This past July Fourth holiday broke records not just for the globe's temperature but also for U.S. air travel demand.
The Transportation Security Administration recorded 10.7 million passengers passing through U.S. airport checkpoints this past Thursday through Sunday, Barron's reports. An additional 2.3 million people passed through on Monday as well as just more than 2 million on Tuesday.
Barron's reports that Friday was the busiest air travel day in TSA's history, screening more than 2.88 million people. This figure beats the record number of passengers screened in a single day set on the Sunday before Thanksgiving in 2019.
Oh, and when it comes to heat, Monday was the hottest day ever recorded since the past record set in 2016 at 62.46 degrees Fahrenheit. The average global temperature on Monday was 62.62 degrees Fahrenheit, Reuters reports.
But back to travel ... robust demand around the holiday hasn't always been the case. In fact, STR's Isaac Collazo reported in 2022 that hotel performance typically softens during the week leading up to July Fourth.
In 2022, U.S. hotel occupancy declined 4.9 percentage points from the previous week and notched at 67.3% for the week of June 26 to July 2.
"While that might seem alarming, it is important to note this type of decline is normal for the Fourth of July holiday. Since STR began weekly benchmarking in 2000, the Fourth of July or the observance of the federal holiday has fallen on a Monday seven times, including [2022] and in 2016. In each case, occupancy in the week before the holiday fell by more than 4 percentage points with most of the losses beginning on Wednesday and continuing into the weekend. Demand and occupancy are also likely to come in lower for the week containing the holiday before strengthening in the remaining weeks of July," Collazo wrote.
It's important to take the holiday calendar shift into account.
U.S. weekly hotel performance between July 3-9 2022, in comparison to 2019, was mixed.
Occupancy fell 14.5% to 63.3% while average daily rate rose 15.7% to $153.71 and revenue per available room dropped 1.1% to $97.37.
The most recent weekly U.S. hotel performance data this year from CoStar's hospitality analytics group STR shows that during the week of June 18-24, measured in percent change from the comparable week in 2022, occupancy declined 1% to 71.4%. At the same time, average daily rate increased 0.9% to $159 and revenue per available room fell 0.1% to $113.58.
The next few weeks of 2023 U.S. weekly data will be telling. We'll see whether occupancy and demand fall again after the July Fourth holiday but rebound in the remaining weeks of the month.
For 2022, a hotels achieved a rebound during the week of July 10-16, compared to 2019, after two consecutive weeks of lower demand around the holiday.
"The record-breaking July Fourth holiday, hot on the heels of a bumper Memorial Day travel weekend, is providing a clear answer that demand remains robust," Baron's reports.
We will see if that holds true this year.
Major airlines, such as United Airlines, have succumbed to "severe travel disruptions" in the past week due to weather and air traffic gridlock.
"Airlines can plan for things like hurricanes, sub-zero temperatures and snowstorms, but United has never seen an extended limited operating environment like the one we saw this past week at Newark," United CEO Scott Kirby told employees in a July 1 email, CBS News reports.
Though these flight delays and cancellations didn't appear to negatively affect July Fourth air travel numbers, I do wonder how fed up consumers will become the remainder of the summer travel season should major disruptions continue.
There could also be consumers who begin pulling back on spending this year as cost pressures weigh on them and savings accumulated during the pandemic dwindle.
"For investors, the big question regarding travel stocks heading into the summer period was whether demand would stay strong, or whether a feared consumer spending pullback would emerge," Barron's reports.
From what I have been hearing from executives at industry conferences and during one-on-one interviews, the sentiment is that consumers still value and prioritize travel.
All in all, I hope you and your families had a safe and relaxing break during the holiday.
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