Travel deals appearing despite interest rates: Priceline CEO

Going anywhere this summer? A Hopper survey shows over 86% of Americans plan on traveling this summer. With inflation still permeating through most sectors, affecting consumer prices, will there be a shift in how Americans book their vacations and travel this summer?

Priceline CEO Brett Keller joins Catalysts to give insight into the busy travel season and notable areas of consumer travel spending, such as airfare prices. Priceline.com is a subsidiary of Booking Holdings (BKNG).

When asked about the current interest rate environment affecting consumer spending, Keller states: “Travel has historically been a highly prioritized part of the consumer’s budget. And so we continue to see that now, even though where some commodities and other hard goods people have pulled back their travel still seems to be healthy, and moving forward, I think what will happen is you’ll see suppliers start to really pull their prices back, which will open up more travel opportunities, more deals for consumers.”

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Nicholas Jacobino

Video Transcript

As summer rolls around here.

A new survey shows that over 86% of Americans plan on traveling this season, but we got inflationary prices persisting.

So what we see a shift in how people travel, whether that’s vacationing closer by opting for all inclusives or just taking vacations overall for what we’re going to bring in Brett Keller.

He is Priceline’s Ceo Brett, thanks so much for being here with us.

Look, I want to jump in on the inflationary picture here because that is of course, what we are fascinated with here at Yahoo Finance.

What are you seeing that indicates to you where the consumer heading with regards to inflation?

Well, so far global leisure travel demand has held up very well.

In fact, it’s booming in Asia.

Europe’s sitting nicely in the US while trailing the other two countries is still holding up.

In fact, as we look forward to Memorial Day travel, we’re expecting close to a record number of travelers hitting the roads and probably record numbers of travelers moving through the airport.

So so far consumer demand is holding up and I think that’s largely in part to airline ticket prices actually being down year over year by as much as 15%.

And that’s really helping, I think to spur more airline uh traffic, the airlines have opened up more capacity as a result.

Brett are travelers though, are they looking for more deals just in terms of the activity that you’re seeing on your site?

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And, and maybe ultimately, are they waiting to book until a little bit later in the hopes that maybe some of those prices will drop?

Well, shopping patterns are higher.

So we are seeing more people shop ahead of their actual booking to make the reservations, but we aren’t seeing people wait until the last minute to make these reservations.

People are booking ahead.

In fact, the booking window is pushing out a little bit, which means people are a little more comfortable with making the reservations ahead of time and planning their trips a little more carefully.

So a lot of shopping behavior, but still planning things out.

Um Hotel prices aren’t quite falling to the degree that airline ticket prices are falling.

So a little more pressure on the hotel side.

Well, that’s interesting talk to me about the pressure that you’re seeing on the hotel side and to what extent you feel like that is potentially correlated with some of what we’re seeing from airbnb in terms of users.

Just sort of starting to be a little bit over the hidden fees and the booking experience that’s offered through that platform.

Sure.

Well, 2023 was a very big travel year.

You know, it was the first full year of no constraints and people had a lot of excess funds.

And so they really traveled hard and used a number of different booking methods to get, to get deals on, on travel as we move into this year.

We’re moving more here in the US into a, in a more typical standard uh pattern of travel with peaks and memorial Day in midsummer and then with some nice travel windows in between where you can really find some better deals for the consumer.

And so I think what’s happened is really people are falling into a more normal state of travel and doing a little more work to really find what fits their budget for them.

And you know, listen in the hotel industry, uh capacity continues to be added at a very slow and steady pace about, you know, 1% a quarter here.

And so there’s not a lot of new opportunity for hotels.

So hotels have been able to keep their prices higher.

Whereas the airlines have been adding capacity to a pretty heavy rate, you know, United just announced in their first quarter results that they added 9% more capacity, that’s a lot of capacity moving into the airline space.

But when it comes to the fact that rates are still high inflationary pressures or inflation is still very sticky if we don’t see any sort of rate cut.

If we don’t see any more future improvement on the inflation from between now and year end, will we then see more of a deterioration?

Or I guess, how are you looking at that aspect?

That possibility?

Well, it’s obviously hard to predict what’s going to happen with consumer travel.

Listen, travel has historically been a highly prioritized part of the consumer’s uh budget.

And so we continue to see that now, even though where some commodities and other hard goods people have pulled back there, travel still seems to be healthy and moving forward.

Um I think what will happen is you’ll see suppliers start to pull their prices back which will open up more travel opportunities, more deals for consumers that they’ll be spending less to take the same kinds of trips.

And I think we’re seeing a little bit of that today in the US and some of the shoulder periods where, you know, some of the larger hotel chains have had to discount their prices a little bit in order to spur demand, but the demand is still there and especially in the peak periods, we’re seeing very robust demand.

Well, I want to switch gears a little bit.

I know that you have your own A I powered travel assistant penny.

But I am curious about some competition for penny because you know, I’m already on chat GP T throughout most of my work day here is that a potential had one for you, that folks are already on platform for something like chat GP T and can just ask that platform to find them a cheap travel deal and then book flights directly through airlines versus coming to you.

Well, listen, uh Chad GP D is a great place to go.

If you’ve got general questions about travel, if you’re looking for something very specific though, to what you’re looking at what you’re booking really as you move through the transaction experience here at Priceline, you can get very direct answers that you’re not going to find as you move out of our flow.

We’ll be able to tell you what availability looks like and what pricing looks like real time for a given hotel or flight.

Whereas the other bots and engines outside of the travel ecosystem don’t have access to that information.

In fact, we have a lot of proprietary prices and inventory that can only be accessed by our unique uh travel bot penny.

All right, Brett Kellow Ceo of Priceline.

Thanks so much for taking the time to join us here this morning.

We appreciate it.

You bet.

Thank you.