Flights, hotel stays, and car rentals all have double-digit inflation rates
We have some bad news if you were hoping for a cheap vacation this year. Prices for airfare, hotels, and even car rentals are higher than in previous years, and they’re only getting higher. There have been warnings that domestic travel will get a lot more expensive as we move into summer, but a trifecta of skyrocketing prices for gas, plane tickets, and hotel stays is making budget-friendly travel in the U.S. a real challenge.
Currently, the U.S. is dealing with the highest inflation rate in 41 years.1 Across the board, prices for goods increased by 8.5 percent, but the travel industry was hit especially hard. Airline fares increased 23.6 percent from 2021 prices, according to the Bureau of Labor Statistics consumer price index.2 According to CNBC, perhaps more surprising, tickets are now 20 percent higher than pre-pandemic prices.3 The spike is partly due to the same increasing fuel costs impacting people at gas pumps, but increased demand is also driving prices.
After years of heavily modified travel, people are clamoring to take their postponed vacations, and higher prices won’t stop them. Demand for tickets is up 12 percent from 2019 levels, and in March 2022, $8.8 billion was spent on domestic flights alone.3
Hotel prices are also ballooning, with hotels in resort destinations experiencing a jaw-dropping 34 percent increase compared to 2019, based on reporting by The Points Guy.4 Similar to the airline industry, higher costs for consumers reflect higher operating costs and booming demand. The higher occupancy levels mean “hotels have the opportunity to push rates …”, explained Greg Miller, vice president of lodging and experiential leisure equity research at Truist Securities.4 Outside of popular vacation markets, inflation is still high but more reasonable, with average hotel rates that are 11.7 percent higher than in 2019.5
If you’re planning a trip this year, be prepared for higher costs for all aspects of travel. And consider using some of those loyalty points before they succumb to inflation too.