Fluxfactory | E+ | Getty Images
Travelers saw prices fall for big-ticket pieces of their vacation budgets in July, offering at least a temporary reprieve after soaring costs earlier this year.
Airfares fell nearly 8% from June to July, while prices for rental cars and lodging such as hotels declined 9.5% and about 3%, respectively, according to a monthly inflation report issued Wednesday by the U.S. Department of Labor. It was the second consecutive month of price declines for each category.
“That’s really good news, I think, when people are planning out their vacations,” said Sally French, a travel expert at NerdWallet.
Airline ticket prices peaked in May this year, driven by factors like elevated consumer demand coming out the Covid-19 pandemic and operational issues for airlines such as high jet-fuel costs and staffing shortages, which led companies to pare back flight schedules, according to experts.
More from Personal Finance:
Inflation Reduction Act extends $7,500 tax credit for electric cars
30 companies that will help employees pay off their student loans
Climate change is making some homes too costly to insure
That surge in airfare earlier in 2022 was “anomalous,” said Hayley Berg, lead economist at Hopper.
Hotel and rental car prices also topped out in the spring, while high gasoline costs also served to stretch road-trip budgets.
‘A lot’ of people traveled recently, despite high costs
Thirty-nine percent of travelers said the general cost of trips being too expensive deterred them from traveling more than they would have otherwise preferred in the past half-year, according to Destination Analysts, a tourism market research firm. Almost half, 47%, explicitly cited gasoline costs and 27% did so for airfare.
Financial concerns compounded other travel headaches over the last several months, such as an increase in lost baggage and delayed or canceled flights.
However, “a lot” of people still traveled over the summer — more than half of Americans took a trip in the past month, according to a Destination Analysts survey fielded in July.
Despite the recent cooling, travel largely remains pricier than it was pre-pandemic. Airfare this July was up 16% versus July 2019, according to monthly Consumer Price Index data.
Hotels are up more modest 6% for the same period while rental cars are up about 48%, which is “easily the sharpest price increase of any [travel] category we track,” French said. In addition to consumer demand, factors like a semiconductor shortage that impacted the auto industry more broadly have flowed through to consumers, she added.
“It’s still important to remember [that] if you haven’t traveled or done a big trip since pre-Covid, you should expect to pay more than what you’re used to,” French said.
How to score good deals on upcoming trips
Travel experts had a few tips to ease the sting of potentially costly travel.
Travelers who can remain flexible regarding vacation dates may be able to score a better deal on airfare, French said. A tool like Google Flights lets users compare prices for selected travel dates as well as other combinations earlier or later in the week or month, for example, she said.
You may find that extending a trip by a day could save enough on airfare that it more than offsets an extra night at a hotel — and gives you an additional day of vacation.
“I’d encourage people to really be flexible about their budgeting,” French said.
For the best deals on airfare, travelers planning a domestic trip for the fall should book their plane tickets at least three to six weeks before departure, after which prices tend to rise quickly, Berg said.
Flying in the autumn is also one of the best ways to save on international airfare, since prices are often lower in September and October relative to summer months, Berg added. Travelers generally get the best deal if booking approximately four weeks ahead, she said.
Further, departing midweek instead of on peak days generally saves about $35 a ticket, according to Hopper.
Travelers may be better-served booking a hotel closer to their arrival date, though, especially for big-city destinations with ample accommodations, experts said. That’s because hotels often drop their prices to clear inventory as the check-in date approaches.
I’d encourage people to really be flexible about their budgeting.
travel expert at NerdWallet
Renting a car from a major airport hub may also be a safer bet especially amid high demand — the typically larger car fleets at those hubs reduce the chances of a company saying they don’t have a vehicle for you upon arrival, Berg said. Travelers who’d prefer to fly into a regional airport can consider renting from a bigger airport nearby and taking a taxi there, for example.
Refundable travel may also offer a financial benefit — especially relative to rental cars and hotels — for those travelers willing to do a bit of extra legwork, French said.
For example, travelers can often choose to defer payment for these purchases until their arrival date. While travelers may pay a slightly higher rate for that luxury, opting for a fully refundable hotel or rental car purchase allows travelers to monitor prices leading up to their trip; if the price drops beforehand, travelers can book at the lower rate and then cancel their original booking, French said. However, consumers should, of course, be cognizant of any restrictions that may apply.