For much of the pandemic it’s been almost non-sensical to talk about inflation. What’s been the price of a trip to Australia, compared to 2019? It isn’t infinite, Nicole Kidman’s quarantine-free visits show it’s possible at some price even if that price isn’t usually paid in cash. But it’s many orders of magnitude higher than it used to be, with borders largely shut even to Australian residents.
The price of tourism to Europe was similarly high for Americans, before this past summer. The cost has fallen, even if part of the price of visiting many destinations now includes not just air and lodging but also vaccination (whose nominal cost is paid by the U.S. government).
On the other hand, there’s been significant inflation in American Airlines first class since you get less at the same price point.
A pre-COVID example of shadow inflation: the infamous Lay’s potato chip incident of 2014. Lay’s intentionally included about five chips less per bag, lowering content from 10 ounces to 9.5, yet still charged $4.29 per bag, meaning customers were paying (and Frito-Lay was making) 5.3% more per ounce of chips.
…“Many types of businesses facing supply disruptions and labor shortages have dealt with those problems not by raising prices (or not only by raising prices), but by taking steps that could give their customers a lesser experience.”
According to Cole, “Over the last 18 months … goods and services are getting worse faster than the official statistics acknowledge,” implying that “our inflation problem has actually been bigger than the official statistics suggest.”
American Airlines used to offer a hot meal in first class, now there’s the ubiquitous shrink-wrapped turkey sandwich. There’s been no made-to-order guacamole on my recent Admirals Club visits, but the price of an Admirals Club membership hasn’t fallen. The airline will no longer refund tickets when its schedules change by an hour – it now requires a four hour change to be eligible for a refund.
Delta tickets are more expensive at the same price point not only because of less inflight service but also because you pay in time, rather than money, when you need to speak with the airline. And even if you know the workaround of ringing up Delta’s Singapore reservations line, you pay for an international call even if you’re using Skype or similar internet phone service.
So-called full service hotels used to include a bundle of services, like restaurants with long hours and wide menus and available room service. They used to offer daily housekeeping. In other words they used to differentiate themselves from limited-service properties (who also reduce housekeeping services) and from home sharing. You now get less than you used to even if you aren’t spending less. The product has changed and it’s lower quality.
For the week of October 10-16, 2021, hotel average daily rates were down 1.4% against 2019 yet costs are down much more than that.
Perhaps the one area where higher prices and scarce inventory have followed the traditional path in travel is rental cars where if you can rent a car it’s expensive and then you have to hope there’s a car there when you arrive. Hotels and airlines are just providing you less, while not charging you proportionately lower prices, and so inflation isn’t as obvious.
(HT: Anthony H.)