Inflation appears to be impacting how Americans are planning to travel this holiday season, but industry experts predict the last two months of 2023 will still be a bustling travel period.
“This should be the busiest holiday travel season in at least four years, and we might even top 2019. There continues to be tremendous demand for travel and other experiences as we put the pandemic behind us,” said Ted Rossman, a senior industry analyst at Bankrate.
Bankrate conducted a survey that showed 48% of adults in the United States are planning an overnight leisure trip this holiday season, up by 5% compared to the previous year. However, due to the impact of inflation on people’s budgets, travelers are making adjustments to their modes of transportation, accommodations, and activities.
About three-quarters of respondents (77%) said they will likely adjust their plans this year due to inflation, with 27% of travelers saying they are driving to their destination instead of flying due to rising prices. Others are taking fewer trips (23%), traveling shorter distances (21%), choosing less expensive destinations or accommodations (23%), or traveling fewer days (21%). Another 21% said they would engage in less costly activities while traveling.
While leisure travel should optimally be a refreshing and relaxing experience, more than two-thirds of holiday travelers expressed concerns about their plans. More than 1 in 4 (27%) were worried about travel disruptions, such as flight delays or cancellations, severe weather, or lost luggage. Other concerns were more directly related to finances: 31% of respondents worried their travel would strain their budget; 25% said they felt pressured to spend more than they were comfortable with; and 16% were concerned they would go into debt to pay for their holiday travel.
Credit cards are often the most convenient way to book and pay for travel. More than half of the respondents in the survey said they were planning to use them during the upcoming holiday travel season, with 36% saying they would pay off the balance in full before interest accrues and 21% saying they would pay off the balance over time. Another 8% said they would use a buy now, pay later service, such as Affirm or Afterpay.
Credit card interest rates have reached their highest level in 30 years at 22.75%, according to The Messenger.
Of the survey respondents, 10% said they will depend on their family members to fund their travel expenses, while some will ask their extended family or friends for financial assistance. Similarly, many vacationers intend to rely on their friends and loved ones for lodging arrangements, as only 16% of participants expressed their willingness to pay for a hotel, motel, or short-term rental.
Not surprisingly, those most impacted by the cost of travel are younger adults and lower-income households. Of the Gen Z (ages 18-26) respondents, 86% said their travel plans are likely to change due to inflation, compared to 80% of Millennials (ages 27-42), 77% of Gen X (ages 43-58), and 68% of Baby Boomers (ages 59-77). Young adults are more likely to have extra expenses, such as childcare and student loans, and are the most likely to travel home for the holidays, explained Rossman, per The Dallas Morning News.
According to the Bankrate survey, 86% of holiday travelers in the $50,000 or less household income bracket are likely to change their holiday plans due to inflation, compared to 69% of travelers in the $100,000 or more income bracket.