Last Updated on October 18, 2021 by tripcentral
It’s hard to predict travel pricing in normal times. Trying to predict what might happen when there are virtually no advance bookings and as unpredictable as the vaccine rollout is even more challenging.
Our survey conducted Feb 24-28 of travel intentions as the vaccine rolls out is very clear. There is strong pent-up demand for fall and winter travel, and later into 2022.
Let’s see how this might affect WHEN you should book.
Demand for Leisure Travel is Very Strong
Especially for Canadians facing cold weather, the fall and winter all-inclusive vacation will be in hot demand for the next “cold season”. The plan to have adult Canadians who want a vaccination done by September is looking even more likely with the approval of Johnson & Johnson and the manufacturing distribution by Merck in Canada. Our survey results show a strong belief in being vaccinated by September.
This will reduce hesitancy to book travel for November and onward. We’re already seeing this now – it is unusual for us to see so many far-in-advance bookings at this time of year – the focus is normally last-minute current winter bookings which of course, are not possible this year.
Business travel will take far longer to return, with many predicting Zoom and DocuSign having permanently changed long-distance business. There will still be a need for in-person business, but it will just take longer to recover – and this will have an impact on leisure market pricing.
Supply of Resort Hotels
There is a supply of all-inclusive resort hotels in the destinations Canadians love, and this supply has not changed much from pre-pandemic levels. Some resorts have taken the opportunity to do extensive renovations while there was low demand.
Whenever demand goes up, but supply remains constant, prices rise. If you are considering a fall or winter sun vacation, it makes sense to book as soon as possible to secure your place before everyone else. Those that wait for certainty of their own vaccination or the vaccination of everyone will pay higher prices.
Those that wait for complete vaccinations of their destination before booking might entirely miss this fall and winter. Or, they may enter the market very late, only to find sold-out properties and high prices.
Canadian package suppliers are open for sale 12 months in advance –so right now, March 2022 prices will not be open for sale until April. Group bookings, however, are open for sale beyond one year and even more important to get booked early.
Supply of Air Seats South
Prior to the pandemic, Air Canada, WestJet, and Sunwing were all struggling with the grounding of the Boeing 737Max aircraft. After a rigorous re-approval process by the FAA in the US, the EU, and Canada, the Max is now flying again. Further, with the decrease in demand for business travel, there will be many more aircraft available than before. Air Canada Rouge retired older wide-body 767 aircraft and put the new smaller A220 into service.
There will be an abundance of aircraft and air seats available to sun and leisure destinations, and the new smaller aircraft sizes may open up direct service from smaller airports in Canada. Large gateways like Toronto may see more niche destinations appear with direct service.
We have seen situations in the past, particularly with Jamaica in prior years, where there were far more air seats for sale than hotels and resorts available for sale. For those with family in the Caribbean and sun destinations, it may mean great deals on air only for southbound and northbound family and friends if more capacity to these destinations is added. In this case, unless you have firm dates (weddings, birthdays etc), you might want to hold off for a while. Those with firm dates are always best to get it done sooner than later. It might also open more Airbnb-type vacations if resorts are sold out or high priced.
Supply of Air Seats USA, Europe & Elsewhere
With less business travel, airlines will be aggressively pricing to fill planes to capacity to try and make up for the loss in higher-priced business tickets. Expect full planes. The extra legroom seat selection will be in hot demand. If you feel like splurging a bit, Business Class and Premium Economy will likely have some interesting promotional fares, especially for those routes that have mostly business travellers. In the past, there were better deals on destinations like Barcelona, Rome, and Athens for business class and premium economy. If those destinations are now “hot”, you may find the business class seats more than normal. But destinations like London and Frankfurt with more business travel up front may see some offers that we’ve never seen before.
Watch for increased capacity for leisure destinations within Canada and the US. Florida has a massive capacity for accommodations, especially in the fall. The US domestic leisure market will be frothy as well, with destinations like Vegas, California, New Orleans etc in demand. Hawaii, with a limited stock of hotels and condos, will likely see an increase in fares rather than more flights.
Midweek & Weekend Hotel Prices
With business travel recovering slower, the pressure on prices will be midweek hotel rates, and with an increase in demand for leisure, weekends will be at a premium. Normally, hotels in major cities like New York, Boston, Washington, and Chicago have strong demand for business throughout the week, with road warriors returning home on the weekend.
Now there will be pent-up demand for weekend getaways, and destinations with high weekend premiums like Las Vegas will get even higher.
Canadians like doing these weekend getaways in the better weather and since travel restrictions are highly uncertain, it will be better to wait and see for more clarity about the border re-opening and travel restrictions before booking summer and early fall weekend getaways.
Our advice would be to secure hotel bookings at prices that allow free cancellations rather than going for the very lowest non-refundable rate right away. You can always try and re-book at lower rates once borders are open and restrictions are relaxed, or cancel for no penalty. Don’t book flights until things are more certain.
Remember that cruises have a worldwide market and in particular, a drive market in the US. The pent-up demand for cruising in the US is very high. Because many do not fly to take their cruise, advance bookings for cruises are a lot higher than you might think from our Canadian perspective. Now is the time to book late fall, winter, and beyond. It is uncertain if cruises will be sold to capacity or not. CDC put out guidelines for cruise lines for early sailings, but as vaccinations roll out it is pure speculation about capacities. By the time you cruise, it may be back to full capacity, or not.
Book refundable deposit rates if you can. It locks in whatever pricing is in place today. This gives you maximum flexibility to cancel prior to final payment or reprice at lower rates if they occur before final payment. However, if you decide to book with a non-refundable deposit because the price is so much better, you don’t need to worry about a complete loss of value if the sailing is cancelled by the cruise line. If the sailing is cancelled by the cruise line, at the very least, the deposit can be applied to another sailing. Some cruise lines are offering various levels of flexibility on pricing and changes. Normally the focus of most consumers is getting the lowest price because they “intend to travel” as planned. Today the lowest rate with these conditions may not be the best thing until things become more normal again.
Pricing is normally based on seasonality, destination, departing airport, duration, advance purchase and much more. The speed and timing of the travel industry’s recovery are what is in question – “when, not if”.
We think there will be a pent-up demand for long haul overseas travel as well, in particular, to get in touch with nature and culture. Being cooped up all these months has many of us starving for much more than just a beach vacation. Small group tours will be in hot demand.
Tour operators have special contracted fares with airlines that avoid having to purchase flights separately. In many cases, this special fare can be higher than what is available in the market when you price it “air only”. The problem though is non-refundable and restrictions on changes. If your tour is cancelled, you are stuck with non-refundable tickets.
When booking tours in advance, it is best to book the air component with the tour company as a package. If the tour becomes guaranteed not to cancel (enough sold on it to be “a go”), only then can you consider booking air separately and perhaps adding a pre or post-stay.
Lowest fare isn’t always best, look at cancellation waivers offered.
The pandemic has illustrated the value of having refundable or more flexible terms and conditions on your travel booking. You get this flexibility by paying a higher price and choosing a “branded fare” from the airline that allows changes for nominal fees.
Package suppliers are now offering a number of choices of cancellation waivers that can only be purchased at the time of booking. For a nominal amount, this allows you to make changes to the dates, in some cases names, or cancel with a credit. While many of us are stuck with unexpected travel credits, getting credit for a last-minute cancellation, or simply not feeling like going for whatever reason is a lot better than a complete loss.
These waivers are not insurance. Travel insurance covers different risks and there is a strong case to be made to buy BOTH a waiver and insurance depending on your tolerance for risk of loss.
Booking travel has gotten a lot more complicated than it used to be. Simply zeroing in on the lowest price is a poor strategy today. It’s taking us much longer to book travel for our customers now. There are many more disclosures, many more questions to answer.
It’s another reason that booking sooner than later for fall, winter and beyond makes sense. Our expectation is that we will face a massive overwhelming demand once the travel advisory is lifted. Not only us – our suppliers as well. It’s going to mean long hold times which will affect our own service levels and response times.
Certainly, for late fall, winter, and cruises and tours into 2022 and later, we are confident that booking sooner than later before the mass of the market comes back will mean better pricing, more flexibility of terms and conditions, and a calmer level of service.