Inflation hasn’t dented summer travel demand yet

A sharp uptick in inflation has so far not caused a slowdown in demand for travel in the spring and summer months, Booking Holdings CEO Glenn Fogel told CNBC on Thursday.

“Not yet. Not yet,” said Fogel, whose company offers online travel services, including flight booking. He cited the Covid pandemic’s disruptions to travel routines.

“When you have two years of people not traveling the way they want to travel and you have a lot of savings built up in that time period, prices can be really high and people are saying, ‘I don’t care. I just want to travel. I want to go somewhere,” the CEO said in an interview on “Closing Bell.”

The Federal Reserve and other central banks around the world have raised interest rates and are expected to issue more hikes in the future. That’s the main lever in the monetary policy toolbox to tamp down on inflation.

But in the near term, Fogel said, he’s expecting the pricing situation to get worse for travel-related services. One reason for that may be fuel prices, which have spiked in response to the disruptions for the Russia-Ukraine war.

“If you’re planning to take a summer trip, right now prices are going up. I don’t think it’s going to turn around at all,” Fogel said.

Premium travelers are generally seen as less sensitive to higher prices because they’re in a position to afford premium amenities in the first place. Airlines are looking to cater to that group of travelers, particularly on international routes as cross-border trips pick up. International travel has been slower to recover from pandemic-related declines than domestic trips.

Fogel said Booking Holdings is “hopeful” there will be strong international travel this summer, but noted there will be regional differences.

“Asia [is] not coming back nearly as fast as, say, Western Europe is, which is something we’ve seen for quite a while. There’s also, of course, the tragedy of the war in Ukraine, which has definitely impacted Eastern Europe somewhat,” Fogel said.