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Prices for gas, food and other goods and services continue to rise, and, like many Americans, you may be feeling the pinch in your budget. The latest government statistics show inflation reached a 40-year high in May 2022, having surged 8.6% from the same month a year ago, according to the Bureau of Labor Statistics (BLS).
While a study by tourism market researcher Longwoods International revealed that 91% of travelers have trips scheduled in the next six months, 41% of the survey respondents admitted that record-high fuel prices will significantly impact their travel decisions.
Inflation may impact your vacation by limiting the number of trips you take, reducing your budget for trip expenses or even causing you to choose driving over flying on your next trip. Here's how inflation may affect your vacation and what you can do to manage your travel costs.
Travel Costs Climb in 2022
Inflation is impacting nearly every sector of the economy, including travel, so it's essential to factor higher costs into your travel plans. As you budget for your upcoming travel plans, consider this cost breakdown of how prices changed in 2021:
|Travel Costs Changes in 2021
|Price Increase: December 2020 - December 2021
|Rental cars and trucks
|Hotels and lodging
|Food away from home
|Gas (all types)
Source: U.S. Bureau of Labor Statistics
We'll take a look at how costs have changed more recently, but while these factors can help you understand the travel costs you're likely to encounter, they shouldn't be your only consideration. Your own financial situation is unique, as is your personal travel style and preferences. For example, maybe you like to take advantage of the complimentary hotel breakfast instead of dining at a restaurant.
So instead of comparing your travel spending to national averages, it may make sense to set your budget based on your past trips and adjust according to current inflation rates.
How Inflation May Impact Your Vacation
While many people are eager to travel after roughly two years of pandemic-related restrictions, travel plans now might be restricted by inflation. As we've seen, travel costs are rising across the board, and financial experts believe short-term relief is unlikely. Here are areas you may feel the pinch:
In March 2022, prices for airline flights were still below pre-pandemic prices. That all changed in April, when prices soared 18.6%, according to BLS data. Flights for your next trip will now cost you more than they did before the pandemic—13% more, according to BLS data. Airline tickets are more expensive than they've been since the summer of 2015. Make sure to book your reservations well in advance for lower flight prices, ideally around 64 days before your departure date, which a 2021 survey by CheapAir indicated was the best day to buy a ticket.
Hotel rates are at an all-time high, with an average daily rate of $149.90, according to a report from hospitality data firm STR. As you plan your next trip, remember that hotel prices can vary by season, so the summer and holiday travel season could cause hotels to demand even higher rates.
Rental Car Rates
Hertz and Avis raised rental rates on their cars and trucks by at least 25% in the first quarter of 2022 compared with the same time frame in 2021. Along the same lines, Hopper projects summer 2022 average rental rates to rise 20% over their rates from January. Before you book your flight and hotel stay for your next trip, you may want to check the current rental rates to make sure they fall within your budget.
Dining and Entertainment Expenses
The BLS reports the cost of food away from home is 7.4% higher year-over-year from May 2021, and the costs for movies, theaters and concert tickets are up 6.4%. If prices are pinching your vacation budget, consider free or low-cost activities for your next vacation, such as hikes, farmers markets, local art galleries, aquariums and zoos. Also, keep in mind that many museums and national parks often have free or lower entrance fees on specific dates or times.
How to Save Money on Your Next Vacation
To combat increasing inflation, you could consider taking these measures to reduce travel costs—or at least minimize the impact of higher prices.
- Choose your travel dates wisely. If you have some flexibility in your schedule, you may be able to save on your flights by flying on Tuesday, Wednesday or Saturday.
- Book flights well in advance. You may pay less for domestic flights by booking them between one and four months before your travel dates. Traveling internationally typically involves more planning, so consider booking even further in advance if possible.
- Call the hotel directly. While you can often find good deals on hotel rooms online or through the hotel's toll-free number, it could pay to call the local hotel reservation desk directly. They may offer a special rate not available elsewhere, especially if they have a lot of vacant rooms.
- Check for hotel discounts. Don't accept the first room quote you receive without first asking if the hotel has a less expensive room available. Also, ask if the hotel provides any discounts for corporate employees, students, service members or senior citizens if you're eligible. You might also qualify for discounts through specific memberships like AAA, AARP and trade unions.
- Take more staycations. You may save money by opting for a "staycation" at home or in a nearby hotel rather than traveling to a far-away destination. Not only can you start your vacation right away, but you can also eliminate airfare and minimize your costs for expensive gas. You can relax and recharge at the hotel pool and participate in leisure activities within driving distance of your home.
- Consider alternatives to fancy restaurants. You may be able to reduce your costs for meals by forgoing dining at sit-down restaurants in favor of fast-casual outlets or street vendors. And if you stay in a home rental or hotel suite with a kitchen, you can grab food at the grocery store and whip up meals at home.
Consider Getting Cash Back or Loyalty Discounts
One way to help curb the effects of inflation is to take advantage of credit card loyalty discounts or cash back programs. For example, some loyalty programs offer discounted or even free flights or hotel stays once you reach specific points thresholds.
If you want to get a rewards card to save money on travel, you'll usually need good or excellent credit. To help tune up your credit before applying, you can get your free Experian credit report and credit score and see how you can improve it. You can see cards you qualify for and get personalized travel credit card offers with Experian CreditMatch™.