Newsletter · · Ashutosh Agarwal

Volatile Fuel Squeezes Airlines as Hotels Hold Rate and Google Chases the Booking - Travel, Airlines and Leisure - Week of August 1, 2026

A synthesis of what travel, airline and hospitality podcasts said for the two weeks ending August 1, 2026, including jet-fuel volatility hitting American and Southwest guidance, the Marriott and Hilton CEOs on loyalty as an anti-disintermediation moat, and Google's push to make travel bookable inside its AI.

Travel, Airlines and Leisure

Week of August 1, 2026: Volatile Skies, Defiant Hotels, and Google's Booking Land-Grab

This was a rich two weeks of listening. Two of the biggest names in hotels, the CEOs of Marriott and Hilton, sat down for long, candid interviews. Airline analysts made the case that 2026 is the most turbulent year the industry has seen since the pandemic. A travel-rewards expert explained, in blunt terms, why your frequent-flyer miles are worth about as much as Monopoly money. And a quiet but important shift kept surfacing across almost every show: the fight over who gets to sell you the trip, the airlines and hotels themselves, the online travel agencies, or, increasingly, Google's artificial intelligence.

Airlines: a very good year that feels terrible

If you want the single best explanation of the mood in aviation right now, start with the Skift Airline Weekly Lounge episode, bluntly titled "Why 2026 Is Aviation's Most Volatile Year Since COVID" (Airline Weekly Lounge, July 23). Hosts Gordon Smith and analyst Jay Shabat opened with a line from a staff memo that Southwest CEO Bob Jordan made public: "The airline industry is far more volatile than it was even just a few months ago. Fuel prices have risen sharply." Jordan said carriers are responding by "adjusting schedules, raising fares, rethinking investments."

The villain of the story is jet fuel, and, more precisely, the unpredictability of it. Shabat walked through the price of crude oil (a decent stand-in for jet fuel) over the past 18 months: it started 2025 around $80 a barrel, drifted down to roughly $65 by February 2026, then spiked violently to $91, then $100, then $102 in March as conflict with Iran disrupted energy markets, before falling back toward $68 and bouncing to $80 again. Here is why that matters: fuel is typically the number-one or number-two cost for any airline, "30, 40% of an entire airline's operating cost base." And as Shabat put it, "if there's one thing that an airline dislikes more than high oil prices, it's volatile oil prices," because wild swings make it nearly impossible to plan how many flights to run.

The plot twist is that, on paper, this is still a good year. The global airline trade body IATA expects the industry to stay profitable in 2026, profits and margins down, but positive. Shabat's wry reminder of how thin those margins usually are: IATA likes to say the industry, per passenger, often makes less money than it costs to buy a cup of coffee in Geneva.

A few threads from that conversation are worth pulling on, because they explain the whole sector:

The Gulf hubs got knocked offline, and everyone else caught the traffic. The giant Middle East connecting airports (Dubai, Doha, Abu Dhabi) briefly fell to near-zero capacity around late February on the Iran conflict. Emirates is the world's largest international carrier, so going "from 100 to zero," as Smith put it, is staggering. The recovery has been uneven, Etihad said it is now running 110-120% of last summer's capacity, but in the meantime passengers rerouted through Istanbul, Hong Kong, Amsterdam and Singapore, handing those hubs a windfall. Korean Air was the vivid example: in the quarter just ended, revenue jumped 26% on only 5% more seats. Sounds fantastic, except costs rose 33%. Shabat's image was two rockets racing to the moon, with the cost rocket pulling ahead of the revenue rocket.

"Premium, premium, premium." The single most durable trend in the industry, per Shabat, is that anything an airline spends on the front of the plane, lie-flat seats, fancy lounges, pays off, because travelers who used to fly economy keep trading up. United, for instance, is putting a premium "economy plus" (a blocked middle seat) on its new long-range single-aisle jet. The flip side is brutal for the discount carriers, who don't have that premium cushion. Spirit Airlines, which at its peak had more than 200 planes, has now disappeared after a double bankruptcy. The biggest winner from Spirit's exit is Frontier, reportedly the best-performing U.S. airline stock this year, because it overlapped most with Spirit's routes. JetBlue benefits too, especially in Fort Lauderdale.

To see just how differently the "premium" airlines and the discounters have fared, Shabat compared unit costs (the cost to fly one seat one mile, excluding fuel) against 2019 levels: Delta's were up 33%, but Spirit's had ballooned 62%, and Spirit, unlike Delta, had been unable to raise its fares to match. His verdict on which carriers are surviving the cost squeeze best: Delta and United, precisely because of their premium and international exposure.

Now for the hard numbers on the U.S. majors. The Business Travel 360 weekly (Business Travel 360, July 29) reported that both American and Southwest trimmed their 2026 earnings forecasts on the fresh jet-fuel surge. American now expects a full-year result somewhere between an adjusted loss of $0.65 a share and a profit of $0.65 a share, a remarkably wide range that tells you how little visibility management has, even as it posted record quarterly revenue of $16.7 billion. Profit fell sharply anyway, because fuel ate the difference. Southwest also cut its outlook, saying higher fares and other initiatives had not fully offset rising costs.

That same episode was a useful reminder of how much else is moving in aviation right now:

  • The FAA restored Boeing's authority to sign off airworthiness on all new 737 MAX and 787 jets, a milestone after years of tighter oversight, as Boeing landed fresh orders from Philippine Airlines and Riyadh Air. Boeing's long-range forecast calls for the world's commercial fleet to grow nearly 80% by 2045, needing almost 44,000 new aircraft.
  • In the UK, budget carrier easyJet is the target of a possible bidding war: private-equity firm Apollo made a higher £5.7 billion offer at £7.15 a share, topping an earlier £6.90-a-share bid from rival Castle Lake. (Any deal has to respect EU rules that airlines stay majority-owned by EU nationals.)
  • JetBlue won the auction for Spirit's 22 takeoff-and-landing slots at New York's LaGuardia for $58.5 million, with Frontier the backup bidder at $57.5 million.
  • The European Union approved a passenger-rights overhaul (effective mid-2027): compensation stays at €250 to €600, but travelers get a free personal item, clearer carry-on pricing, and free seating for children under 14.

The loyalty machine: why your miles are "Venezuelan currency"

The most quotable episode of the fortnight was The Investopedia Express, where host Caleb Silver interviewed travel-rewards expert Peter Greenberg, "The Travel Detective" (The Investopedia Express, July 20). His argument, delivered with the energy of a man who has spent 40 years collecting miles he can't use: airline loyalty programs have stopped being about loyalty and become pure revenue machines, and the customer is the mark.

The numbers he cited are genuinely eye-opening:

  • On average, only 8% of miles ever get redeemed. There are roughly 380 million frequent-flyer and frequent-stay memberships in the U.S., more than the population, because people belong to several.
  • 54% of all miles are now earned on the ground, through credit-card spending, by people who may never fly. To earn a 25,000-mile "free" ticket that way, Greenberg estimates you'd have spent about $14,000 on the card.
  • This summer, he said, Delta wanted 990,000 miles for a single business-class ticket from Los Angeles to Paris, which, by his math, implies you'd have to spend roughly $457,000 to earn it. "That's not a ticket," he said of the equivalent cash fare on another route, a $17,000 business seat to Johannesburg, "that's a Toyota."

Then came the part that matters most for anyone thinking about airline economics. The programs are wildly profitable not because of the flying, but because of the banks. Greenberg claims American Express pays Delta about $8 billion a year to buy Delta's miles; Citibank writes American Airlines a check for about $10 billion; United gets its money from Chase. In several cases, he said, that annual payment is worth more than the airline's entire stock-market value, and, provocatively, "if the airlines did not have that revenue from those credit card mileage purchases, they would be Chapter 7 in two weeks. The airlines, if you took the mileage programs away, are break-even at best." The banks are happy to pay because the average credit-card interest rate is around 26% and only about 49% of Americans pay their balance in full each month.

He also described how the cabins themselves are being re-carved to squeeze more revenue: Delta and United now sell "basic business" and "basic first," and Delta has reconfigured its A350 wide-body jet to hold 44 first-class seats, auctioning the extra ones to whoever will pay. Even upgrades are auctioned, the seat a loyal flyer expected gets offered to the whole plane for an extra $26. His one practical tip: play the "codeshare" game. Because airlines in the same alliance sell seats on each other's flights, the identical seat on the identical plane can be hundreds of dollars cheaper if you book it through a partner airline's website. He gave the example of a United flight from Washington Dulles to Frankfurt costing about $400 less booked as a Lufthansa flight number.

Keep this in mind as you read the hotel section, because the loyalty-versus-revenue tension is exactly the same debate playing out in lodging.

Hotels: the market that refuses to break

If airlines feel gloomy, hotels feel puzzled, in a good way. The best summary came from No Vacancy Live!, where host Glenn Haussman talked with Bruce Ford of Lodging Econometrics, a firm that tracks the hotel construction pipeline (No Vacancy Live!, July 28). Haussman opened by admitting his year-ago prediction that the market was "cooked" simply hasn't come true.

Why has it held up? Events, mostly. The FIFA World Cup pulled in international visitors who "stay longer" and "spend different." Interestingly, hotel occupancy in the host cities was only soft-to-fine; what jumped was the rate charged, especially on "match days" (the night before and night of a game). Ford's broader point is that people will now travel for experiences, concerts, sports, the country's 250th-anniversary events, even NFL training camps, while the old reliable of routine business travel and conference attendance is still soft.

The tension is the consumer. Haussman rattled off the strain: expensive gas and groceries, rising loan defaults, ballooning credit-card debt. Ford's read is that hotels are responding not by cutting their headline prices, "once you cut the price, it's much harder to gain back that ground," but by piling on discounts, bonus points and upgrades to keep people booking.

For anyone who cares about hotel supply, Ford gave concrete figures. The U.S. construction pipeline is still above 700,000 rooms but slowly shrinking, because hotels are opening faster than new ones are breaking ground; he thinks construction starts hit bottom in early 2026 (with the 2028 Los Angeles Olympics as the next big demand event). The real action is in existing buildings: hotel transactions were up 23%, driven by owners facing loans coming due and the reality that it now costs 20-25% more to run a hotel than when they underwrote it. Ford expects the industry to renovate or convert 325,000 to 375,000 rooms a year for the next couple of years, three-and-a-half to four times the volume of brand-new construction.

Marriott's CEO: selling experiences, not rooms

The marquee interview came from Brew Markets, where Ann Berry hosted Marriott International CEO Anthony Capuano, head of a company with roughly 10,000 properties and a ~$100 billion market value, speaking days before Marriott's earnings (Brew Markets, July 31).

On the World Cup, Capuano said Marriott had told investors it expected the tournament to add about 40 basis points (0.4 percentage points) to U.S. revenue-per-available-room and 35 basis points globally, with the actual figures due on the coming earnings call.

On loyalty, the scale is remarkable: Marriott Bonvoy now has over 280 million members worldwide, and members account for roughly three-quarters of the room nights booked in the U.S. and Canada. Capuano framed the program as Marriott's defense against being cut out of the customer relationship by AI booking tools: "We have the ability to control the stay." He was also unusually direct about the money: Marriott's credit-card partners "find real value in affiliation with our brands," and while Marriott takes a royalty, "the vast majority of the economics flow into the Bonvoy program," the same bank-funded loyalty engine Peter Greenberg described for airlines, viewed from the other side of the table.

On strategy, Capuano leaned into wellness and all-inclusive resorts. Marriott is adding the Italian wellness brand Le Fay (two resorts open, three more coming, including one in Tuscany), reflecting luxury guests who "want more substance from their travel," nutrition, sleep, longevity, not just a spa. It has pushed into all-inclusive resorts through a partnership with Blue Diamond and an owned set of resorts in Barbados called Elegant, reasoning that if a loyal Bonvoy customer can't find an all-inclusive option in Marriott's system, "I would, in effect, be pushing them into the warm, welcoming arms of some of my friends and competitors."

On the Middle East, he was frank: Marriott had guided that regional RevPAR could fall "as much as 50%" because of the war with Iran, though his regional managers are confident demand snaps back once the conflict resolves, given a strong start to the year in January and February.

And on valuation, the question hovering over the whole sector, Berry noted Marriott's stock is up over 34% in the past year, with analysts split between buy ratings and holds, and the shares trading at roughly a 30% premium to their historical multiples. Capuano's answer to "what's the next catalyst" was, essentially, keep delivering: RevPAR growth, a development pipeline of more than 600,000 rooms (about 4,000 hotels), and only mid-single-digit market share internationally, which he framed as a decade-plus runway for growth. Marriott is sticking to its "asset-light" model, franchising rather than owning buildings, occasionally borrowing its own balance sheet to reboot a brand (it bought and reinvented the W Union Square in New York) before recycling the capital.

Hilton's CEO: 28 brands and the "bazillion points problem"

Over on Good Morning Hospitality, the hosts unpacked recent comments from Hilton CEO Chris Nassetta (Good Morning Hospitality, July 22). Hilton had 8 brands when Nassetta took over as CEO in 2007; it now has 28. Pressed on whether that's brand sprawl, Nassetta made two arguments: it's a data-driven response to what owners and guests ask for, and every Hilton brand with at least 100 open hotels outperforms its local competitors on RevPAR. (For scale, the hosts noted Marriott, Accor and Hyatt run 38, 42 and 45 brands respectively.)

His more interesting point was about service. Nassetta called Hilton's habit of throwing loyalty points at guests who complain "buying forgiveness," and argued AI should let the company catch a problem during the stay rather than apologize with points afterward. The hosts, who book hotels for a living, added a telling detail about how uneven points values have become: an equivalent two-night stay might cost around 200,000 Hilton points versus roughly 38,000 Marriott points, the kind of gap that quietly erodes the whole promise of a loyalty currency.

The view from the deal side: is the brand flag helping or hurting?

For a grittier, owner's-eye perspective, The Hotel Investor Playbook interviewed hotel broker Chris Kilcullen (The Hotel Investor Playbook, July 28). His provocative thesis: for some owners, the big brand "flag" over the door is now capping revenue rather than boosting it. Independent and boutique hotels, he argued, are growing RevPAR faster than branded ones, because a brand like Hampton Inn has a price ceiling, and a cool, well-reviewed independent property near a concert amphitheater can charge far more than the flag would allow.

He described a full-circle market: owners who once paid to add a brand are now, in some cases, stripping the flag off to reposition as boutiques, or converting tired hotels into apartments and workforce housing (extended-stay hotels make the best candidates, since they already have kitchens). But he was careful not to bury the counter-argument: brands still "drive value," because their loyalty platforms are a magnet for travelers, and the big chains have launched cheaper sub-brands (Hilton's Spark, Marriott's City Express) precisely to pull budget travelers into those rewards ecosystems. The hard economics he cited: dropping a franchise flag can cost an owner 30-40% of the asset's value, because that branded revenue simply disappears. He also called the modern "soft brands" (like Marriott's Autograph or Hilton's Curio) "an elevated OTA," a nod to the recurring theme that the line between a hotel brand and a booking channel is blurring.

A few more travel-demand signals

The Modern Hotelier devoted an episode to the month's hospitality headlines (The Modern Hotelier, July 30), and three data points stood out:

  • World Cup host cities saw an average RevPAR gain "well above 20%." And 80% of international visitors traveled beyond the host cities, spending 8 to 10 times more than domestic travelers, a genuine boost to the wider economy.
  • Data centers are quietly a hotel story. The roughly $600 billion being spent on data-center construction this year is driving a surge in extended-stay hotel demand in markets like Atlanta, Phoenix and Austin, with the honest caveat that when the construction crews leave, it can turn into a "boom and bust."
  • The consumer is trading down, not dropping out. About 70% of Americans still say summer vacations matter, but they're economizing: driving instead of flying, picking cheaper destinations, spending less once there. Fewer than one in five are canceling trips outright, and among Gen Z and millennials, more than 80% say they're still going.

Cruise: a niche operator returns to the Med

The one cruise conversation came from The Insider Travel Report, an interview with John DiOrio of Celestyal, a smaller Mediterranean-focused line (The Insider Travel Report, July 30).

Celestyal's story is a small, human illustration of the same geopolitics rattling the airlines. Having tried sailing in the Gulf of Arabia, the line pulled both its ships out at the start of the war and returned full-time to the Mediterranean. It now leans into being the specialist for Greek-island short breaks (it's the only line doing 3- and 4-night sailings out of Athens) and is expanding into the Western Med, Spain, Portugal and Morocco, starting with a trial month in December 2026 before a full winter 2027-28 season, adding 17 new destinations. On pricing, DiOrio pointed to a summer suite sale with suites from $649 per person on some three-night sailings, and emphasized that Celestyal's fares bundle in gratuities, Wi-Fi and main meals. On returning to the Gulf, he was noncommittal: "it's too soon to say."

The real battle: who owns the moment you book?

The thread running under almost every episode this fortnight, hotels, airlines, rentals, was distribution. Who actually captures you at the moment you decide to travel, and how much do they charge for the privilege? Two Behind the Stays episodes made this vivid.

Google's AI booking grab. In its July 31 roundup (Behind the Stays, July 31), the hosts walked through Google's push to make travel bookable inside its AI. Google's "AI mode" has crossed 1 billion monthly active users; its "direct offers" pilot launched in January and expanded into travel in May with Booking Holdings and Expedia as the first partners, and hotel group IHG has now joined with special offers that surface exclusively inside AI trip planning. Google's search-and-other-ad revenue grew 17% in the quarter, and the company is building checkout plumbing so travelers can complete a flight or hotel booking without ever leaving the AI. As one host put it, everyone in the industry now has to treat "Google as rented land," you don't control the algorithm, so building your own direct-booking brand "has never been more valuable."

That same episode had a fascinating footnote on the value of a name. Sonder, the apartment-hotel startup that went bankrupt eight months ago, just had its trademarks and 70-plus web domains bought by an affiliate-marketing company called Travel AI. Travel AI runs 530-plus consumer travel brands, creates roughly 200 a year, and will clear over $750 million in booking value this year, routing every reservation through Booking Holdings or Expedia. Why buy a dead brand? Because search engines and chatbots still rank Sonder highly and, as Travel AI's CEO put it, the large language model "doesn't really know the two weeks last November when they went bankrupt." Its target: $100 million in bookings from the Sonder name within 12 months. The lesson the hosts drew: being known is now an asset in its own right.

The cost of the middleman. In its July 24 episode (Behind the Stays, July 24), the panel dug into a Skift thought experiment by Rafat Ali about Accor spinning its lifestyle-hotel arm, Ennismore (home to brands like Hoxton, Delano and Mondrian), toward a U.S. IPO led by Goldman Sachs at a valuation around $3.7 billion, the low end of estimates. The reason the numbers matter: an independent hotel that runs half its bookings through online travel agencies pays somewhere between 10% and 12.5% of its room revenue just to that channel; stack a soft-brand affiliation on top and the total distribution cost can reach 18-30% before a single bill is paid. The proposed fix, a distribution partnership with Airbnb at a roughly 9% commission plus a lighter brand fee, could bring the all-in cost back to 9-12%. The catch, the hosts noted, is that the math depends on Airbnb's claim that 55% of guests who book a hotel on its platform go on to book a home within a year, and how much of that is genuinely new business is undisclosed.

The same episode captured the other side of distribution, marketing, with a delightful story. Ahead of a World Cup quarterfinal between Norway and England, Norwegian Air challenged British Airways on Instagram: the loser would swap its profile photo for the winner's logo for 24 hours. England won 2-1, Norwegian gamely switched to the BA logo, and the stunt went viral, with airlines worldwide piling into the comments and even ESPN covering it. The kicker, from Norwegian's own social lead: it was dreamed up by a three-person team in about half an hour, with a single sign-off from the head of marketing. As one host marveled, if a social manager at United had swapped the logo without approval, "they'd be fired." The takeaway the panel kept returning to: attention is getting scarce and expensive, and the brands that can generate their own, cheaply and authentically, have a real edge over those paying ever-rising tolls to the booking platforms.

Rounding out the distribution theme: the travel-advisor platform Fora hit a $1 billion valuation on a new fundraise, a bet that some travelers, overwhelmed by choice, still want a human to plan the trip.

The bottom line

Put the fortnight together and a clear picture emerges. Demand for travel is genuinely strong, the World Cup delivered, luxury and experience travel is booming, and even budget-conscious families are still going, just cheaper. But the economics are being reshaped by two forces. First, volatile fuel and geopolitics are punishing anyone without pricing power: premium-heavy airlines like Delta and United are absorbing the shock, while the discount carriers get crushed (Spirit is simply gone). Second, and more structurally, a war over distribution is intensifying, loyalty programs, online travel agencies, soft brands and now Google's AI are all fighting to own the moment you book, and each layer adds cost that someone (usually the hotel owner, ultimately the traveler) has to pay.

The through-line from the CEOs of Marriott and Hilton is telling: both are betting that a huge, bank-funded loyalty program is their best insurance against being disintermediated by AI. Whether that holds is one of the most interesting questions in the sector.