WSJ What’s News - How Summer Travel Is Changing

Episode Date: August 3, 2025

We are in the heat of the summer travel season, and many travelers are finding that it’s getting more expensive to take a vacation. Airlines, whose hopes for this year were rattled by tariff uncertainty, have started adapting to more upscale consumers; Southwest, for example, has adopted new bag fees and started selling tickets with assigned seats. Hotels are seeing a decline in foreign visitors as domestic travelers scale back their plans, even as short term rental services like Airbnb are broadening their offerings to include services. Allison Pohle covers travel and tourism for the Wall Street Journal, and she joins host Alex Ossola to discuss how travel is looking different these days, and what this means for travel in the future. Further Reading:  Europe Is Out. Road Trips Are In. Welcome to the Scaled-Back Vacation.  Airlines Are Having a Bruising Year. Delta and United Are Doing Better. New York City’s Hotel Market Is Envy of the Country  Airbnb Lets You Add a Private Chef to Your Rental. Your Host Might Not Like It. Where Did All the Las Vegas Tippers Go? Learn more about your ad choices. Visit megaphone.fm/adchoices

Omada Health makes managing chronic conditions easier by supporting members between doctors' visits. Members are paired with a health coach empowered by insights from smart devices and AI-powered tools. Learn more at omadahealth.com. Omada Health is proudly NASDAQ listed. Hey What's News listeners, it's Sunday, August 3rd. I'm Alex Osala for The Wall Street Journal. This is What's News Sunday, the show where we tackle the big questions about the biggest stories in the news by reaching out to our colleagues across the newsroom to help explain what's happening in our world. On today's show, many Americans may have been looking forward to their summer vacation

all year, only to find that it's just way more expensive than they expected. Everyone from airlines to hotels are catering to more high-end consumers, so vacationers went looking for cheaper options. Today we're talking about how the world of travel is changing and whether our current moment is ushering in a new normal. Baggage fees, seat selection fees, cleaning fees. It's true, travel is getting more expensive. How is that changing the future of travel? To discuss, I'm joined by Allison Poley. She is not only fresh off a vacation of her own, but she also covers travel and tourism for the journal.

Allison, going into this summer, how were people thinking about their vacations? If you go back to this winter, people were really optimistic about vacations that they would be taking. And then things started to get a little bit murkier. So we had news about tariffs, there was economic uncertainty. The data was complicated and it was tough to get a clear picture of what people were actually doing. But we knew that they did want to travel, they might just change some of their plans. So for example, if they already had a trip booked, they were probably going to go on it.

They probably weren't going to straight up cancel a vacation for the summer, but they might cancel one for later in the year. People were not flying as much domestically, but they were still flying internationally. Maybe they were going to drive instead of fly, or maybe they weren't going to stay at a hotel for as many days, they were going to cut back. I'm a little bit surprised honestly about the not flying as much domestically, but more,

you said, internationally, right? That is because travel is getting bifurcated and segmented out. So people who have more money are not as affected by the economic uncertainty. So wealthier consumers are still going to go abroad, still going to take their international trips. But people who are traveling domestically, who maybe were a little bit more conservative in their spending were changing their plans. Right. Let's talk about that second group. For people who saw all the news coming out about tariffs and they were like, oof, I don't know

about planning my summer trip, were they responding to something real that had changed in their bank account, or is just sort of like reading the vibe of the room and being like, maybe I should just play it a little bit safe? I think it's both. We saw a lot of layoffs early in the year. So if you lose your job, you're not as likely to take a vacation. And then at the same time, there was so much uncertainty that people thought, oh no, maybe

my finances won't really be in a good spot later this year, but I should probably scale back or take a different type of trip if I am going to travel this summer. Now, interestingly, some of the readings of consumer sentiment have actually been on the upswing for the last two months. The University of Michigan survey showed that Americans felt more optimistic about the economy this summer. So how does that fit into what actually ended up happening with these summer travel plans? Overall people feel more optimistic but that might not carry over to travel directly. So the conference board released its sentiment survey,

and it said that vacation intentions were down overall and slightly more consumers planned to travel abroad, but intentions to travel in the US went down. So basically people are feeling maybe a little bit better overall. The tariffs haven't quite affected their finances or everyday spending yet, but they're still being cautious about the big ticket items. What are people doing if they are looking for a cheaper vacation?

This has been the summer of the road trip. What we saw is over Memorial Day and over Fourth of July, tons of traffic all over the country. The timing of those holidays meant that people had a built-in day off with July 4th on a Friday, Memorial Day on a Monday of course, and a lot of people chose to take a road trip or stay closer to home. Is a road trip really that much cheaper than flying even domestically? So another thing that has happened is because fewer people are flying domestically, the airlines have had to drop prices.

So you have seen deals on domestic flights this summer because they need to fill the seats. A bunch of airlines reported earnings in the past week or two. What kind of picture were they painting? It depends on the airline. Delta and United have been really optimistic and these are two big global airlines that make a lot of money from their premium cabins. So they're up charging for nicer seats, premium economy or business class. People are paying for those seats too. They're not just getting upgrades because they're loyalty

members. But American and Southwest had a different picture, and they were hit a little bit harder because they primarily fly more domestic U.S. routes, and that's where people have been pulling back. American CEO said that July was soft. People were making these bookings in a time of economic uncertainty and so that's gonna carry over through the rest of the year. They're saying we think the worst is behind us but again there's still this cloud of uncertainty. So for these airlines that are seeing softer demand what are they doing to try to get more customers to fly again? Discounting prices for seats. Southwest has made headlines because they have changed their strategy

overall. Southwest used to be the airline where you could get bags that fly free. You were able to just board the flight and sit in any seat. Now Southwest is going to have assigned seating. They're going to charge for certain seats and they're charging for bags. So I don't know if that necessarily incentivizes people to fly more, but it's a way for the airline to recoup some of the costs and change its business model in this economic environment. Coming up from flights to hotels, here's how travel might look different in the next few years. More on that after the break. Get to Toronto's main venues like Budweiser Stage and the new Rogers Stadium with Go Transit.

Thanks to Go Transit's special online e-ticket fairs, a $10 one-day weekend pass offers unlimited travel on any weekend day or holiday, anywhere along the Go network. And the weekday group passes offer the same weekday travel flexibility across the network, starting at $30 for two people and up to $60 for a group of five. Buy your online Go pass ahead of the show at Gotransit.com slash tickets. Allison, I will say that just as an occasional traveler, I've noticed that everything is just more expensive with flying. You want to be able to pick your seat, you want to check a bag, you want to in some cases

carry a bag bigger than a purse. Is this the end of the cheap flight? Is this our new normal? I hope not. Just kidding. I mean, not kidding. It's tough to say exactly how airlines are going to handle this, but we have seen hints from Delta

and United that they're going to start segmenting out their business class even more. So there haven't been concrete details, but some analysts have suggested they might follow in the path of European carriers where you have to pay for a seat assignment in business class. Or maybe you get a business class seat, but then you don't get the food included. So it looks like we're getting more bifurcation even in the premium segments of the plane. It sounds like even if demand does bounce back in the next couple of quarters, as some of these carriers are

expecting, in the long term, they're seeing it to be a better bet to invest in those higher paying consumers and people who are traveling for business. Does that seem right? consumers and people who are traveling for business? Does that seem right? Yeah, that's right. And that brings up a lot of questions too about the accessibility and affordability of travel. In some ways, consumers have way more options for flights than they ever have. It is more affordable to fly for most people compared to 20, 30 years ago. It's way more accessible. But at the same time, it's getting tougher. It's a more uncomfortable experience. Anybody who's flown recently has probably experienced some type of delay. You're in a row where all the seats are cramped. You maybe couldn't bring your carry-on bag

on. It's just starting to seem like a massive hassle. And in some ways, that incentivizes people to pay more to be more comfortable. So you take that flight, you take that road trip, and then you get there and you have to stay somewhere. How is the hospitality industry looking at this juncture? So Airbnb and other short-term rentals have taken up a growing share of lodging,

but overall more people stay in hotels. There is again with hotels and with short term rentals some softness as executives say. Hotels business wise are in a position where they can recoup some of those costs because they also cater to business travelers and their companies are paying for these trips. But there's still been pretty big demand for short term rentals because the advantage that they have is that they cater to families or big groups who don't want to book three or four hotel rooms. And so it's more economical a lot of times for people to stay with their whole family and a short term rental, They can cook at home.

But speaking of that, Airbnb has also introduced an expansion to its business, where it's encouraging people to book services, where they can have a private chef come to the house or get something catered. So they're also appealing to the whole travel experience and in that way trying to compete more with hotels. Should we anticipate that if you're not traveling

for business and you're just trying to book a hotel in the next couple of years, that it's just gonna be way more expensive? Prices aren't going to go back to what they were before the pandemic. But like I said, there are opportunities to find deals. The airlines were discounting domestic flights this summer. So the deals are out there.

We always say, if you see a good price for a flight, just book it. How does it seem like travel is going to be different in the next couple of years, just based on the changes that are happening now? We talked about the bifurcation, and that is a trend that's going to continue. A lot of travel companies are investing heavily in experiences for the wealthiest travelers. They're giving them more options. There's a lot more innovation in travel happening

in the highest paying consumers than there are for the lowest paying. And that's tough because travel is something that so many people enjoy and it's meaningful. And the thought of people getting priced out of certain experiences is something travel companies are going to have to reckon with. But the way that travel is changing is it's becoming hyper-personalized. We've seen some airlines talking about using AI to do

personalized pricing. We can expect these changes to stick and to continue in the future. Your travel experience is going to be what you make of it, but also what you're able to pay for. That was WSJ Reporter Alison Poley. Thank you so much, Alison. Thank you. And that's it for What's New Sunday for August 3rd. Today's show was produced by Charlotte Gartenberg with supervising producer Michael Kosmides and deputy editor Chris Sinzley.

I'm Alex Osola and we'll be back tomorrow morning with a brand new show. Until then, thanks for listening.