Consumer spending has remained strong in recent years, especially in discretionary categories like travel. The TSA processed 30 percent more passengers in 2023 than in 2023, and 2023 set a new record with 13 percent more passengers. 2024 is on pace to be the busiest year yet.
Many people are willing to go into debt for discretionary purchases, with travel being the top category at 27 percent. While physical goods spending has shown signs of a pullback, services spending, including travel, remains strong.
Despite slowing bar and restaurant sales, travel demand continues to intensify. Americans are saving less and taking on more debt, but are still prioritizing experiences like travel.
How are people paying for all of this travel?
About four in 10 U.S. adults are willing to go into debt for discretionary purchases, with travel being the top category at 27 percent. Physical goods spending has decreased, while services spending, including travel, remains strong.
Despite slowing bar and restaurant sales, travel demand continues to intensify. Americans are saving less and taking on more debt, but are still prioritizing experiences like travel.
What to do if you haven’t booked yet
While it’s important to be cautious about taking on debt for travel, there are budget-friendly ways to have fun. Utilizing credit card rewards, frequent flyer miles, and hotel points can help offset costs. Unused gift cards and travel vouchers can also provide value.
Flexibility is key when planning travel, as traveling during the offseason or midweek can save money. Renting accommodations with a kitchen can also help cut costs by preparing meals instead of dining out.
How to fit travel into your budget
Traveling closer to home or planning a staycation can be budget-friendly options. About one in eight Americans are planning a staycation this summer. Alternatively, if traveling further from home is feasible, there are ways to make it affordable by being flexible with travel dates and accommodations.
Although inflation has taken its toll, causing common household expenses to increase by about 20 percent since early 2023, travel prices have actually decreased significantly over the past year.
Based on the May 2024 Consumer Price Index, rental car costs have dropped by 9 percent, airline fares by 6 percent, and hotel prices by 2 percent. Unlike many other spending categories, travel prices have essentially returned to pre-pandemic levels in 2019.
The Key Takeaway
When it comes to planning your summer travel budget, it’s possible to strike a balance. Despite concerns about inflation, it’s important to set aside some funds for enjoyment. Consider setting aside a portion of each paycheck for a dedicated entertainment fund. Utilize any rewards points and miles you’ve accumulated and think outside the box when planning your trips.
A solid budget focuses on spending that aligns with your priorities. It doesn’t mean eliminating all sources of fun, but rather making strategic choices based on your priorities. If travel is something you value, it’s definitely feasible to make it a reality.
If you have any credit card-related inquiries, feel free to reach out to me at ted.rossman@bankrate.com for assistance.