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Canadian travellers pay more for hotels, less on airfares

Vast majority of Canadians view travel as more expensive than pre-pandemic
A Porter Airlines plane sits on the tarmac at Vancouver International Airport

High hotel prices may be making it harder for Canadians to appreciate that lower airfares are making some trips more affordable.

Blue Cross released a survey this morning that found 58 per cent of 2,047 adult Canadians surveyed in November thought the cost of travelling was “significantly more expensive” than several years ago.

Another 36 per cent thought travel prices were “somewhat more expensive” than several years ago.

That is 94 per cent of the public that thinks travel is more expensive than the early days of the COVID-19 pandemic, according to the survey.

The reality is that hotel prices have soared but airfares are only about 10 per cent more than they were in 2019.

On some routes, such as to Mexico, many flights are less expensive than in 2019.

Data from Statistics Canada yesterday revealed that airfares have been falling. They fell 14.3 per cent in January year-over-year, and that the decline in January followed a trend that has been in place since April, when prices started falling compared with the same months one year earlier.

In December, airfares were 9.7-per-cent lower on a year-over-year basis, while in November, airfares were 17.4-per-cent lower than in November 2022, according to Statistics Canada.

The belief that airfares are rising may stem from what happened in 2022. Starting in May 2022, airfares rose by double-digit percentages year-over-year for 10 consecutive months. That stretch included a 57.7-per-cent year-over-year increase in July 2022.

Airline executives acknowledge that airfare prices are coming down.  

Flair Airlines CEO Stephen Jones told media on February 8 that he believes his ultra-low-cost carrier has been partly responsible for helping Canadians get to destinations for cheaper prices. 

"We flew more than four and a half million passengers [last year,] so that's one half million more than we flew in the year prior," he said.

Air-travel booking site executives have said their revenue is less than expected in part due to lower airfares.

Expedia Group Inc. (Nasdaq:EXPE) CFO Julie Whalen earlier this month said on her company’s earnings call that increased airline capacity has reduced ticket prices.

Expedia’s gross bookings were also slightly less than analysts expected. That, combined with news that the company’s CEO was stepping down, prompted Expedia’s share price to plunge nearly 17.8 per cent on Feb. 9.

Higher hotel prices are the real culprit in making travel more expensive.

CoStar, which provides global real estate data, analytics and news last year reported that the Canada’s hotel industry hit records for average room rates in May, June and July.

Canada's average daily hotel room rate rose to $232 in July, up 29 per cent from July 2019, before the COVID-19 pandemic caused an almost complete shut down in the sector, CoStar said.

Vancouver's average July hotel-room price jumped to $346 – the highest monthly rate ever recorded by a Canadian city, according to CoStar.

The AMEX Global Business Travel Hotel Monitor report last year projected that Vancouver hotel prices this year would increase at a faster clip than other major Canadian cities.

Today’s Blue Cross survey found 46 per cent of respondents said they are travelling less this year than in the past, with 34 per cent of those who are not using their vacation time saying that the reason is that they cannot afford to go anywhere.

The travel industry’s widely publicized challenges also deter travellers.

Blue Cross found that 31 per cent of respondents have had an airline cancel or change their flight. Another 20 per cent have lost baggage while 17 per cent have had airlines damage baggage.

British Columbians had the highest average spend on their most recent vacation, according to the survey, at about $5,100, or approximately $1,000 more than the Canadian average.

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