Forget Emily. Today there is a stream of Americans in Paris.
People either spent 2020 and 2021 cooped up at home or traveled sparingly and mostly within the continental US. But after Covid travel restrictions were lifted for international travel last summer, Americans are going abroad again.
While domestic holiday travel is showing signs of calm – people are still holidaying in droves, but prices for hotels and flights are moderating as demand proves strong but not insatiable – foreign travel is shooting back with a vengeance. Americans are boarding planes and cruise ships to flock to Europe, early data shows.
According to AAA estimates, international travel bookings for 2023 were up 40 percent between 2022 and May. That’s still about 2 percent lower than in 2019, but it’s a significant increase at a time when some travelers are held back by lengthy passport processing delays amid record applications. Tour and cruise bookings are expected to surpass pre-pandemic highs, with holiday demand to major European cities particularly strong.
For example, Paris experienced a huge increase in North American tourists last year compared to 2021, according to the city’s tourism board. Planned aircraft arrivals for July and August of this year increased by a further 14.4 percent – nearly 5 percent above 2019 levels.
“This year is just totally crazy,” says Steeve Calvo, a Parisian tour guide and sommelier whose company — The Americans in Paris — visits Normandy and French wine regions. He attributes part of the jump to a recovery from the pandemic and part to television shows and social media.
“‘Emily in Paris’: I’ve never seen so many people in Paris in red berets,” he said, noting that the popular heroine’s trademark hat from the Netflix show showed up on tourists last year. Other newcomers are eager to take coveted photos for their Instagram pages.
“In Versailles, the Hall of Mirrors, I call it the Hall of Mirrors,” said Mr. Calvo, referring to a famous room in the palace.
Robust travel booking numbers and anecdotes from tour guides echo what companies say they are experiencing: From airlines to American Express, business executives report continued demand for flights and vacations.
“The industry’s constructive backdrop is unlike anything any of us have ever seen,” Delta Air Lines CEO Ed Bastian said during an investor day on June 27. “Travel is going to be gangbusters, but it will continue to be gangbusters because we still have huge demand.”
Data from the Transportation Security Administration shows that the daily average number of passengers passing through US airport checkpoints in June 2023 was 2.6 million, 0.5 percent above June 2019 levels, based on an analysis by Omair Sharif from Inflation Insights.
And at many foreign airports, the burst of American vacationers is palpable: Customs lines are packed with American tourists, from Charles de Gaulle in Paris to Heathrow in London. The latter saw 8 percent more traffic from North America in June 2023 than in June 2019, based on airport data.
In a strange way, the uptick in foreign travel may put some pressure on US inflation.
While international flight prices are rising for some routes, they are not a major part of the U.S. consumer price index, which is dominated by domestic airfare prices. In fact, airfares in the measure of inflation fell sharply in June from the previous month and are almost 19 percent lower than a year ago.
That’s partly because fuel is cheaper and partly because airlines are putting more planes into the air. Many pilots and air traffic controllers had been laid off or retired, so companies struggled to keep up as demand began to recover from the initial pandemic slump, driving prices sharply higher in 2022.
“Last year we just didn’t have enough seats to go around,” said Mr Sharif, explaining that while staffing problems continue, the supply situation has been better so far this year. “Airplanes are still completely full, but there are more planes.”
And as people flock abroad, it saps some of the 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 don’t quite offset the wave of Americans moving abroad.
Domestic travel is barely in freefall — travel over the July 4 weekend probably set new records, per AAA — but tourists are no longer so insatiable that hotels can keep raising room rates indefinitely. Prices for out-of-home accommodations in the US rose 4.5 percent in the year through June, which is much slower than the 25 percent annual increase for hotel rooms last spring. There’s even play space at Disney World.
Even if not inflationary, the rise in foreign travel highlights something about the U.S. economy: It’s hard to contain U.S. consumers, especially affluent ones.
The Fed has been raising interest rates since early 2022 to cool growth. Officials have made it more expensive to borrow money in hopes of creating a ripple effect that would undermine demand and force companies to stop raising prices so much.
Consumption slowed down during that attack, but it didn’t refuel. Fed officials took note, noting at their last meeting that consumption was “stronger than expected,” the minutes showed.
The resilience comes as many households remain in solid financial shape. People who travel internationally are wealthier, and many benefit from a rising stock market and still-high house prices that are proving surprisingly immune to interest rate movements.
Those who don’t own major stocks or real estate are experiencing a strong job market, with some still holding on to extra savings they built up during the pandemic. And it’s not just holiday destinations that are feeling the momentum: consumers are still spending on a range of other services.
“There is a latest burst of spending,” said Kathy Bostjancic, chief economist at insurance company Nationwide Mutual.
It could be that consumer resilience is helping the US economy avoid recession as the Fed fights inflation. As has been the case with US hotels, stabilizing demand without a collapse could allow for a slow and steady moderation in price increases.
But if consumers remain so hungry that companies find they can still charge more, it could prolong inflation. That’s why the Fed keeps a close eye on spending.
Ms. Bostjancic thinks consumers will pull out from this fall. They are drawing up their savings, the job market is cooling down and it may just take a while for the Fed’s rate hikes to take full effect.
But when it comes to many types of travel, the end is not yet in sight.
“Despite economic headwinds, we are seeing very strong demand for summer vacation travel,” said Mike Daher, who heads the U.S. division of Transportation, Hospitality & Services at consulting firm Deloitte.
Mr. Daher attributes that to three driving forces. People have missed outings. Social media lures many to new places. And the advent of remote work has allowed professionals — “what we call the laptop loggers,” according to Mr. Daher — to extend vacations by working away from the beach or mountains for a few days.
Mr. Calvo, the guide, rides the wave, taking Americans on tours that show Paris’ shared history with France and driving them to Champagne in minivans.
“I have no idea if it’s going to last,” he said.
