Forget Emily. These days, a whole flood of Americans are in Paris.
People spent 2020 and 2021 either holed up at home or traveling sparingly and mostly in the continental US. But after Covid travel restrictions were lifted for international travel last summer, Americans are once again heading abroad.
While domestic leisure travel is showing signs of easing – people are still on vacation in large numbers, but prices for hotels and flights moderate as demand proves strong but not insatiable – foreign travel is snapping back with a vengeance Americans are boarding planes and cruise ships to flock to Europe in particular, based on early data.
According to AAA estimates, international travel bookings for 2023 increased by 40 percent from 2022 through May. That’s still down about 2 percent from 2019, but it’s a strong increase at a time when some travelers have long been held back. passport processing delays amid record applications. Tour and cruise bookings are expected to eclipse pre-pandemic highs, with especially strong demand for holidays to major European cities.
Paris, for example, experienced a huge jump in North American tourists last year compared to 2021, according to the city’s tourism bureau. Scheduled air arrivals for July and August of this year climbed another 14.4 percent – to nearly 5 percent above the 2019 level.
“This year is absolutely crazy,” said Steeve Calvo, a Paris tour guide and sommelier whose company — The Americans in Paris – made visits to Normandy and French wine regions. He attributes some of the jump to rebounding from the pandemic and some to TV shows and social media.
“‘Emily in Paris’: I’ve never seen so many people in Paris with red berets,” he said, noting that the signature head car of the popular Netflix show heroine began to appear on tourists last year. Other newbies are eager to take coveted photos for their Instagram pages.
“In Versailles, the Hall of Mirrors, I call it the Hall of Selfies,” Mr. Calvo said, referring to a famous room in the palace.
Robust travel booking numbers and anecdotes from tour guides match what companies say they’re experiencing: From airlines to American Express, corporate executives report continued demand for flights and vacations.
“The construction industry backdrop is unlike anything any of us have ever seen,” Delta Air Lines CEO Ed Bastian said on June 27. investor day. “Travel is becoming gangbusters, but it will continue to be gangbusters because we still have a tremendous amount of demand waiting.”
Transportation Security Administration data show that the daily average number of passengers who passed through U.S. airport checkpoints in June 2023 was 2.6 million, 0.5 percent above the June 2019 level, according to an analysis by Omair Sharif at Inflation Insights.
And in many foreign airports, the boom in American vacationers is palpable: Customs lines are packed with American tourists, from Charles de Gaulle in Paris to Heathrow in London. The last one saw 8 percent more traffic of North America in June 2023 than in June 2019, based on airport data.
In a strange way, the rebound in foreign travel may take some pressure off US inflation.
International airfares, during spraying for some routes, there is not much of the US Consumer Price Index, which is driven by domestic airfares. In fact, flight prices in the inflation measure fell sharply in June of the previous month and are down almost 19 percent from a year ago.
That’s partly because fuel is cheaper and partly because airlines are getting more planes into the sky. Many pilots and air traffic controllers were laid off or retired, so companies struggled to keep up as demand began to recover from the initial pandemic slump, pushing prices sharply higher into 2022.
“We just didn’t have enough seats to go around last year,” Mr Sharif said, explaining that while staffing issues persist, so far this year the supply situation has been better. “Planes are still fully booked, but there are more planes.”
And as people flock abroad, it reduces some demand for hotels and tourist attractions in the United States. International tourists have yet to return to the United States in full force, so they do not completely compensate for the wave of Americans directed abroad.
Domestic travel is hardly in freefall — July 4th weekend travel is likely set new records, according to AAA — but tourists are no longer so insatiable that hotels can keep raising room rates indefinitely. Prices for living away from home in the United States climbed 4.5 percent in the year to June, which is much slower than the 25 percent annual increases posted in hotel rooms last spring. It is even elbow room at Disney World.
Even if it’s not inflationary, the jump in foreign travel does highlight something about the American economy: It’s hard to keep American consumers, especially wealthy ones.
The Fed is raising interest rates to cool growth starting in early 2022. Officials have made it more expensive to borrow money in hopes of creating a ripple effect that would cut demand and force companies to stop raising prices so much.
Consumption slowed amid that onslaught, but it didn’t tank. Fed officials noted, noting at their last meeting that consumption was “stronger than expected,” minutes showed.
The resilience comes as many households remain in solid financial shape. People who travel internationally tend to be wealthier, and many are benefiting from a rising stock market and still high home prices, which are starting to prove surprisingly resistant to interest rate movements.
Those without large stock or real estate holdings are experiencing a strong job market, and some are still holding on to extra savings acquired during the pandemic. And it’s not just holiday destinations that are feeling the momentum: Consumers are still spending on variety other services.
“It’s this latest burst of spending,” said Kathy Bostjancic, chief economist at the insurance company Nationwide Mutual.
It could be that consumer resilience will help the US economy avoid a recession as the Fed battles inflation. As was the case with US hotels, demand that stabilizes without falling could allow for a slow and steady moderation in price increases.
But if consumers remain so ravenous that companies find they can still charge more, it could prolong inflation. That’s why the Fed is watching spending.
Ms. Bostjancic believes that consumers will pull back starting this fall. They are drawing down their savings, the job market is cooling, and it may just take time for the Fed’s rate hikes to have their full effect.
But when it comes to many types of travel, there’s still no end in sight.
“Despite economic headwinds, we’re seeing very strong demand for summer leisure travel,” said Mike Daher, who leads the U.S. Transportation, Hospitality and Services practice at consulting firm Deloitte.
Mr. Daher attributes this to three driving forces. People missed trips. Social media draws many to new places. And the advent of remote work allows professionals – “what we call the laptops”, according to Mr. Daher – to extend vacations by working a few days from the beach or the mountains.
Mr. Calvo, the tour guide, is riding the wave, taking Americans on tours that show Paris’ shared history with France and taking them on minivan tours to Champagne.
“I don’t know if it will last,” he said.