Americans are still worried about affording holiday airfares despite slowing inflation
Inflation caused the price of travel to skyrocket last holiday season, but in 2023, people can expect some relief. Airfare and other travel costs are cheaper this year than they were in 2022, but despite lower inflation, high prices may still be a problem for many Americans during holiday travel.
The percentage of holiday travelers who say their plans will strain their budgets remains relatively unchanged since last year: from 32 percent in 2022 to 31 percent in 2023, according to Bankrate’s holiday travel survey. The percentage of holiday travelers changing something about their plans as a result of inflation or high prices also remains high: from 79 percent in 2022 to 77 percent in 2023.
Despite high prices, the holidays don’t have to be a hit to your budget. Here’s how you can expect inflation to impact your plans — and how you can alleviate financial pressure to enjoy the time with people important to you.
Even though travel prices have come down a bit from last year, there's a significant cumulative effect to the high inflation and high interest rates that we have experienced the past two years.— Ted Rossman | Bankrate Senior Industry Analyst
Key Bankrate statistics on travel inflation
- Inflation is making a big impact on holiday travel. 77% of holiday travelers are changing their plans in 2023 due to inflation and rising prices.
- Travelers are commonly driving to cut costs. 27% of holiday travelers will drive instead of fly to their destination, due to inflation and rising prices. Additionally, 23% are taking fewer trips and 23% are selecting less expensive accommodations and/or destinations.
- Lower-income people are driving more. 32% of holiday travelers with an income under $50,000 per year are driving instead of flying to their destination, more than any other income bracket.
- Americans are struggling to make holiday travel work in their budgets. 31% of holiday travelers say the upcoming holidays will put a strain on their budget and 25% worry they’ll feel pressured to spend more than they’re comfortable. 27% are worried their travel plans could be disrupted by airline delays or cancellations, weather, extra lodging expenses, lost luggage or other reasons.
How inflation in 2023 is impacting travel costs
Airports may be a little more crowded this year: Nearly half (48 percent) of U.S. adults are planning an overnight leisure trip this holiday season, up from 43 percent of U.S. adults in 2022, according to Bankrate’s holiday travel survey.
“We’re still seeing a lot of post-pandemic demand for experiences such as travel, dining and concert tickets,” Bankrate Senior Industry Analyst Ted Rossman says. “When people are splurging these days, it’s much more likely to be on experiences than physical goods such as electronics and furniture.”
Increased demand also means increased spending. Americans are projected to spend $731 billion on domestic leisure travel this year, up from $718 billion in 2022, according to the U.S. Travel Association. While key vacation expenses are still expensive, prices aren’t increasing as fast as they did in 2022.
Airfare inflation fell 5.5% since COVID-19 began, but other travel expenses ballooned
At its peak in June 2022, the inflation rate was 9.1 percent year-over-year, according to the U.S. Department of Labor’s Bureau of Labor Statistics (BLS), which dwindled to 3.7 percent in August 2023. Though the inflation rate has decreased significantly since 2022, it’s still higher than before COVID-19. The inflation rate was 2.3 percent in February 2020, according to the BLS.
The inflation rate of airfare decreased 13.3 percent between August 2022 and August 2023, and the inflation rate for car and truck rentals decreased 6.8 percent, according to the BLS. While the inflation rate for lodging away from home, such as at hotels, increased 3 percent year-over-year as of August 2023, hotel prices aren’t as high as they were in the summer.
Travelers may still notice the effect of inflation when they book hotels and buy gas for a road trip. The inflation rates of lodging away from home and gasoline have grown tremendously since February 2020 (notably, the inflation rate of gasoline rose 46.1 percent). However, the inflation rate of airline fares actually decreased 5.5 percent:
Inflation rate percentage change
| Travel category | February 2020 to September 2023 |
|---|---|
| Source: BLS | |
| Airline fares | -5.5% |
| Lodging away from home | 13.4% |
| Gasoline prices | 46.1% |
Falling inflation on airline tickets means the average flight now costs less for domestic holiday travelers than it did in 2019. In dollars, Americans booking a domestic round-trip flight in September for Thanksgiving 2023 can expect to spend $268 on average, according to travel booking site Hopper, 7 percent less than the cost of the same ticket in 2019.
Thanksgiving airfare is down 14% from 2022
Americans lept at the chance to take trips again after COVID-19 lockdowns lifted, but travel demand has now somewhat normalized. Travelers booking domestic airline tickets in September for Thanksgiving 2023 will pay, on average, 14 percent less than they would have paid last year. Rental cars are $42 on average per day, a 17 percent decrease year-over-year. Hotel prices around Thanksgiving, however, are expected to be slightly more expensive year-over-year: $206 per night, an 8 percent increase:
Average cost of Thanksgiving travel expenses
| Travel category | Thanksgiving 2022 costs | Thanksgiving 2023 costs | Percentage change |
|---|---|---|---|
| Source: September Hopper 2023 and 2022 data | |||
| Domestic airfare (round-trip) | $312 | $268 | -14% |
| Hotels (avg. per night) | $189 | $206 | +8% |
| Rental cars (avg. per day) | $52 | $42 | -17% |
For winter holiday travelers, buying a plane ticket for a domestic round-trip flight is $400 on average, a 29 percent increase since 2019 and a 12 percent decrease since 2022. Rental car prices around Christmas have remained unchanged; the cost was $53 per day in both 2023 and 2022. Hotels are averaging $233 per night, a 6 percent increase since 2022:
Average cost of winter holiday travel expenses
| Travel category | Winter holiday 2022 costs | Winter holiday 2023 costs | Percentage change |
|---|---|---|---|
| Source: September Hopper 2023 and 2022 data | |||
| Domestic airfare (round-trip) | $452 | $400 | -12% |
| Hotels (avg. per night) | $218 | $233 | +6% |
| Rental cars (avg. per day) | $53 | $53 | Unchanged |
Travelers booking an international trip are in for the highest price increases. Expect to see a 69 percent average increase between 2019 and 2023 on winter flights to Europe and an eyewatering 74 percent average increase on flights to Asia, according to Hopper.
Nearly 1 in 3 lower-income households are driving instead of flying due to flight prices
Thanksgiving flights may be cheaper this year, but the $268 price tag may still be too high for many Americans.
While wages are catching up to inflation, many Americans are still feeling the impact of high prices. Between the beginning of 2021 and the second quarter of 2023, inflation rose 15.8 percent, while wages rose 12.8 percent, according to BLS data analyzed by Bankrate.
“With people paying so much more for rent, food, gas and more, there’s less disposable income to go around,” Rossman says. “The excess savings that many households built up during the pandemic is all but gone at this point, and the resumption of student loan payments is another headwind.”
Holiday travelers who make under $50,000 per year are most likely (86 percent) of any income bracket to change their plans due to inflation or rising prices this year, according to Bankrate. The higher a household’s income, the less likely they’re changing their plans:
- Under $50,000 per year: 86 percent
- $50,000-$79,999: 78 percent
- $80,000-$99,999: 68 percent
- $100,000 per year or more: 69 percent
Holiday travelers making under $50,000 a year are also the most likely of any income bracket (32 percent) to drive instead of fly this year due to inflation or rising prices.
Source: Bankrate survey, September 12-14, 2023
*Of U.S. adults planning on an overnight leisure trip this holiday season
However, middle-income holiday travelers are also affected by high prices: Holiday travelers making between $50,000 and $74,999 are the most likely income bracket (27 percent) to engage in cheaper activities during their holiday plans due to high prices.
Household incomes, if they continue to rise at their current pace, aren’t expected to recover from loss of total purchasing power until the fourth quarter of 2024, according to Bankrate’s new Inflation to Wage index. An uncertain economy could have long-term impact on travel, according to Rossman.
“It stands to reason that this pent-up demand could fade, especially if high inflation, high interest rates and other economic worries persist,” Rossman says.
4 ways to save on travel in 2023 and 2024
It’s normal to be worried about travel spending during economic uncertainty, but there are ways to take advantage of discounted tickets and bundles, even if you don’t have a credit card with rewards points. Here are four ways to help save on travel in 2023 and 2024:
1. Book tickets strategically
- If you’re planning on booking airline tickets, book them as soon as possible. The best time to book airline tickets for the holiday season is by Oct. 14, according to Hopper.
- Additional tip: Try to book your flight for an atypical day, such as the Monday ahead of Thanksgiving instead of the weekend.
2. Utilize fare-tracking apps
- Plenty of apps like Hopper, Skyscanner, Kiwi.com and more help you not only get the best deal on a flight, but can also help you book hotels or rental cars.
- Additional tip: Many apps will also allow you to examine when flight costs might go up and when is the most expensive time to fly, allowing you to get the most competitive price.
3. Use your credit card for deals
- Choosing the right travel card can help you take advantage of a lot of different deals on flights, hotels, gas and more.
- Some of the best travel credit cards of 2023 can help you earn flight miles and travel insurance, or even give you access to airport lounges.
4. Learn how to travel hack
- Travel hacking allows you to “hack” flights and hotels, allowing you to redeem points for travel.
- Even if you don’t want to use a credit card, you can get extra points by using shopping portals, dining rewards and taking advantage of mistake fares, or fares that have been priced below market value due to a mistake from the airline.
Bottom line
If you’re thinking of booking tickets to travel this holiday season, now is the time. Prices will only continue to climb, and your budget may be stretched if you wait. If you think you might be unable to see your out-of-state family or have the vacation of your dreams this year, perhaps wait until next year when you can book those tickets well in advance.
Travel costs aren’t set in stone, and they’re even more uncertain going into next year. However, with a combination of travel points and tricks, as well as thoughtful planning, you can get a well-deserved vacation after the hectic last several years.
Methodology
All figures from the study on holiday travel, unless otherwise stated, are from YouGov Plc. Total sample size was 2,419 US adults. Fieldwork was undertaken between 12th – 14th September 2023. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+). 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.
