The summer travel season was off to a rocky start with headlines about flight cancellations hitting every week, and now those complications are getting worse with news that airlines will drop services to certain cities and cut back on flights out of others.
Airlines in the U.S. canceled more than 700 flights Sunday, CNN reports. They canceled almost 1,200 flights last week, and travel industry experts expect delays and cancellations will continue if not worsen, CBS News reports. American Airlines announced late last week it would end services to Dubuque, Iowa; Islip and Ithaca, New York; and Toledo, Ohio, due to regional pilot shortages. United Airlines said it would eliminate 50 flights per day from Newark Liberty International Airport to reduce delays and cancellations.
The problems with reliable and affordable flights are completely out of the control of hoteliers, many of whom worry how long it will take for normalcy to return.
The fact is airlines are running massive load factors, said Mark Hoplamazian, president and CEO at Hyatt Hotels Corporation, during the “CEOs Check-In: A View from the Top” session at the NYU International Hospitality Investment Conference. During the early days of the pandemic, the airlines significantly reduced their capacity and laid off a lot of people, and it takes a long time to replace a pilot.
“So unfortunately, it’s going to take some time for them to actually add back capacity, but every airline executive that I’ve spoke with, they’re working really hard to figure out how to accelerate that because every opportunity missed has gone forever,” he said. “It’s a perishable revenue opportunity.”
Major operators are canceling a large number of flights in Europe as well, said Keith Barr, CEO of IHG Hotels & Resorts. The trouble airlines are having staffing baggage handlers and people at check-in illustrate the whole travel ecosystem’s issue with missing labor, he said.
“Truly the airports are a big, big challenge in many, many international markets because they just pulled back so much staff,” he said. “Demand’s come back, and they just can’t get flights up.”
The flight cancellations are clearly causing disruption and leading consumers to think twice about flying for a vacation, said Neil Shah, president and chief operating officer at Hersha Hospitality Trust, in an interview. Further complicating the matter is the rising price for airline tickets.
There was some capacity during the pandemic, but it’s not close to being back to what it was before the pandemic, he said. As airlines become more profitable, the capacity will continue to increase.
“I think of it as more of a short-term problem,” he said. “This is just a matter of the recovery. The recovery is coming, and it's coming very strong and very robust.”
The summer feels like the hotel industry is back, so while the headlines are tough, he said he’s cautiously optimistic.
The flight cancellations haven’t had much impact in some of the markets where Crestline Hotels & Resorts has properties, President and CEO James Carroll said in an interview. The hotels in drive-to markets continue to benefit from guests taking road trips due to the problems with flights.
“The fuel prices would have scared me more than some of the chaos going on with the airlines, but it seems like even in spite of the fuel prices, folks are still getting out on the road and traveling,” he said.
For the company’s urban hotels and gateway city locations where international travel is critical and hoteliers are hopeful for the return of business travel and group demand, that’s where Crestline is seeing more of an effect, he said.
“It’s not something I can necessarily put a number on, but it’s just another travel impediment that is limiting how quickly the international travel and group is coming back,” he said.
Alongside the issues with airline prices and cancellations, gas prices continue to rise, but the factor working in hoteliers’ favor is historically that hasn’t been an issue for hotels.
During the most recent Lodging Industry Investment Council meeting, Jan Freitag, national director for hospitality market analytics at CoStar, said studies have long shown there’s no relationship between higher gas prices and hotel demand.
“It just doesn’t exist,” he said. “Intuitively you would think there is, and there’s not.”
While the total cost of travel matters when factoring in airfare, rental cars and hotel rooms, the individual issue of the price at the pump doesn’t affect overall demand, he said.
“The total U.S. demand number doesn’t change if gas goes up,” he said.