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Travelers saw prices fall for large parts of their vacation budget in July, offering at least a temporary reprieve after rising costs earlier this year.
Airfares fell nearly 8% from June to July, while prices for rental cars and lodging such as hotels fell 9.5% and about 3%, respectively, according to a monthly inflation report released Wednesday by the US Department of Labor. It was the second consecutive month of price drops for each category.
“That’s really good news, I think, when people plan their vacation,” says Sally French, a travel expert at NerdWallet.
Airfare prices peaked in May this year, driven by factors such as increased consumer demand due to the Covid-19 pandemic and airline operational difficulties such as high jet fuel costs and staff shortages, forcing companies to cut flight schedules, according to experts.
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That increase in airfares earlier in 2022 was “abnormal,” said Hayley Berg, chief economist at Hopper.
Hotel and rental car prices also peaked in the spring, while high gas costs also pushed road trip budgets up.
Thirty-nine percent of travelers said the overheads of overpriced travel prevented them from traveling more than they otherwise would have liked in the past six months. according to to Destination Analysts, a tourism market research firm. Nearly half, 47%, explicitly mentioned gasoline costs and 27% did so for airline tickets.
Financial concerns have exacerbated other travel problems in recent months, such as an increase in lost luggage and delayed or canceled flights.
However, “many” people still traveled in the summer — more than half of Americans made a trip in the past month, according to a July Destination Analysts survey.
Despite the recent cooling, travel remains largely more expensive than before the pandemic. Airfare was 16% higher in July than in July 2019, according to monthly data from the Consumer Price Index.
Hotels are up more modestly at 6% over the same period, while rental cars are up about 48%, which is “easily the sharpest price increase of all.” [travel] category we’re tracking,” French said. In addition to consumer demand, factors such as a semiconductor shortage that affected the broader auto industry have spilled over to consumers, she added.
“It’s still important to remember [that] if you haven’t traveled or taken a big trip since pre-Covid, you should expect to pay more than you’re used to,” French said.
Travel experts had a few tips to help ease the sting of potentially expensive travel.
Travelers who can remain flexible about vacation dates may be able to score a better deal on airfare, French said. For example, a tool like Google Flights allows users to compare prices for selected travel dates and other combinations earlier or later in the week or month, she said.
It may be that extending a trip by a day can save enough on airfare to more than offset an extra night in a hotel — and give you an extra day of vacation.
“I would encourage people to be really flexible about their budgeting,” French said.
For the best airfare deals, travelers planning a domestic trip for the fall should book their airfares at least three to six weeks before departure, after which prices rise rapidly, Berg said.
Flying in the fall is also one of the best ways to save on international airfare, as prices are often lower in September and October than in the summer months, Berg added. Travelers generally get the best deal if they book about four weeks ahead, she said.
Furthermore, according to Hopper, it generally saves about $35 per ticket if you leave mid-week instead of on peak days.
However, travelers may be better served if they book a hotel closer to their arrival date, especially for major city destinations with adequate accommodations, experts said. That’s because hotels often lower their prices to clear inventory as the check-in date approaches.
Renting a car from a major airport hub can also be a safer bet, especially when demand is high — the typically larger fleets at those hubs reduce the likelihood of a company saying they don’t have a vehicle for you upon arrival, Berg said. Travelers who prefer to fly to a regional airport can consider renting at a larger airport nearby and taking a taxi there, for example.
Refundable travel can also provide a financial benefit — especially compared to rental cars and hotels — for travelers who want to put in some extra work, 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 track prices leading up to their trip; if the advance price drops, travelers can book at the lower rate and then cancel their original booking, French said. However, consumers should of course be aware of any restrictions that may apply.