bit of a skeptical eye on that, but I will tell you that I’ve actually experienced that. I just bought tickets for my family of four to fly to the East Coast and back. I managed to get it under $1,400, which I fly from the West Coast to the East Coast a good bit. That was a very good price and I was extremely excited to manage to do that.

Venessa Wong: Yeah, it was also relieving to me. I feel like everyone has sort of an anecdotal experience of this, but when I was searching for flights during spring break, it was prohibitively expensive for me to get out of New York City because everybody that has a kid was trying to get to a beach or something. So we had to wait and we might hold off and just do something this summer instead since it does look like flights are easing up a little bit, which is really nice.

Jeremy Owens: Yeah. And you had some tips and tricks to get people cheaper airfare. The one I really jumped on is just the timing of your vacation. You said the first two weeks of June and the last couple weeks of August. What else are you seeing to help people find some cheaper airplane tickets?

Venessa Wong: Yeah, I mean I do like these travel hacks. Some of them make a lot of sense. Right. If you’re sort of booking your trip at the very beginning or the tail end of summer, demand might be weaker than. Right. So prices might be lower.

Jeremy Owens: So the days you fly on, that is one that you can use to figure out. If you can fly midweek or even on a Saturday, those are not always in demand. People tend to fly on Sunday and Monday and Friday, right?

Venessa Wong: Yeah, that’s right. I mean we are hostages to the school calendar, otherwise we are captive to our work schedules, so people tend not to travel as much on Tuesdays and Wednesdays. So those are the days that flights tend to be a little bit lower than normal. You can also try to book your trip out as far as advanced possible.

Jeremy Owens: But not too far. Right. There is kind of an outer limit there that you’re not really going to get a good deal.

Venessa Wong: There’s a sweet spot that’s about 21 to 73 days this year where flights have been the cheapest. So once you’re about three months ish towards a vacation plan, maybe you could start looking at fares just to get a sense of what the prices look like. Between then and three weeks out from your travel plans, you can see how prices are trending. There are also tools you can use to gauge prices. So the explore tool on Google Flights lets you see a ton of options. You don’t have to even enter in a specific destination or date in mind. Google will just sort of tell you what prices are for things based on where you are or what is showing up first in their algorithm and might give you some inspiration or ideas based on what your budget is. And the other tip is to try to book your trip on a Sunday as in make the reservation and the transaction on a Sunday.

Jeremy Owens: And beyond trying to find deals, you want to avoid fees. Airlines charge a lot of fees. The Biden administration has actually been jumping at them for junk fees as they call them. Venessa, in your reporting, you did say that Spirit and Frontier have gotten rid of changing cancellation fees, but you found a bunch of other fees that are still being charged by airlines. What should we know to kind of try to avoid those this summer?

Venessa Wong: Yeah, I mean fees are very difficult to navigate. When we set out to do this story, it was like, okay, here are some of the fees that we typically deal with as travelers. What’s going on now that our budget carrier Spirit and Frontier are no longer charging change and cancellation fees? We ask the airlines to sort of just give us the dollar figures on what their charges are for these specific expenses. They basically just sent us to their websites and told us to figure it out on your own. And the reason it’s difficult to understand is that there are different terms based on the tier of ticket that you bought.

Jeremy Owens: Seems like the airlines are just staying ahead of this. The tiering has really come in, in the past few years. I remember Southwest doing this with the one get away price and then the other prices, and now it seems like every airline when you go, it says, okay, here’s your basic airfare and here’s like you can choose to pay $50 or 100 or $150 more.

Venessa Wong: Right. I mean, there is one fee that we won’t be charged anymore, which is the family seating fee. So you won’t have to pay extra money to have your children sit with you.

Jeremy Owens: I’ve experienced this doing this with the family of four flying. You have to pay to choose your seat. And I was like, no, if you want to sit my eight-year-old half a plane back, he’s going to be on switch anyway. I’ll survive.

Venessa Wong: Right. No, but they can’t charge you to have him sit next to you anymore. Families can sit together now. I had the same approach as you. I was like, well, if you don’t want to let my child sit next to me, I guess the flight attendant could take care of him.

Jeremy Owens: Somebody else can answer his questions, man. That’d be great. I’m sure whoever he sits next to is going to want to talk about baseball statistics for the next six hours on this flight.

Venessa Wong: Right. If you would like to avoid that situation, I recommend you find a way for us to sit together that doesn’t involve me paying you more money.

Jeremy Owens: But for those who want to avoid all of that, there is a road trip. You mentioned that a lot more people are doing road trips. We definitely saw that over the Memorial Day weekend. It was expected to be biggest travel Memorial Day weekend we’ve seen a long time according to AAA. And so you can do that, but you’re going to deal with gas prices at that point. And gas prices always increase right about now and through the summer as people take those big road trips.

Venessa Wong: So AAA was expecting a lot of people to hit the road Memorial Day weekend. Their projection was for 38.4 million people to travel by car. They were also expecting 3.1 million air travelers. So it’s just a lot of people moving around America to try to get some R&R.

Jeremy Owens: Where are some hot destinations for people this summer? Where are people trying to get to this summer that you’ve tracked?

Venessa Wong: We got some data just showing the most popular flight routes. It’s Chicago, Atlanta, New York, LA, Orlando, and then for folks who are traveling international London, Paris, Toronto, there are some folks who are interested in traveling to Japan right now because the yen has been weakening so they can get a little bit more bang for their buck if they’re thinking about traveling there.

Jeremy Owens: Same with Europe. Right. The dollar has been strong against the Euro recently. I haven’t checked it lately, but that was definitely a case last summer and into this year. I just noticed that airfare to Europe was incredibly expensive last year when I looked at it.

Venessa Wong: It’s kind of expensive this year too, depending on where you’re going and when because of the Olympics in Paris. I was even looking at flights to London around that time and they were very expensive because I’m guessing some people will have to fly maybe into London, transferred to get over there. And there are a lot of other sporting events going on. F1 is happening. With the pandemic further and further in the rearview mirror, it’s just like people feel like they can exhale a little bit this summer and get out, which I think is wonderful.

Jeremy Owens: Yeah, for sure. I mean, I got to tell you, a sports-themed trip is my specialty. So anybody looking to do that for the first time, you just reach out to Jeremy at [email protected]. I’ll tell you how to do it. I’m seeing three baseball games with my boy as we’re flying around and training around this summer on the East coast. Venessa, thank you so much for joining us and we’ll talk to you again soon. We’re going to take a quick break. Coming up, financial face off. Stay with us.
Welcome back to On Watch by MarketWatch. Before the break, we talked with Venessa Wong about how to find summer travel deals and Venessa is going to stick around for this next segment, a classic debate with MarketWatch real estate reporter, Aarthi Swaminathan. You may have noticed in our previous segment, that we talked about a lot of things involving summer travel, but left out one critical expenditure for any trip, and that’s lodging. Well, now we’re going to bring that into this financial face off, Airbnb versus hotels. Today to argue these two sides, we have Venessa Wong and Aarthi Swaminathan, welcome to the show guys.

Venessa Wong: Thanks for having us.

Aarthi Swaminathan: Thank you for having us Jeremy.

Jeremy Owens: So look, here’s how financial face off works. Both contestants will get to make their argument for the best financial decision between these two sides. Then I’ll ask each of them a follow-up. At the end, I will make my judgment, which I’m sure all participants and listeners will support without disagreement. And what we have today is Venessa arguing for hotels and Aarthi arguing for Airbnbs. Aarthi, please tell us why it’s better to stay at an Airbnb than a hotel.

Aarthi Swaminathan: Yes, of course. So I have three main reasons why I consider an Airbnb to be superior to staying in hotel. Okay. The first reason is the fact that Airbnbs can just accommodate far more people under the same roof. So if I’m traveling with my in-laws and with my kid, I need everyone to stay under the same roof and hotels, I can’t afford a suite. Right. So for that reason alone, I find that Airbnbs are much more value for money. And the second reason is because most Airbnbs come with a kitchen. With a toddler, I cannot expect him to eat everything outside. And so having a kitchen is just so useful and for that reason alone, love Airbnb. My third and final reason is that sometimes Airbnbs can be much closer to specific attractions versus being close to an airport like some hotels are or right in the central business district. So it can be a little bit easier to book a Airbnb and it might be cheaper to book an Airbnb in a very good location versus being stuck with an airport in the middle of nowhere.

Jeremy Owens: Venessa, now you get to come in and tell us why hotels are better than Airbnbs.

Venessa Wong: Thank you for giving me a platform to advocate for the hotel industry, I guess. I never thought I would be in this position. However, I have found after many years of using Airbnb that I now prefer hotels. And there’s two main reasons. One is financial. So there was a research report recently by a UK-based company called Wish that found that hotels are cheaper now in 75% of the markets that they analyzed. And this was a global study, so this was in places like Amsterdam, Singapore, London, Dubai, San Francisco. The only place they found that it was cheaper to stay in an Airbnb was in France. So maybe if I’m in France, I’ll stay in an Airbnb, but otherwise I might actually be saving myself some money by staying in a hotel, which is kind of nuts. But when you think about what your bill looks like after an Airbnbs visit, it’s not unimaginable, right?
There’s all the taxes, there’s the cleaning fees, there’s all this stuff that sort of adds up and ultimately makes your stay very expensive. I know that a lot of people who use Airbnb are traveling in large groups. So you split the tab and maybe it’s not so bad at the end, but this ties into my second reason for preferring hotels is that it’s just like a lot less work. If I’m staying at a hotel, I can book my own room. There’s less math and legwork to figure out. I know that cleaning is part of the service that they’re providing.
One of the ways that Airbnbs help people save money is that you can cook your own food, your own meals while you’re staying at the house. And this might just be a personal preference of how you like to travel. I do not want to cook and clean while I’m on vacation. I’m on vacation. I’ve saved money for someone else to do that for me for a couple of days. So I just want to walk up to a place that’s reasonably clean, has cable TV, and I can just relax and feel taken care of for a few hours before I get back to my regular routine.

Jeremy Owens: Okay, excellent arguments, MarketWatchers. Now it’s my time to poke holes in it. Aarthi, many of the things you mentioned as in you want a kitchen, you want more space, you have a lot of people. It seems like there are hotel rooms that can accommodate. You mentioned a suite. Many suites come with at least a mini kitchen. A lot of these hotels will offer you free continental breakfast at least, sometimes free food all day. So how is that different? How is an Airbnb better than just a larger hotel room and how do you combat the cost stat that Venessa brought in?

Aarthi Swaminathan: Yeah, so I think the difference with the hotels is that they have so many issues with add-on fees, right? So if the breakfast is not a guarantee, and also if you are sort of bringing a big family, how can they accommodate seating eight people at breakfast without having to wait for a long time? So for those reasons, I find it just more convenient to be at an Airbnb. Now, bear in mind when we travel, we do a combo. So we stay sometimes at hotels and sometimes at Airbnbs. And we have found that consistently hotels put us on different floors or it’s just unnecessary inconvenience that you need to tap your card on the elevator to get to a different floor. Just very annoying little things that really add up.
When I went to Kyoto, we stayed at an Airbnb and it was superior to a hotel because of the host. In the morning they made us green tea and they explained to us what each cup mean. So the first cup goes to the guest, second cup goes to the dad or whatever. They’re like a hierarchy of things. And the fact that we were in a completely new country, nobody spoke English to us or pretended they didn’t speak English. This guy sitting there serving us tea and making us feel so comfortable made me love Kyoto more than Tokyo where we stayed in a hotel.

Jeremy Owens: Well, Venessa, let me ask you a question real quick. A lot of times Airbnb hosts really know the neighborhood where their house is and can give you very personalized attention and advice for what to do while you’re there. How do you combat that with a hotel that can be a lot more impersonal?

Venessa Wong: Man, I feel like we were staying in Airbnbs in alternate universes or something. So my experience with Airbnb hosts hasn’t been universally positive, let’s put it that way. So the last time that I volunteered, that I sort of like suggested that we stay in an Airbnb was two summers ago. And that was sort of like my breakup moment with the platform, and I still haven’t recovered it, right? I’m just still kind of heartbroken from that visit because our host was so hostile towards visitors and it wasn’t us specifically. So when we got in, there was the manual, like the house rules book that most Airbnbs come with now and was very, very big. And one of the first things that they established very clearly to their guests was that this house was not for parties. And if their neighbors complained about the noise or called the police, they would side with their neighbors, which is a sign that they put on all of their doors, the doors exiting the house.
Now this was a booking that costs more than $6,000 for the three families, so we split it, but for that amount of money to be treated with that kind of hostility, just put the worst taste in my mouth. And I never wanted to stay in an Airbnb again. Also, because we had paid a very generous cleaning fee for this place, and then we still had to run the dishwasher to completion. So the dishwashing cycle has to be done by the time we’ve left the house in case, I don’t know, I guess anything malfunctions. We have to strip the beds, we have to put all of the towels and everything in the laundry room. We have to wipe down all of the countertops to make sure that there aren’t crumbs anywhere because the ants might come. It’s just, it’s how you would prepare your house if you were leaving for the season. Right. And I just felt that I didn’t want to do any of this stuff on vacation.
So these were the rules that the host established. Yes, the book did provide a lot of recommendations of things to do in town. I could have just found those things on Google by myself. I guess that it’s a nice touch if you’re looking for a little bit of personal interaction with the host, but I don’t know, I didn’t feel like there was any value add to any of the information that they were providing to us.

Jeremy Owens: Well, Venessa and Aarthi, thank you so much for your arguments. I am ready to render my verdict, but first let me say that all the listeners are very fortunate. You don’t have to make this decision. And in real life, we don’t have to make this decision. On my upcoming trip with my family, I’m actually staying at both Airbnbs and hotels. And the fact is, these different places, these different lodging options are better in some places and worse in others. And you can make your decision based on the place you’re visiting and where you want to be in that place. But I will still have to say which one I agree with here. And I am going to say that in this argument, hotels win for summer 2024. And first you heard data from Venessa on Airbnbs growing in price, being more expensive, being more expensive than hotels in a lot of cities right now.
And I found that to be the case. That may not be the case for long. What we’ve seen here is Airbnb come in and disrupt hotels and be the better option for a while, and then now they’re a public company. They have to make more money, they have to make profit, they have gotten more expensive, they have added more inventory. Well, hotels now are desperate for that business to come back to them and they in many cases are a better deal. That pendulum may swing back very soon, I don’t know. But summer of 2024, my verdict here is hotels.
Before we go, it’s time for what we are watching, a look at the news you need to know for the rest of the week and beyond. Consumer confidence in the economy is rebounding after a dismal start to the year. The Conference Board’s monthly report show that Americans grew more confident in May after declines in three consecutive months. There is also additional strength in American’s expectations for the future, but with an important caveat. While confidence in what will happen during the next six months grew, it’s stayed below the line that typically indicates a recession is on the way for a fourth consecutive month. Homes are more expensive than ever and there isn’t much hope for relief. The Case-Shiller Index found that in both the 20 largest metro areas in the US and nationally housing prices hit records in March. That is the sixth month out of the past 12 that national home prices have reached a new record.
With homeowners reticent to sell and take on a new mortgage at what would likely be a greatly increased rate, there just aren’t enough houses to meet demand. Americans searching for a home would surely like interest rates to come down. And Friday could bring news on that front. The Federal Reserve’s favorite inflation gauge, the Personal Consumption Expenditures Price Index will be released in the morning. Like other inflation readings, economists expect that PCE will show a slight cooldown from elevated inflation recorded in the first quarter. However, it’s expected to still be higher than the Fed’s target for inflation. Follow our live coverage of the PCE release and the effect on markets Friday morning for more.
And that’s it for this episode. Thanks to Venessa Wong and Aarthi Swaminathan. Keep following the latest on summer travel deals, head to marketwatch.com. You can subscribe to the show wherever you get your podcasts, and please do. If you like what you heard, please leave us a rating, a review. It really helps others discover the show and let us know what you want to hear from us. You can reach us at [email protected]. The show is hosted by me, Jeremy Owens, and produced by Jackson Cantrell, Isaac Gaines mixed this episode, Melissa Haggerty is the executive producer. We’ll be back next week with a new episode. And until then, we’ll be watching.