As you begin booking tickets for summer vacation, you may realize inflation is still impacting vacation budgets.
After months of high prices for everyday items, an April 2023 Bankrate survey of economists indicates inflation is set to cool over the next 12 to 18 months. In the meantime, many Americans will still see sweltering hot prices this summer: Nearly two-thirds (62 percent) of those who can’t afford a vacation this year cite inflation or rising prices, according to Bankrate’s survey on summer travel.
“Inflation is definitely impacting everything,” said Hayley Berg, chief economist with travel booking site Hopper. “The cost of flying a plane is more expensive [in] everything from wages to the free peanuts and the water.”
This is how much more Americans might expect to spend on summer vacations this year due to inflation.
Key summer travel inflation statistics
- Most people don’t have the budget for a summer vacation this year. 58% of those who are not taking a summer vacation this year say they can’t afford it. That’s up from 2022, when 48% of those not taking a summer vacation said they couldn’t afford it. (Bankrate)
- But a possible recession isn’t deterring travelers. 63% of U.S. adults are likely to take a summer vacation this year, up from 61% in 2022. (Bankrate)
- Airfare prices are finally landing. Round-trip airline tickets are expected to peak at around $350 this summer. That’s down 11% from summer 2022, when tickets peaked around $400. (Hopper)
- Prices will be highest on Independence Day weekend. July 1, the Saturday before July Fourth, is expected to be both the most expensive and busiest day to fly this summer. (Expedia)
How inflation in 2023 is impacting summer travel
Inflation isn’t stopping many Americans from getting away: According to Bankrate, nearly two in three (63 percent) Americans plan to take a summer vacation this year — 2 percentage points higher than in 2022.
Those vacations will come with a high price tag. The average American can expect to spend $1,585 on a one-week vacation this year, according to Budget Your Trip. That’s slightly higher than the winter holidays last year, when a one-week vacation in the U.S. cost the average person $1,578.
That higher price tag comes as most typical vacation expenses, including hotels, recreation and meals out, are more expensive since last year.
Inflation for all items increased 5 percent between March 2022 and March 2023, the latest data available from the Bureau of Labor Statistics (BLS). Though inflation is still high, it’s the smallest year-over-year increase in inflation since May 2021. It’s also a significant decline since the June 2022 peak, when inflation surged to 9.1 percent.
To still go on vacation despite higher prices, instead of spending less overall, 80 percent of likely vacationers plan to change something about their vacation due to inflation, according to the Bankrate’s summer travel survey. Most commonly, they plan to select less expensive accommodations and/or destinations (29 percent), engage in cheaper activities (28 percent) or drive instead of fly to their destination (26 percent).
Berg says Hopper customers, typically Gen Z (ages 18-26) and millennials (ages 27-42), are checking prices more frequently and trying to book the cheapest tickets they can to take more trips on a smaller budget for each trip.
“What we’re learning is people do not want to cut their travel budget,” Berg said. “They don’t want to cut trips. They want to take the budget they already have and they want to stretch it further.”
Airfare is up 17.7% from 2022, the most of any travel category
Generally, all but one popular vacation category grew at least 5.8 percent more expensive year-over-year, according to BLS data analyzed by Bankrate:
Inflationary impact on common travel expenses
|Travel expense||Percentage change February 2023 to March 2023||Percentage change March 2022 to March 2023|
|Food away from home||+0.6%||+8.8%|
|Lodging away from home, including hotels and motels||+8.4%||+8.1%|
|Alcoholic beverages away from home||+0.3%||+5.8%|
|Car and truck rental||+4.3%||-8.9%|
Airline prices have increased the most of any travel category between March 2022 and March 2023, up 17.7 percent, according to the BLS. Recreation services and alcoholic beverages away from home (such as at bars) have increased the least of any major vacation category, only 5.9 percent and 5.8 percent, respectively. However, that’s still more than the average 5 percent increase for all items nationwide.
Unlike other categories, however, car and truck rentals have actually decreased in price year-over-year, now 8.9 percent less expensive than they were in March 2022, according to the BLS.
Airfare price tracker: Travel costs in summer 2023
Last year, travelers saw the biggest impact of inflation in eye-watering prices for flights. Airline tickets cost travelers an average of around $400 in summer 2022, according to Hopper. Now, improved airline capacity and lowered prices, especially in jet fuel, means that despite current inflated prices in March, travelers may expect to spend around $350 on average for an airline ticket this summer.
“What we saw last year was really abnormal. Pretty much from the end of March, all the way through summer departure dates, prices strictly increased,” Berg said. “In a normal year, prices will start high, they’ll drop in April and early May … and then they’ll rise again as you get closer to those departure dates.”
Travelers booking plane tickets will see prices rise as the summer travel season begins. Domestic airline tickets were only $277 on average in February 2023, according to Hopper predictions. That was up 8 percent from February 2022, but Hopper expects that year-over-year prices will begin to decrease in the summer. The most expensive summer month is expected to be May, when travelers might spend $348 for an airline ticket, but that’s 11 percent cheaper than May 2022.
After May, prices that Hopper considers a “good deal” will gradually decrease again:
How upcoming airfare predictions compare to the past
|Month||Considered to be a “good deal” on domestic airfare||Price percentage change month over month||Price percentage change year over year||Price percentage change since 2019|
Despite the year-over-year relief, airfare prices are still higher than they were in 2019. Most notably, prices in May 2023 are expected to be down 11 percent since May 2022, but up 10 percent since May 2019.
How might international travel demand change in 2023?
Some of the last countries with COVID-19 travel restrictions, such as China and New Zealand, have opened back up to travelers since last summer. Now, more people are taking the international vacations they’ve been unable to take since the beginning of the pandemic.
International seat capacity is up to 93 percent of what it was in 2019, according to Hopper. Demand for trips to Europe and Asia, in particular, is expected to meet or exceed 2019 levels this year.
Interest in destinations in Europe and Asia is up tremendously, according to Melanie Fish, an Expedia spokesperson.
“I think people are catching up on the trips they didn’t take the past couple of years,” Fish said.
Expedia expects major U.S. cities and classic international tourist spots to remain vacation favorites, but cities in New Zealand and Vietnam are also becoming more popular for international travelers. These are Expedia’s top expected summer destinations:
- New York City
- Los Angeles
- Las Vegas
- Cancun, Mexico
- Punta Cana, Dominican Republic
- Auckland, New Zealand
- Hong Kong
- Osaka, Japan
- Da Nang, Vietnam
- Hanoi, Vietnam
4 ways to find cheaper flights in 2023
Travel can be overwhelming enough as it is, and trying to book airfare during a period of inflation can bring unneeded stress to your vacation. Using points and frequent flyer miles can be a great way to drive down out of pocket costs on your flight. However, even if you don’t use points, there are still plenty of ways to take that vacation without breaking the bank:
- Plan ahead. Unfortunately, if you’re trying to book flights in April for a May trip, it’s likely already too late to get the best deal. Expedia recommends booking domestic airfare between 21 to 60 days ahead of time. Fish generally recommends booking summer trips in August, when you can expect the least busiest (August 24) and cheapest (August 27) days to fly. Try to avoid holiday weekends, too: July 1 is expected to be the most expensive day to fly this summer, as well as the busiest.
- Don’t believe every “travel hack.” Ever tried to book tickets on a Tuesday to get the lowest price? Berg says that some popular travel hacks, such as booking on a private browser or on a Tuesday night, aren’t effective ways of getting the best price on a flight. Instead, she recommends trying to be flexible on your departure date, such as flying in the middle of a week, or booking as far ahead of your flight as possible.
- Check the fine print. Sure, you may have found a great deal on a flight, but check the terms to make sure you won’t have to pay extra for carry-on luggage or a flight delay. This also applies to hotels — both Fish and Berg recommend checking to make sure you aren’t surprised by extra costs, like resort or parking fees, when you see a great price on a hotel.
- Utilize points and miles. Frequent flyer miles aren’t just for making your flight more affordable, they can also be used for free checked bags, priority boarding and other perks that can make your summer flight just a little smoother. Travel credit cards often offer points or miles, as well as additional insurance for canceled or interrupted trips.
The First-Quarter 2022 Bankrate Economic Indicator Survey of economists was conducted March 23-30. Survey requests were emailed to economists nationwide, and responses were submitted voluntarily online. Responding were: Odeta Kushi, deputy chief economist, First American Financial Corporation; Yelena Maleyev, economist, KPMG; Scott Anderson, chief economist, Bank of the West; Nayantara Hensel, Ph.D., chief economist, Seaborne Defense; Joel L. Naroff, Naroff Economics; Mike Fratantoni, chief economist, Mortgage Bankers Association; Robert Frick, corporate economist, Navy Federal Credit Union; John E. Silvia, CEO and founder, Dynamic Economic Strategy; Dante DeAntonio, director of economic research, Moody’s Analytics; Bernard Markstein, president and chief economist, Markstein Advisors; Lawrence Yun, chief economist, National Association of Realtors; Robert Brusca, chief economist, Fact and Opinion Economics; Bill Dunkelberg, chief economist, NFIB; Gregory Daco, chief economist, EY; Lindsey Piegza, Ph.D., chief economist, Stifel; Eugenio J. Alemán, Ph.D., chief economist, Raymond James Financial; and Mike Englund, chief economist, Action Economics.
Bankrate commissioned YouGov Plc to conduct the survey on summer travel. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,461 U.S. adults, among whom 1,554 are likely to take at least one summer vacation this year. Fieldwork was undertaken on March 29-31, 2023. The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.