Inflation can be a real pain in the pocketbook. As a result of rising prices, recent studies reveal Americans are re-thinking their COVID revenge travel plans. Rather than sit another summer out, though, many Americans are simply switching up their vacation destinations. Here’s the current outlook and how money can still be saved on travel.
Inflation Hits the Travel Industry
According to the Consumer Price Index, inflation recently soared to 8.5%, a forty-year high. Prices have gone up across the board, including food, energy, goods, and services. How exactly does that impact travel?
Restaurant prices have gone up 6.9% since last March. Gas prices have gone up 48% since last March. Airfare may continue to increase another 7% until at least May. The average rate increase for hotels is up to 37%. Some economists are hopeful that inflation has reached its peak. If so, will prices stay steady or begin to decline? That seems to be the critical question as the summer travel season looms.
Summer Travel Plans Are Shifting
As inflation starts to impact our everyday lives, many people have chosen to cancel or downgrade their travel plans. Destination Analysts reported that 24.7% of Americans have already canceled at least one trip because of rising prices.
Blaine Thiederman, the founder and principal advisor at Progress Wealth Management, shared, “I have several clients that recently changed their summer travel plans due to inflation.”
One of their clients decided to abandon plans to go to Europe because of the airfare and opted to travel domestically. Another family got creative and decided to rent out their home on Airbnb to cover their mortgage and travel expenses while they were away.
Where Are Americans Going On Vacation?
Although travel plans are shifting, Americans are still enthusiastic about finally being able to get away this summer.
According to a recent travel trends report, “Approximately 3 in 4 travelers (74%) are planning to keep their summer trips within the United States, while 26% of travelers are planning international trips this year. When it comes to what international locales are attracting tourists, it’s almost evenly split between Canada and/or Mexico and countries farther abroad.”
Tips for Saving Money on Travel
Create a Vacation Budget
If you’re still planning to vacation despite current economic conditions, one way to save money on travel is to create a vacation budget. Start by pricing the most expensive items, like accommodation and transportation.
Then allocate money for meals, alcohol, souvenir shopping, and activities. Strict discipline is required for this method to work, though.
Redeem Miles, Points, and Rewards
Now would be a great time to use them if you’ve been racking up points, miles, or rewards. Depending on the program, you may be able to get a discounted, or even free, flight or hotel stay. According to a survey from last year, “Americans save an average of $757 per year by using credit card rewards.”
If you don’t participate in these programs, you should consider signing up. Many travel credit cards offer bonus miles or points once you’ve reached a certain spending threshold. As for hotels, once you’ve signed up for their rewards program, you’ll likely find frequent deals and promotions in your inbox.
Compare Prices on Google Flights
The current average cost of airfare has increased by 7%, costing Americans around $330 for a domestic roundtrip. At the same time, the average cost of airfare for an international roundtrip flight comes in at about $880.
One great price comparison tool available to travelers is Google Flights. It’s a unique search engine that allows you to compile flights from many major airlines, all in one place.
In addition, Google Flights allows you to search from multiple airports, set up price change alerts, and search for the most affordable destinations from your location.
Get Travel Insurance
While spending money on travel insurance sounds counterintuitive, it’s about protecting your bank account and peace of mind. You don’t want to be stuck footing the bill for a vacation disaster you had no control over. And, with the uncertainty of COVID variants, travel requirements, and flight staff shortages, you never know what might happen these days.
Surprisingly, inflation hasn’t caused as many trip cancellations as one might have thought. On the contrary, most Americans are generally excited and enthusiastic about the thought of getting away this summer. Inflation has, however, shifted or influenced travel destinations, with most people vacationing domestically and closer to home.
Whatever you decide to do this summer, stay safe and consider practicing financial responsibility to keep yourself out of trouble!