How Summer Travel Is Changing

Summary

WSJ What’s News: How Summer Travel Is Changing Release Date: August 3, 2025 Host: Alex Osola Guest: Allison Poley, Travel and Tourism Reporter, The Wall Street Journal

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Introduction

In the August 3, 2025 episode of WSJ What’s News, host Alex Osola delves into the evolving landscape of summer travel. With rising costs and shifting consumer preferences, the podcast explores whether these changes signify a new normal for the travel industry.

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Economic Factors Influencing Summer Travel

Allison Poley provides context on the economic uncertainties impacting travel plans this summer.

• Economic Uncertainty and Consumer Confidence: Despite a recent uptick in overall consumer optimism, travel intentions remain cautious. Poley notes, “Vacation intentions were down overall and slightly more consumers planned to travel abroad, but intentions to travel in the US went down” (03:36).

• Impact of Tariffs and Layoffs: The early part of the year saw layoffs and tariffs that affected personal finances, leading to more conservative spending on big-ticket items like vacations. “We saw a lot of layoffs early in the year... people thought, oh no, maybe my finances won't really be in a good spot later this year” (02:57).

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Shifts in Consumer Behavior

With increased travel costs, consumers are adapting their vacation strategies.

• Rise of Road Trips: Poley describes summer as “the summer of the road trip” due to high domestic traffic during holidays like Memorial Day and the Fourth of July (04:14). Road trips offer a cost-effective alternative to flying, allowing families to stay closer to home and reduce expenses.

• Segmented Travel Choices: There’s a clear bifurcation in travel behavior. Wealthier individuals continue to indulge in international travel, while others opt for more economical domestic trips or shorter stays (02:12).

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Airlines' Responses to Changing Demand

Airlines are adjusting their strategies in response to fluctuating demand and economic pressures.

• Pricing Adjustments: With decreased domestic flights, airlines have reduced prices to fill seats. “The airlines have had to drop prices. So you have seen deals on domestic flights this summer because they need to fill the seats” (04:39).

• Variable Earnings Reports: Major carriers like Delta and United remain optimistic due to their focus on premium cabins, whereas American and Southwest Airlines face challenges due to their stronger reliance on domestic routes. Poley states, “American CEO said that July was soft... there's still this cloud of uncertainty” (05:55).

• New Business Models: Southwest Airlines is shifting from free baggage and open seating to assigned seating and charging for bags, aiming to recoup costs in a tough economic environment (06:03).

• Premium Segmentation: Delta and United are further segmenting their business classes, possibly mirroring European carriers by charging for seat assignments and excluding certain amenities (07:39).

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Hospitality Industry Adjustments

The hospitality sector is also adapting to the changing travel dynamics.

• Hotel and Short-Term Rentals: While hotels continue to see demand, especially from business travelers, short-term rentals like Airbnb remain popular for families seeking economical and spacious accommodations. “Airbnb and other short term rentals have taken up a growing share of lodging” (09:32).

• Enhanced Services: Airbnb is expanding its services by offering options like private chefs and catered meals to compete more directly with hotels, enhancing the overall travel experience (10:36).

• Pricing Outlook: Prices in the hospitality industry are not expected to return to pre-pandemic levels but opportunities for deals remain. “Prices aren't going to go back to what they were before the pandemic” (10:46).

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Future Outlook for Travel

Looking ahead, Poley outlines several trends shaping the future of travel.

• Continued Bifurcation: The divide between high-end and budget travel is expected to deepen, with significant investments in experiences for wealthier travelers. “We have seen hints from Delta and United that they're going to start segmenting out their business class even more” (07:39).

• Hyper-Personalization: Travel experiences are becoming more personalized, with airlines experimenting with AI-driven pricing models tailored to individual preferences and spending capacities (11:13).

• Accessibility and Affordability Concerns: While travel remains more accessible than in past decades, increasing costs and discomforts are making it a less inclusive experience. Poley remarks, “It is getting tougher... Anybody who's flown recently has probably experienced some type of delay” (09:21).

• Consumer Choices Drive Experience: Ultimately, the travel experience will increasingly reflect personal choices and financial ability, highlighting the importance of affordability and comfort in future travel planning (12:11).

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Conclusion

The podcast concludes with a reflection on the ongoing transformation in the travel industry. As airlines and hospitality services adapt to economic pressures and changing consumer behaviors, the nature of travel is evolving towards greater personalization and segmentation. While opportunities for cost savings and new experiences exist, the future of travel may be marked by increased disparities in accessibility and affordability.

Produced by Charlotte Gartenberg, Michael Kosmides, and Chris Sinsley.

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Notable Quotes

• Allison Poley on Vacation Intentions: “Vacation intentions were down overall and slightly more consumers planned to travel abroad, but intentions to travel in the US went down.” (03:36)

• On Economic Uncertainty Affecting Travel Plans: “We saw a lot of layoffs early in the year... people thought, oh no, maybe my finances won't really be in a good spot later this year.” (02:57)

• On the Shift to Road Trips: “This has been the summer of the road trip.” (04:14)

• On Airlines' Pricing Strategies: “The airlines have had to drop prices. So you have seen deals on domestic flights this summer because they need to fill the seats.” (04:39)

• On Future Travel Trends: “Travel is becoming hyper personalized... Your travel experience is going to be what you make of it, but also what you're able to pay for.” (11:13)

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Timestamps Reference

• 02:12: Allison Poley on Domestic vs. International Travel
• 02:57: Economic Uncertainty and Travel Plans
• 03:36: Consumer Sentiment vs. Travel Intentions
• 04:14: Rise of Road Trips
• 04:39: Airlines Dropping Domestic Flight Prices
• 05:55: Airline Earnings and Market Segmentation
• 06:03: Southwest Airlines' New Strategy
• 07:39: Premium Class Segmentation
• 09:21: Accessibility and Affordability of Travel
• 09:32: Hotels vs. Short-Term Rentals
• 10:36: Airbnb's Enhanced Services
• 10:46: Future of Hotel Pricing
• 11:13: Hyper-Personalization in Travel
• 12:11: Final Thoughts on Travel Experience

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Note: Timestamps correspond to the moment the quote was mentioned in the podcast transcript.

Transcript

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Viking committed to exploring the world in comfort. Journey through the heart of Europe on an elegant Viking longship with thoughtful service, cultural enrichment and all inclusive fares. Discover [e-mail] hey, what's news, listeners?

[Alex Osola]

It's Sunday, August 3rd. I'm Alex Osola 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's not only fresh off a vacation of her own, but she also covers travel and tourism for the Journal. Alison Going into this summer, how are people thinking about their vacations?

[Allison Poley]

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 gonna drive instead of fly or maybe they weren't gonna stay at a hotel for as many days, they were gonna cut back.

[Alex Osola]

I'm a little bit surprised, honestly, about the not flying as much domestically but more. You said internationally, right?

[Allison Poley]

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 consum 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.

[Alex Osola]

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 it's just sort of like reading the vibe of the room and being like, maybe I should just play it a little bit safe?

[Allison Poley]

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.

[Alex Osola]

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?

[Allison Poley]

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.

[Alex Osola]

What are people doing if they are looking for a cheaper vacation?

[Allison Poley]

This has been the summer of the road trip. What we saw is over Memorial day and over 4th 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.

[Alex Osola]

Is a road trip really that much cheaper than flying even domestically?

[Allison Poley]

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.

[Alex Osola]

A bunch of airlines reported earnings in the past week or two. What kind of picture were they painting?

[Allison Poley]

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. And 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 US 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 going to 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.

[Alex Osola]

So for these airlines that are seeing softer demand, what are they doing to try to get more customers to fly again?

[Allison Poley]

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.

[Alex Osola]

Coming up from flights to hotels, here's how travel might look different in the next few years. More on that after the break.

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[Allison Poley]

Foreign.

[Alex Osola]

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, you know, a purse. Is this the end of the cheap flight? Is this our new normal?

[Allison Poley]

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.

[Alex Osola]

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?

[Allison Poley]

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. And 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.

[Alex Osola]

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?

[Allison Poley]

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 in 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.

[Alex Osola]

Should we anticipate that if you're not traveling for business and you're just trying to book a hotel, you know in the next couple of years, that it's just going to be way more expensive?

[Allison Poley]

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.

[Alex Osola]

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.

[Allison Poley]

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.

[Alex Osola]

That was WSJ reporter Allison Poley. Thank you so much, Alison.

[Allison Poley]

Thank you.

[Alex Osola]

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